MC Electric Inc sold circuit boards. Dortmund was the director of sales for MC Electric. His employment contract said he was responsible for managing the sales force of five employees, including promoting sales. Pricing decisions and overall sales strategy were the responsibility of the president.
In October, Dortmund was approached by GB Circuits Co, another supplier of circuit boards which had been asked to quote on a large order from a manufacturer of telephones, A-Tel. GB could not fill all the A-Tel order itself and proposed that MC should submit a quote for what GB could not supply and, if MC were successful, it would pay over 50 percent of its profits on the order to GB as compensation for giving the MC the opportunity to bid and the introduction to A-Tel.
Dortmund agreed to the deal with GB on behalf of MC. Subsequently, MC quoted and supplied 2500 circuit boards to A-Tel which were paid for. MC did not learn about Dortmund’s agreement with GB until after receiving payment from A-Tel.
MC is reluctant to pay the 50 percent commission to GB and it is considering whether there is any legal basis upon which it could be argued that it is NOT OBLIGED to pay the commission.
Which legal rules and principles you have studied in Unit 8 may be involved in answering this question? Explain them and show why they may apply. Which facts given in this scenario are relevant to the legal issue raised, and why? How might they affect the legal position of MC? Do you think that MC might be successful in avoiding payment?
