This informative case study is a preventative measure to not fall victim to scams and extortion tactics implored.
An employee of Company PP signed a White Pages telephone directory form without the director and/or authorised party’s consent and/or knowledge of the aforesaid form. The employee failed to inform the director that the employee signed on the director’s behalf. The employee did so knowing that employee did not hold any authority to bind Company PP to any contract and/or agreement.
Company PP has two directors, and no company resolution was entered into between the directors to sign the aforesaid contract. The Employee was approached by an employee of White Pages and was assured that the form was to update Company PP details and it was a free service with no charge. It is evident that the approach by White Pages was to mislead unwary consumers and once the alleged form signed to be bound by same without just cause.
The tactic implored by White Pages was to appoint debt collectors for example Laflar collections, this modus operandi and scam is an ongoing attempt to extort from unsuspecting companies with false and misleading information.
Due to the above misrepresentation and the authorised personnel being the directors (of Company PP) unawareness of the above form and the misleading sales tactic employed by White Pages, Company PP would not be liable to pay for the alleged outstanding amount. As company PP did not have an intention to contract nor was the employee duly authorised to bind Company PP to such an agreement. The agreement is void ab initio[1] for the reasons aforesaid and which is of no force and effect.
[1] There was no contract from the beginning due to the fraudulent misrepresentation made by one party to the contract and the innocent party acted based on the false representation.
It is common practice for an employee and/or agent on behalf of someone else, either a juristic or natural person to enter into an agreement with another.
Given the nature of a company being a juristic person and having no corporeal existence, and can only act through its individuals namely the agent/s. Such agents are merely acting as a representative of the company and whilst the company is the principal. The agent is regarded as having to represent to the other party that the agent has the necessary authority to enter into the contract and that the principal will be legally bound to the contract.
Our advice to you is to:
- always ensure your employees are to be informative of any possible contracts;
- seek the relevant authority by the company to prevent any possible scams and/or liabilities;
- ensure that you find the authenticity of party you are approached by.
Should you ever receive any form of demand from a questionable debt collector knowing that you were never a party to such contract claimed in the demand, kindly lodge a formal complaint with the Council of Debt Collectors (kindly see the Council Debt Collectors website for further details), as all debtor collectors are to be registered with the aforesaid Council to operate legally.
[1] There was no contract from the beginning due to the fraudulent misrepresentation made by one party to the contract and the innocent party acted based on the false representation.
