Exam 20: Relationship With Third Parties

Sam is a sales representative for the INC 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 Sam's supervisor at INC had repeatedly reprimanded him and advised him to drive more cautiously. INC has:

When there was a contract with a previously undisclosed principal, the Third Restatement:

Even though an agent exceeds his express authority, the principal may still be bound.

Under the Second Restatement, except in cases of death or incapacity or where performance of an authorized transaction becomes impossible, actual notice of termination of agency is required to the third party if she is one:

A principal is contractually bound to a third party if the agent acts without any authority but the principal ratifies the contract.

A principal who authorizes his agent to commit a tortious act with respect to the property or person of another is not liable for the injury or loss sustained by that person.

In general, an undisclosed principal and the third party to a contract are contractually bound if the agent acts within the scope of his actual authority in making the contract.

Sunset Properties, Inc. hires William to manage its 48-unit apartment complex. Nothing is said as to expenses. William purchases fuel to heat the apartments and arranges for a repairman to do ordinary maintenance. William will be personally liable for these expenses, because he has no authority to incur them.

The purpose of an agency relationship is to:

Authority that is not found in the express or explicit words of the principal, but that is inferred from the words is known as:

For a ratification to be effective, the principal must:

_{40. An agent acts for a(n) principal when she appears to be acting on her own behalf and the third person with} Whom she is dealing has no knowledge that she is an agent.

Upon the termination of an agency, the agent's actual authority ceases. However, his apparent authority may continue until actual notice of the termination is given to third parties.

Regarding the termination of an agency, the Third Restatement:

The contract liability of the principal may depend upon whether the principal is disclosed, partially disclosed, or undisclosed.

An agent has the power to contractually bind her principal whenever she has actual or apparent authority and acts within her authority.

Jack was fired by Larry but decided to try to win back his job as agent by getting a big new contract. He approached Sharon, a new client, and made a pitch to sell Larry's product. Sharon agreed to buy 100. Jack tells Larry. What are the legal consequences?

Apparent authority can arise where there is an undisclosed principal as well as where the principal is disclosed.

Which of the following is correct under the Second Restatement with regard to actual notice to a third party of the termination of an agent's authority to act on behalf of the principal?

Ratification and adoption of contracts have the same effect; they are both retroactive and both release the purported agent.