Exam 29: Relationship With Third Parties

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

Match each statement with the correct term below. -apparent authority

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 raped Belinda,causing severe 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 brutally 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 what the probable outcome of this case would be with regard to the issues of: (a)respondeat superior and (b)general tort liability of principals for the unauthorized acts of their agents.

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

Arthur is authorized to collect accounts for Peter.Peter dies,and there is no notice given to Theresa,who pays Arthur,as she has done in the past.Under the rules of the Third Restatement and the Uniform Durable Power of Attorney Act,if Arthur absconds with the money,Theresa will not have to pay again.

An agent who has either actual or apparent authority has the power to bind his principal.

Apparent authority is not actual authority.

For a ratification to be effective,the principal:

The court in the Schoenberger v.Chicago Transit Authority case held that:

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.

Jack was fired by Bob 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 Bob's product.Sharon agreed to buy 100.Jack tells Bob.What are the legal consequences?

Match each statement with the correct term below. -agency coupled with an interest

Ordinarily,an agent may delegate his duties to an equally qualified subagent.

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.

Constructive notice may occur by publication in a newspaper of general circulation.

Match each statement with the correct term below. -indemnification

Discuss whether the principal is liable in each of the following situations. a.Patricia hires Andrew, an attorney, to negotiate a contract to purchase some property. She agrees to pay him $75 an hour for his services, and he agrees to use his own office and secretarial staff to negotiate and draft the agreement. One day, Andrew is driving his own automobile to a meeting with Edward to discuss the purchase of the land that he owns. Andrew drives too fast for conditions and has a minor traffic accident that results in $600 damage to the other vehicle. b.Mel owns a retail store. He hires Sarah to work for him as a clerk in the home furnishings department. Mel instructs Sarah to make certain representations to customers regarding a microwave oven. Mel knows these misrepresentations are false, but Sarah does not. Henrietta buys a microwave from Sarah in reliance on the misrepresentations. c.ABC Inc. hires Keith as an outside salesman and instructs him to call on customers in a specified territory and to solicit orders for its products. One day Keith is driving the company car a little too fast for conditions on his way to call on a client. He accidentally drives the wrong way on a one-way street and has an accident with another vehicle that results in $6,000 in property damage and $30,000 in medical expenses. d.The A & B Machine Company (ABMC) hires John as an outside salesman for its computers. It sets high sales quotas for him and instructs him to beat up salesmen from competing firms in order to keep them away from ABMC customers. In order to meet his monthly sales quota, John roughs up Ralph, who is a salesman for a competing firm and then tells Ralph to find his own customers and to stay away from John's territory.

The doctrine of __________ is the basis for an employer's liability for an unauthorized tort committed by an employee within the scope of employment.

In the presence of Betty,Ann tells Thomas that Ann is Betty's agent.In reality,Ann has 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.