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Principal's Liability For Agent's Contracts Outline

Law Outlines > Agency and Other Unincorporated Businesses Outlines

This is an extract of our Principal's Liability For Agent's Contracts document, which we sell as part of our Agency and Other Unincorporated Businesses Outlines collection written by the top tier of Oklahoma City University School Of Law students.

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PRINCIPAL'S LIABILITY FOR AGENT'S CONTRACTS

Issues here arise when A makes K w/a 3rd Party Rules governing P liability here is different than P liability for A torts.

CONTRACTUAL POWERS OF AGENTS

AUTHORITY:

(1) EXPRESS AUTHORITY King v. Bankerd POA that Bankerd (P) gave to attny-friend King (A) authorizing "convey, grant, bargain, and/or sell" his (P's) property Attny in Fact=POA=Agent Issue: did poa give authority to King (A) to give the property to Bankerd's wife?
Under agency still required be acting on best interests of and OBO of P and giving away his prop is not in those interests. Bankerd obviously didn't intend for the POA to be used to benefit his wife.

(a) Actual Express Authority: The Agents "power" to enter into contracts for and bind Principal Actual authority is created by manifestations of P to the A that he/she has authority to do some act Power-ability of a person to create legal rights & obligations (the power to alter the Principals legal status) Doesn't have to be written, or if is written a formal POA, but has to be express (words spoken)

(b) Actual Implied Authority

(authority really exists)
-Still based on manifestations by the P to the A that he has this authority.
-The agent must have an objectively reasonable belief that this authority exists
-The authority believes has would be necessary or usual to accomplish what express authority is for or reasonable belief of agent to act based on the express authority given

(2) APPARENT AUTHORITY Smith v. Hansen, Hansen & Johnson Emply. Foster (A) worked for Fentron(P) but Fentron says he was not authorized to make the sale to HH&J and so K not binding and so warranties not binding as to Fentron

HH&J argues that Foster created appearance that he did have the authority, ie (apparent authority) Manifestations: (business cards, office/phone, Title-Manager of Manufacturing Services)

Just cause had authority to do some things, doesn't mean authority to do this act. Manifestation to the 3rd party must be manifestations of authority to do the particular act in question.

ELEMENTS: (a) Manifestations have to be made by the P to the 3rd Party (abt this kind of particular K) Any manifestations by the A are irrelevant, unless authorized to make that particular manifestation which would be actual authority (b) The 3rd Party MUST have an objectively reasonable belief in the authority

Sauber v. Northland Insurance Co

An employer can create apparent authority in an agent to a 3rd party simply by allowing an employee to answer the phone Rule: if (a) The business has invited the public to use the phone to transact business with it, (b) The business has permitted an employee to answer the phone; (c) Such person has purported to act for the business w/
authority; and (d) The person calling the place of business had a right to assume that the person permitted to answer the phone had authority to act (reasonably thought had authority) Foley v. Allard Foley invested with a Allard (argued A) and then he bounced with the money, she tried use phone rule cause was during a time when didn't have stock exchange floor and this is how investors did business but didn't actually work for the company
-but no one ever represented to Foley that Allard workd for co.
-He was not an employee so had zero authority so no manifestation conduct
-He did actually answer but got tranfered calls
-Her belief was also otherwise unreasonable (personal check, no risk, etc) Also, the manifestations, if any by P, must have occurred BEFORE the K is made.

"indicia" of authority: if give POA, bus cards, letter w/ sig. to agent/employee then not reasonable for P to assume wouldn't show a 3rd pty.

Gizzi v. Texaco Breaks fail on purchased van/& fixed on van A=Hinman

P=Texaco

T=Gizzi

Transaction in question is the sale of the van

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