Hypervama Holdings Ltd runs a food supermarket, called Hypervama Supermarket, in Maseru. It employed Mr Smith as a buying manager of Hypervama. He was specifically told at any time he wished to order goods exceeding R20,000, he must obtain a signed purchase order from the finance director of the company. The finance director is his immediate boss. While the finance director was away overseas and inaccessible, Mr Smith ordered butter worth R100,000 from the Butter Company, because the stock of butter was running low, New Year was approaching and he wanted to avoid the New Year rush. He thought it would certainly impress his boss.The lorry carrying butter broke down on the way and by the time it was repaired, all the butter had melted. After the lorry was repaired, the boxes containing the butter were duly delivered to Hypervama. Mr Smith accepted the delivery and signed the delivery note without examining the contents of the boxes. However, when the boxes were opened, the butter was found to be unfit for human consumption and had to be thrown away.When the finance director came to know that Mr Smith ordered the butter worth R100,000 without his prior authorisation, he refused to pay the Butter Company saying that Mr Smith should pay the amount out of his own pocket.Required:In the context of the law of agency, advise Hypervama and the Butter Company. (10 marks)
