THE GREAT FOX WATERPARK and Resort, located in the Wisconsin Dells area of Wisconsin, has received an invoice from Lion Distributing of Reisterstown, Maryland. The invoice is for ten cases of pool chemicals delivered to the resort two weeks ago. The invoice states Mr. Mark Bell, the resort’s head lifeguard, ordered the chemicals. The price on the invoice is three times the normal price paid for chemicals of this type (which are normally purchased from a local vendor).

When questioned by the hotel’s accounting office about the purchase, Mr. Bell states that all he recalls is that he was working one day and received a telephone call in which the caller asked for the “right” shipping address for the resort. The confirmation of address was needed, the caller maintained because an office mix-up had resulted in some shipments of products purchased by its customers being misdelivered. Mr. Bell provided the caller with the hotel’s correct shipping address.

Despite the obvious overcharge, the vendor refuses to accept the shipment back, claiming Mr. Bell, as an agent of the resort, had authorized the purchase of the chemicals. The vendor threatens a lawsuit if their invoice is not paid. Upon investigation, it is determined that one of the ten cases of the product has, at this time, already been used.

Assume that Mr.Bell did not ordinarily purchase pool chemicals for the resort. Is the resort responsible for paying the invoice?

Assume that Mr.Bell did in fact ordinarily purchase pool chemicals for the resort. Is the resort then responsible for paying the invoice?

What steps would you suggest that the resort’s owners take to prevent being victimized by potential invoice frauds of this type?