Exam 29: Relationship With Third Parties

Under the general rule of the Third Restatement, death of a principal terminates all authority of an agent, including apparent authority, even though no notice is given to third parties.

Which of the following is true with regard to contractual relations between the principal and a third party?

Under the Second Restatement, all third parties that were aware of the apparent authority of the agent must have actual and not constructive notice to terminate the agent's apparent authority.

Sam is George's agent. George decides to fire Sam. Mel is an old customer of George's and he has dealt with Sam for over 20 years. Ellie is a prospective customer that Sam has spoken with on numerous occasions in his capacity as George's agent, and George was aware of the preliminary negotiations. Mel orders goods from Sam after Sam has been fired but Mel has no knowledge of the firing. Later, Sam takes an order from Ellie, who does not know of the firing. Using the rules of the Second Restatement, which of the following statements would apply to this scenario?

Apparent authority may arise by an agent's showing a third party a document from the principal authorizing the agent to enter into such a transaction.

Compare and contrast ratification and adoption of unauthorized contracts.

In the Parlato v. Equitable Life Assurance Society of the United States case, the court held:

Respondeat superior :

Rena employs James, a real estate broker, to find a buyer for her home for a price of at least $125,000. James has the actual implied authority to contract for the sale of Rena's home.

The doctrine of respondeat superior is most often applied in situations involving:

An undisclosed principal may result in which of the following?

a. What is an undisclosed principal? b. What is a partially disclosed principal? c. What liability does an agent have to a third party when the principal is either undisclosed or partially disclosed? d. Dale is asked to be an agent for Phil, but Phil does not wish third parties to know that Dale represents him. In light of your answer to part (c), why would Dale want to be an agent for Phil? Why would Phil wish that third parties not know his identity? Explain.

An agent who makes a contract for a disclosed principal whose contracts are voidable for lack of contractual capacity:

Sam is a sales representative for the Incman Corporation. Sam has a terrible driving record and has had his driver's license revoked, but nevertheless he continues to drive the company car for his job. One day he drives too fast for conditions, goes through a red light, and strikes a pedestrian. The accident happened despite the fact that Sam's supervisor at Incman had repeatedly reprimanded him and advised him to drive more cautiously. Incman:

An agent is not normally liable on a contract he makes with a third party on behalf of a(n):

Edward is hired to manage Fred's business. Which of the following is untrue regarding Edward's authority?

Gerald, an agent, who makes a contract with Adele on behalf of Leon, an unidentified principal, may maintain in Gerald's own name a breach of contract action against Adele.

Sarah is planning to incorporate a new landscaping company, "Evergreen and Growin'." She has held herself out as an agent for Evergreen and has contracted to buy a truck, tools, fertilizer, and seed and also has entered into a lease on behalf of Evergreen for an office. When she fails to get the loan from the bank, she cannot start the business, so she cancels all the contracts. What are the consequences?

The court in Connes v. Molalla Transport System, Inc. found:

An employer may have criminal liability for the acts of an employee.