Chat with AIExam 24: Liability of Principals and Agents to Third Parties
Wheelz retained Doug,an attorney,to repossess several utility trailers,giving him the authority to take whatever steps were necessary to recover the trailers.Doug hired Randy RepoMan to locate the equipment.After orally reporting to Doug that he had found the trailers in Iowa,Doug instructed RepoMan to have them towed to Nebraska.RepoMan hired Ted's Towing to carry out the request.Ted's stored the trailers on its lot in Omaha,Nebraska,and RepoMan notified Doug of this fact.When Ted's was not paid,it sued Wheelz for its towing and storage services,arguing that RepoMan was a subagent capable of binding Wheelz to the towing and storage contract.Discuss.
(38) 
VerifiedIt is clear that Doug was an agent of Wheelz who was given actual authority to locate and recover possession of the trailers,and that Doug was not expected to do this alone.An agent may delegate to a subagent the execution of ministerial acts involving no judgment or discretion.Such acts of the subagent are regarded as the acts of the agent who authorizes them,and are binding on the principal.Doug instructed RepoMan to perform ministerial acts and duties as his subagent to arrange for the necessary towing and storage of the trailers.Doug exercised complete control over RepoMan's services after the trailers were located.Thus,Wheelz is liable for these services as if Doug,its agent,had arranged them himself.
After Bart and Veronica were involved in an automobile accident,Bart retained Rhonda as an attorney to negotiate an out-of-court settlement.After a lengthy discussion with Veronica's insurance company,Rhonda settled the case for $5,000.However,Bart personally rejected the $5,000 offer.Veronica filed suit to enforce the settlement,claiming that Rhonda was authorized to accept the settlement on behalf of Bart.Discuss Rhonda's express,implied and apparent authority.
(41) VerifiedExpress authority usually is created by the principal telling his agent what to do in specific terms.Implied authority consists of those powers that the agent reasonably infers are necessary to carry out his express authority.Thus,to determine the existence and scope of express and implied authority,the focus is primarily on the principal and agent.Apparent authority,however,differs both in concept and focus.To determine the existence and scope of apparent authority,the focus is on the principal and the third party.Apparent authority is created by the conduct of the principal which causes a third person reasonably to believe that another has the authority to act for the principal.Rhonda did not have express authority to settle the case because Bart never specifically gave her that power.Further,she did not have implied authority because,as an attorney,Rhonda should have realized that in processing a case in court her authority was limited to procedural matters.She should not have inferred that she had the authority to surrender any of Bart's substantive rights.Finally,Bart did nothing to lead Veronica or her attorney to reasonably believe that Rhonda had the final authority to settle the claim just because she negotiated the settlement.Accordingly,Rhonda had no apparent authority.
Many courts allow a third party to rescind a contract when the person has relied on a misrepresentation by the agent even though the contract contains an exculpatory clause.
(33) VerifiedTrue
Jen is a buyer for Autumn's Iowa health food store.While Jen is in California buying tofu,she finds a solar car for sale for just $3,000.Jen contracts to buy the car for Autumn,who has been looking for a solar car for the past three years.Autumn instructs the seller of the car to ship it.Under these circumstances:
(35) An agent's exercise of apparent authority,in the absence of actual authority,is in violation of the agent's duty to the principal.
(41) Ratification must be expressed and may not be implied from the actions of the agent.
(39) Generally,notice to the agent is notice to the principal if it relates to the business of the agency.
(36) When an agent commits a tort or crime while working for the principal,the agent is personally liable for the consequences of his actions,unless he is acting at the direction of the principal.
(34) An agent does not possess the implied authority to do whatever is reasonably necessary to accomplish the objectives of the agency.
(32) Which of the following statements is true for the principle of respondeat superior?
(32) Liability is imposed on an agent who has exceeded his authority on the basis of an:
(40) A large and well-known corporation wants to acquire a plot of ground for a new plant.To avoid the extra cost,purchases the land through several agents,each purporting to be buying personally.In such cases,the corporation is a(n)______.
(30) Which of the following statements is true for a principal's liability for notice and payments to the agent?
(33) When the principal is negligent in the hiring and/or supervision of the agent,the principal may be liable under:
(43) An agent who commits a criminal act under instruction from her principal is guilty of that crime.
(41) 
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