Posted: September 9th, 2015

Legal Problem solving.

Abigail is the office manager at Westside Dental, a prominent dental practice operating three dental clinics in Perth’s western suburbs. Abigail and her team of two assistant office managers coordinate activities across the three dental clinics from the head office located on St Georges Tce. In October 2014, during Westside Dental’s board meeting, the company’s directors resolved to expand the practice by establishing a new clinic in Leederville starting 2015. This meant that the company would readjust its budget and reduce all its operating expenses by 20% to cater for the construction project. Following this decision, Westside Dental’s board sent an internal memo to Abigail and her team stipulating that their department’s budget was limited to $2 million per annum until the Leederville project is completed and any expenditure that exceeded the $2 million would require the board’s express approval. In March 2015, Abigail met with Peter, a sales representative for Fimet Inc., a leading manufacturer of dental equipment and accessories. After lengthy negotiations Abigail entered into a contract for Westside Dental to purchase six ‘F1-E dental chairs’ valued at $2.1 million, to be installed in its three clinics. The same contract also included three ‘F1 iOx3 digital dental x-ray machines’ at an additional cost of $400,000. A week after signing the purchase contract Abigail notified Westside Dental’s board of directors about the six ‘F1-E dental chairs’ purchase and their price but failed to mention the details about the three ‘F1 iOx3 digital dental x-ray machines’. After considering the circumstances, the board of directors approves the arrangement. Soon after, the machines are delivered and Fimet Inc. sends Westside Dental the invoice amounting to $2.5 million. Westside Dental’s board is shocked by the discovery and seeks to return all the dental chairs and x-ray machines but Fimet Inc. is adamant that Westside Dental should pay for them as stipulated in the contract signed by Abigail. Using only principles of Agency Law, advice Westside Dental’s board on their legal position.

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