BUSINESS LAW Twomey Jennings 1 st Ed Twomey
BUSINESS LAW Twomey • Jennings 1 st. Ed. Twomey & Jennings BUSINESS LAW Chapter 36 Third Persons in Agency © 2004 West Legal Studies in Business A Division of Thomson Learning
BUSINESS LAW Twomey • Jennings 1 st. Ed. Disclosed Principal • Agent who makes a contract with a third person within the scope of authority has no personal liability on the contract. • A person purporting to act as an agent for a principal warrants by implication that there is an existing principal with legal capacity and that the principal has authorized the agent to act. – If the person acting as an agent is not authorized, he is liable for any loss caused the third person for breach of these warranties. © 2004 West Legal Studies in Business A Division of Thomson Learning 2
BUSINESS LAW Twomey • Jennings 1 st. Ed. Agent Liability AUTHORIZED ACTION Disclosed Principal Liable Agent Makes Contract No liability on the contract Third Party © 2004 West Legal Studies in Business A Division of Thomson Learning 3
BUSINESS LAW Twomey • Jennings 1 st. Ed. Agent Liability Unauthorized Action Or Principal Without Capacity Principal Unauthorized Action Third Party Liable Principal Without Capacity Agent Third Party Unless all material facts are made known to third party Unless agreement made with third party that agent shall not be liable © 2004 West Legal Studies in Business A Division of Thomson Learning 4
BUSINESS LAW Twomey • Jennings 1 st. Ed. Partially Disclosed Principal • An agent of a partially disclosed or an undisclosed principal is a party to the contract with the third person. The agent may enforce the contract against the third person and is liable for its breach. • To avoid problems of interpretation, an agent should execute a contract “Principal, by Agent. ” • Agents are liable for harm caused to third persons by their fraudulent, malicious, or negligent acts. © 2004 West Legal Studies in Business A Division of Thomson Learning 5
BUSINESS LAW Twomey • Jennings 1 st. Ed. Undisclosed Principal • If third person is not told that a principal exists. • Third Party believes the agent is a principal and is liable on the contract. Burch v Hancock (2001) Was Burch individually liable on the contract? © 2004 West Legal Studies in Business A Division of Thomson Learning 6
BUSINESS LAW Twomey • Jennings 1 st. Ed. Liability of Agent Partially Disclosed Principal Undisclosed Principal Agent Makes Liable Contract Liable Third Party © 2004 West Legal Studies in Business A Division of Thomson Learning Makes Contract Third Party 7
BUSINESS LAW Twomey • Jennings 1 st. Ed. Agents’ Signatures © 2004 West Legal Studies in Business A Division of Thomson Learning 8
BUSINESS LAW Twomey • Jennings 1 st. Ed. Liability of Principal • An undisclosed or a partially disclosed principal is liable to a third person on a simple contract made by an authorized agent. • A principal or an employer is vicariously liable under the doctrine of respondeat superior for the torts (and some crimes) of an agent or an employee committed within the scope of authority or the course of employment. Studebaker v Nettie’s Flower Garden (1992) Was the Defendant within the scope of employment? © 2004 West Legal Studies in Business A Division of Thomson Learning 9
BUSINESS LAW Twomey • Jennings 1 st. Ed. Negligent Hiring • Employer may be liable for employee’s torts because the employer was negligent in the hiring process. • This theory has been used to hold an employer liable for intentional tort. • Employer knew or should have known that the employee was violent or dangerous. Bryant v Livigni (1993) Was the employer negligent in hiring Livigni? © 2004 West Legal Studies in Business A Division of Thomson Learning 10
BUSINESS LAW Twomey • Jennings 1 st. Ed. Liability for Independent Contractor’s Acts • Generally, the employer is not liable for a contractor’s injury to third persons. • Exceptions to immunity. – Work is inherently dangerous. – Owner controls the work of the contractor. Haag v Bongers (1999) Was the contractor under the control of Owner? © 2004 West Legal Studies in Business A Division of Thomson Learning 11
BUSINESS LAW Twomey • Jennings 1 st. Ed. Liability Issues Status of Principal Authority of Agent Liability Fully Disclosed Principal Full Authority Principal Fully Disclosed Principal No Authority Agent Partially Disclosed Principal Full Authority Agent/Principal Undisclosed Principal Full Authority Agent/Principal Partially Disclosed Principal No Authority Agent Undisclosed Principal No Authority Agent © 2004 West Legal Studies in Business A Division of Thomson Learning 12
BUSINESS LAW Twomey • Jennings 1 st. Ed. Sales Agents • A salesperson is ordinarily an agent whose authority is limited to soliciting offers (orders) from third persons and transmitting them to the principal. – The principal is not bound until he or she accepts the order. – The customer may withdraw an offer at any time prior to acceptance. © 2004 West Legal Studies in Business A Division of Thomson Learning 13
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