Expert: Michael Fay - 5/18/2010

Question
Company "Books" which offers magazines etc, long  relationship with another company who supply goods for them. Creditors claiming that Brookes owe £5000, the company is not aware of this debt, hence the employee of that company has been ordering goods for several people, (third party) got nothing to do with "Books" but the creditors are claiming that "Books" are responsible for the debt.
Is the company liable for debts occurred by the employee?

Answer
You used two names:  Books and Brookes and I cannot tell if this is the same or not.  It does not impact the answer, but it does make the question a little more confusing.

The answer to the question cannot be determined by the facts presented here.   One fact to support the company includes the length of the relationship.  If someone new started ordering goods and/or services, then the supplier should have been alerted to the change if indeed it was a long term relationship.  The same would be true if there was a change in the materials being ordered.  (If I had been ordering £50 per week and suddenly I’m ordering £80 per week then there should be some questions; or if I had started ordering different materials – “you haven’t ordered those before” ... same process).  Likewise, if the Brookes/Books company had racked up these charges over a period of months, then the internal audit & review process at the company is at fault for not catching the problem and they are still responsible for the charges.  The contract that the companies have with each other might also outline the nature of responsibilities.

However, the true unknown depends upon the nature of the employment contract.  It is very possible that the employee represented him/her-self as authorized to place these orders, which removes the burden from the supplier and places the burden on the company.  I believe that the Bookes/ Books company has just cause to withhold pay from the employee until they are fully reimbursed, and might well have just cause for prosecuting them for theft.

Unfortunately, I don’t know enough of the situation from what you have presented – but hopefully I have given you a few new ways to look at the problem.

Good luck,
Michael