Law for Business 12th Edition by James Barnes,Terry Dworkin,Eric Richards

Exercise 2

CSX Transportion is in the business of selling out-of-service railcars and parts. Albert Arillotta, of Interstate Demolition and Environmental Corporation (IDEC), sent an e-mail to Len Whitehead Jr. of CSX expressing interest in buying "rail cars as scrap." Arillotta represented himself to be "from interstate demolition and recovery express." The e-mail address from which Arillotta sent this inquiry was [e-mail]. Recovery Express shares offices with IDEC in Boston. CSX prepared and forwarded sales order forms that confirmed a sale to IDEC. Arrillotta then went to CSX's rail yard, disssembled railcars, and transported them away. After delivery, CSX sent invoices for the scrap railcars totaling $115,757.36 addressed to IDEC at its Boston office (shared with Recovery). After a check from Arillotta to CSX purporting to pay the invoices bounced, Whitehead called Nancy Marto of Recovery. Because IDEC had gone out of business, CSX sued Recovery for the purchase price of the railcars. Specifically, CSX asserts that Arillotta represented that he was authorized to act on behalf of Recovery Express. CSX based this belief on the e-mail's domain name-recoveryexpress.com-and representations made by Arillotta in the email. CSX argues that at no time prior to delivery of the rail cars did anyone from Recovery inform Whitehead that Arillotta was not authorized to transact busing on behalf of Recovery. In response, Recovery claims that Arillotta never worked for it. Is recovery liable on the contract under a theory of apparent authority?