Exam 20: Relationship With Third Parties

The Second Restatement provides that the death of a principal terminates all authority of an agent, including apparent authority, even though no notice is given to third parties.

An employer can be liable for an agent's negligence, but he will never be liable for his intentional torts.

If Carol, acting as agent for Steve, signs a contract, she alone will be personally bound by it:

Arthur, who works for Peter, sees what he thinks is a good deal for Peter. Without asking whether he has authority to negotiate the deal, Arthur enters into a contract on Peter's behalf. Peter says later that he isn't interested. Is Peter liable on the contract? Is Arthur liable on the contract? Explain.

_{38. The doctrine of is the basis for an employer's liability for an unauthorized tort committed by his employee in the} Course of his employment.

Roy is the promoter of a new corporation that has not yet been organized. On behalf of the as-yet unincorporated business, he enters into a three-year lease agreement for office space and personally signs the lease in his own name. The corporation is liable on the contract, because Roy is its agent.

Susan 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?

A person who purports to act as agent for a principal whom both the agent and the third party know to be wholly incompetent is personally liable on a contract entered into with a third person on behalf of such a principal.

Paul is a truck driver who owns his own truck and delivers loads to various companies for nine months out of the year. For the hard winter months Paul goes to Key West to "put his feet in the sand." One evening while delivering a load for Emblem Helicopter Parts Co., Paul got into a "little scuffle" with a rowdy trucker who was giving Nell, a waitress at the DewDrop Inn Cafe, a hard time. Paul knocked out five of "Rowdy's" teeth. Rowdy is suing Paul and Emblem for his injuries. Discuss whether Rowdy will win against Emblem on the issue of: (a) respondeat superior and (b) unauthorized acts of agents.

Apparent authority is actual authority.

Under the Third Restatement, an agent who represents an undisclosed principal is discharged from liability if:

Spoken or written words the principal communicates to the agent create:

Unless otherwise agreed, an agent making a contract for an unidentified principal is not a party to the contract.

Ratification:

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

Southern Furniture Co. hired Chuck to drive a company truck and deliver furniture. Chuck had a spotless driving record and did well on his driving test. Belinda ordered a chair from Southern Furniture Co. and arranged for its delivery on her lunch hour. Belinda was at home when Chuck delivered the chair. After delivering the chair, Chuck brutally assaulted Belinda, causing physical and psychological injuries. Chuck was convicted in the criminal courts. During the trial it was revealed that Chuck had been in a mental institution for the criminally insane for two years because he had assaulted his mother and other women. He also had a lengthy criminal rap sheet involving theft crimes. Belinda sought compensation for her physical and psychological injuries from both Chuck and Southern Furniture Co. in civil court. Discuss the probable outcome of this case with regard to the issues of: (a) respondeat superior and (b) general tort liability of principals for the unauthorized acts of their agents. Respondeat superior-An employer may be liable for the unauthorized torts committed by an employee, even acts that are in flagrant disobedience of the

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

The liability of an employer under the doctrine of respondeat superior is limited to wrongdoing by the employee in the course of his employment.

Ann, in the presence of Betty, tells Thomas that Ann is Betty's agent. In reality, Ann had no authority. Betty hears the statement, but she says nothing. In reliance, Thomas ships goods to Betty on Ann's order. Betty is liable even though no actual authority existed.

Martinez makes a contract with Bowers on behalf of a disclosed principal. If Bowers breaches the contract, ordinarily Martinez has no right of action against Bowers.