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Quiz 33 :

Agency Liability and Termination

Quiz 33 :

Agency Liability and Termination

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Undisclosed Principal Homeowners Jim and Lisa Criss hired Kevin and Cathie Pappas, doing business asOutside Creations, to undertake a landscaping project. Kevin signed the parties' contract as "Outside Creations Rep." The Crisses made payments on the contract with checks payable to Kevin, who deposited them in his personal account-there was no Outside Creations account. Later, alleging breach of contract, the Crisses filed a suit in a Georgia state court against the Pappases. The defendants contended that they could not be liable because the contract was not with them personally. They claimed that they were the agents of Forever Green Landscaping and Irrigation, Inc., which had been operating under the name "Outside Creations" at the time of the contract and had since filed for bankruptcy. The Crisses pointed out that the name "Forever Green" was not in the contract. Can the Pappases be liable on this contract? Why or why not? [ Pappas v. Criss , 296 Ga.App. 803, 676 S.E.2d 21 (2009)]
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Case summary: K and C were hired for landscaping project by J and L. They were working under the name of OC. The payments were made by check on the name of K. A suit was filed against K and C for the breach of contract.
Partially disclosed or disclosed principal: In such type of cases, the principal is held liable for the contracts which are taken by the agents on behalf of or on the name of principle.
In this case, the payments made to K and C on behalf of OC were deposited in the personal account of K. The plaintiffs claim that K and C did not disclosed about the principal FGLI for which they were actually working for. Here, K and C disclosed that the principal FGLI is working under the name of OC. Going through the above-mentioned facts it can be concluded that if the plaintiffs were already informed about the principal company for which the agents were working, then the principal would be held liable for the accusations but here, they were not even partly informed about the principal. Thus, in this case, K and C are held liable for the plaintiff's allegations

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QUESTION WITH SAMPLE ANSWER: Unauthorized Acts. Janell Arden is a purchasing agent-employee for the A B Coal Supply partnership. Arden has authority to purchase the coal needed by A B to satisfy the needs of its customers. While Arden is leaving a coal mine from which she has just purchased a large quantity of coal, her car breaks down. She walks into a small roadside grocery store for help. While there, she encounters Will Wilson, who owns 360 acres back in the mountains with all mineral fights. Wilson, in need of cash, offers to sell Arden the property for $1,500 per acre. On inspection of the property, Arden forms the opinion that the subsurface contains valuable coal deposits. Arden contracts to purchase the property for A B Coal Supply, signing the contract "A R Goal Supply, Janell Arden, agent." The closing date is August 1. Arden takes the contract to the partnership. The managing partner is furious, as A B is not in the Property business. Later, just before closing, both Wilson and the partnership learn that the value of the land is at least $15,000 per acre. Discuss the rights of A B and Wilson concerning the land contract.
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Agent's Authority:
In general, a principal and third party are bound only to a contract made by the principal's agent within the scope of the agent's authority. Arden was not acting within the scope of her regular duties when she offered to purchase the land from Wilson, so she did not have implied authority.
Arden did not have express authority to purchase the land on behalf of A B. Further, A B did nothing to lead Wilson to believe that Adams had the authority to purchase his land on their behalf.
Additionally, there was no emergency that would have necessitated the purchase of Wilson's land for A B. Therefore, neither party is bound to the terms of the contract unless A B ratifies the contract before Wilson withdraws the offer to sell.

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Liability for Independent Contractor's Torts Dean Brothers Corp. owns and operates a steel drum manufacturing plant. Lowell Wyden, the plant superintendent, hired Best Security Patrol, Inc. (BSP), a security company, to guard Dean property and "deter thieves and vandals." Some BSP security guards, as Wyden knew, carried firearms. Pete Sidell, a BSP security guard, was not certified as an armed guard but nevertheless brought his gun, in a briefcase, to work. While working at the Dean plant on October 31, 2010, Sidell fired his gun at Tyrone Gaines, in the belief that Gaines was an intruder. The bullet struck and killed Gaines. Gaines's mother filed a lawsuit claiming that her son's death was the result of BSP's negligence, for which Dean was responsible. What is the plaintiff's best argument that Dean is responsible for BSP's actions? What is Dean's best defense? Explain.
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Liability for Independent Contractor's Torts:
The best argument for the plaintiff is under the doctrine of respondeat superior where the employer is liable for the negligent acts or omissions of the employee that are committed within the scope of employment. When one party was acting as an agent or servant of another party, parties' liability is joint and several.
Dean's best defense is under the independent contractor provision for liability. Dean did not have the right to control the details of BSP's performance. It was BSP's responsibility to ensure that their employees were all certified to carry firearms while protecting the site. BSP was negligent in its duty to ensure that their employee Sidell was certified or did not carry a gun to work.
Because the work was not inherently dangerous and BSP was not required under contract to arm their guards, it was not Dean's responsibility to ensure that BSP followed safety regulations. Therefore the liability falls squarely on BSP and Sidell.

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A QUESTION OF ETHICS: Power of Attorney. Warren Davis lived with Renee Brandt in a house that Davis owned in Virginia Beach, Virginia. At Davis's request, attorney Leigh Ansell prepared, and Davis acknowledged, a durable power of attorney appointing Ansell to act as Davis's attorney-in-fact. Ansell was authorized to sign "any … instrument of … deposit" and "any contract… relating to … personal property." Ansell could act "in any circumstances as fully and effectively as I could do as part of my normal, everyday business affairs if acting personally." A few days later, at Davis's direction, Ansell prepared, and Davis signed, a will that gave Brandt the right to occupy, rent-free, the house in which she and Davis lived "so long as she lives in the premises." The will's other chief beneficiaries were Davis's daughters, Sharon Jones and Jody Clark. According to Ansell, Davis intended to "take care of [Brandt] outside of this will" and asked Ansell to designate Brandt the beneficiary "payable on death" (POD) of Davis's $250,000 certificate of deposit (CD), The CD had no other named beneficiary. Less than two months later, Davis died. A suit between Brandt and Davis's daughters ensued in a Virginia state court. [ Jones v. Brandt, 274 Va. 131, 645 S.E.2d 312 (2007)] (a) Should the language in a power of attorney be interpreted broadly or strictly? Why? (b) In this case, did Ansell have the authority under the power of attorney to change the beneficiary of Davis's CD? Explain. (c) Ansell advised Davis by letter that he had complied with the instruction to designate Brandt the beneficiary of the CD. Davis made no objection. Based on these facts, what theory might apply to validate the designation?
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Ratification by Principal Springer was a political candidate running for Congress. He was operating on a tight budget and instructed his campaign staff not to purchase any campaign materials without his explicit authorization. In spite of these instructions, one of his campaign workers ordered Dubychek Printing Co. to print some promotional materials for Springer's campaign. When the printed materials arrived, Springer did not return them but instead used them during his campaign. When Springer failed to pay for the materials, Dubychek sued for recovery of the price. Springer contended that he was not liable on the sales contract because he had not authorized his agent to purchase the printing services. Dubychek argued that the campaign worker was Springer's agent and that the worker had authority to make the printing contract. Additionally, Dubychek claimed that even if the purchase was unauthorized, Springer's use of the materials constituted ratification of his agent's unauthorized purchase. Is Dubychek correct? Explain.
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Respondeat Superior ABC Tire Corp. hires Arnez as a traveling salesperson and assigns him a geographic area and time schedule in which to solicit orders and service customers. Arnez is given a company car to use in covering the territory. One day, Arnez decides to take his personal car to cover part of his territory. It is 11:00 A.M., and Arnez has just finished calling on all customers in the city of Tarrytown. His next appointment is at 2:00 P.M. in the city of Austex, twenty miles down the road. Arnez starts out for Austex, but halfway there he decides to visit a former college roommate who runs a farm ten miles off the main highway. Arnez is enjoying his visit with his former roommate wh?n he realizes that it is 1:45 P.M.and that he will be late for the appointment in Austex. Driving at a high speed down the country road to reach the main highway, Arnez crashes his car into a tractor, severely injuring Thomas, the driver of the tractor. Thomas claims that he can hold ABC Tire Corp. liable for his injuries. Discuss fully ABC's liability in this situation.
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Lynne Meyer, on her way to a business meeting and in a hurry, stopped at a Buy-Mart store for a new pair of nylons to wear to the meeting. There was a long line at one of the checkout counters, but a cashier, Valerie Watts, opened another counter and began loading the cash drawer. Meyer told Watts that she was in a hurry and asked Watts to work faster. Instead, Watts, only slowed her pace. At this point, Meyer hit Watts. It is not clear whether Meyer hit Watts intentionally or, in an attempt to retrieve the nylons, hit her inadvertently. In response, Watts grabbed Meyer by the hair and hit her repeatedly in the back of the head, while Meyer screamed for help. Management personnel separated the two women and questioned them about the incident. Watts was immediately fi red for violating the store's no-fighting policy. Meyer subsequently sued Buy-Mart, alleging that the store was liable for the tort (assault and battery) committed by its employee. Using the information presented in the chapter, answer the following questions. Suppose that when Watts applied for the job at Buy-Mart, she disclosed in her application that she had previously been convicted of felony assault and battery. Nevertheless, Buy-Mart hired Watts as a cashier. How might this fact affect Buy-Mart's liability for Watts's actions? DEBATE THIS: The doctrine of respondeat superior should be modified to make agents solely liable for some of their tortious acts.
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Why should Hoggatt be personally liable if he merely followed the instructions of his employer, SDI, given that the employer is better able financially to pay the judgment and may have insurance that covers the matter?
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Disclosed Principal Mario Sclafani (doing business as Martinucci Desserts USA, Inc.), wanted to place small refrigeration units containing point-of-purchase imported Italian desserts in New York City restaurants. Felix Storch, Inc., makes commercial refrigeration units. Sclafani ordered custom units for $18,000. Felix faxed a credit application to Sclafani. The application was faxed back with Sclafani's business banking information, credit references, and a signature that appeared to be Sclafani's beneath a personal guaranty clause. Felix made and delivered the units. The imported dessert business failed, and the units were not paid for. Felix fi led a suit in a New York state court against Sclafani to collect. Sclafani denied that he had seen the credit application or signed it and testified that he referred all credit questions to "the girls in the office." Among these parties, who is the principal? Who are the agents? Who is liable on the contract? Explain. [Felix Storch, Inc. v. Martinucci Desserts USA, Inc., 924 N.Y.S.2d 308, 30 Misc.3d 1217 (2011)]
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Lynne Meyer, on her way to a business meeting and in a hurry, stopped at a Buy-Mart store for a new pair of nylons to wear to the meeting. There was a long line at one of the checkout counters, but a cashier, Valerie Watts, opened another counter and began loading the cash drawer. Meyer told Watts that she was in a hurry and asked Watts to work faster. Instead, Watts, only slowed her pace. At this point, Meyer hit Watts. It is not clear whether Meyer hit Watts intentionally or, in an attempt to retrieve the nylons, hit her inadvertently. In response, Watts grabbed Meyer by the hair and hit her repeatedly in the back of the head, while Meyer screamed for help. Management personnel separated the two women and questioned them about the incident. Watts was immediately fi red for violating the store's no-fighting policy. Meyer subsequently sued Buy-Mart, alleging that the store was liable for the tort (assault and battery) committed by its employee. Using the information presented in the chapter, answer the following questions. Under what doctrine discussed in this chapter might Buy-Mart be held liable for the tort committed by Watts? DEBATE THIS: The doctrine of respondeat superior should be modified to make agents solely liable for some of their tortious acts.
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CASE PROBLEM WITH SAMPLE ANSWER: Apparent Authority. Lee Dennegar and Mark Knutson lived in Dennegar's house in Raritan, New Jersey. Dennegar paid the mortgage and other household expenses. With Dennegar's consent, Knutson managed their household's financial affairs and the "general office functions concerned with maintaining the house." Dennegar allowed Knutson to handle the mail and "to do with it as he chose." Knutson wrote checks for Dennegar to sign, although Knutson signed Dennegar's name to many of the checks with Dennegar's consent. AT T Universal issued a credit card in Dennegar's name in February 2001. Monthly statements were mailed to Dennegar's house, and payments were sometimes made on those statements. Knutson died in June 2003. The unpaid charges on the card of $14,752.93 were assigned to New Century Financial Services, Inc. New Century filed a suit in a New Jersey state court against Dennegar to collect the unpaid amount. Dennegar claimed that he never applied for or used the card and knew nothing about it. Under what theory could Dennegar be liable for the charges? Explain. [ New Century Financial Services, Inc. v. Dennegar, 394 N.J.Super. 595, 928 A.2d 48 (A.D. 2007)]
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Lynne Meyer, on her way to a business meeting and in a hurry, stopped at a Buy-Mart store for a new pair of nylons to wear to the meeting. There was a long line at one of the checkout counters, but a cashier, Valerie Watts, opened another counter and began loading the cash drawer. Meyer told Watts that she was in a hurry and asked Watts to work faster. Instead, Watts, only slowed her pace. At this point, Meyer hit Watts. It is not clear whether Meyer hit Watts intentionally or, in an attempt to retrieve the nylons, hit her inadvertently. In response, Watts grabbed Meyer by the hair and hit her repeatedly in the back of the head, while Meyer screamed for help. Management personnel separated the two women and questioned them about the incident. Watts was immediately fi red for violating the store's no-fighting policy. Meyer subsequently sued Buy-Mart, alleging that the store was liable for the tort (assault and battery) committed by its employee. Using the information presented in the chapter, answer the following questions. How is Buy-Mart's potential liability affected by whether Watts's behavior constituted an intentional tort or a tort of negligence? DEBATE THIS: The doctrine of respondeat superior should be modified to make agents solely liable for some of their tortious acts.
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Liability Based on Actual or Apparent Authority Summer-all Electric Co. and other subcontractors were hired by National Church Services, Inc. (NCS), which was the general contractor on a construction project for the Church of God at Southaven. As work progressed, payments from NCS to the subcontractors were late and eventually stopped altogether. The church had paid NCS in full for the entire project beforehand, but apparently NCS had mismanaged the project. When payments from NCS stopped, the subcontractors filed mechanic's liens (see page 546 in Chapter 28) for the value of the work they had performed but for which they had not been paid. The subcontractors sued the church, contending that it was liable for the payments because NCS was its agent on the basis of either actual or apparent authority. Was NCS an agent for the church, thereby making the church liable to the subcontractors? Explain your reasoning. [ Summerall Electric Co. v. Church of God at Southaven , 25 So.3d 1090 (App.Miss. 2010)]
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Lynne Meyer, on her way to a business meeting and in a hurry, stopped at a Buy-Mart store for a new pair of nylons to wear to the meeting. There was a long line at one of the checkout counters, but a cashier, Valerie Watts, opened another counter and began loading the cash drawer. Meyer told Watts that she was in a hurry and asked Watts to work faster. Instead, Watts, only slowed her pace. At this point, Meyer hit Watts. It is not clear whether Meyer hit Watts intentionally or, in an attempt to retrieve the nylons, hit her inadvertently. In response, Watts grabbed Meyer by the hair and hit her repeatedly in the back of the head, while Meyer screamed for help. Management personnel separated the two women and questioned them about the incident. Watts was immediately fi red for violating the store's no-fighting policy. Meyer subsequently sued Buy-Mart, alleging that the store was liable for the tort (assault and battery) committed by its employee. Using the information presented in the chapter, answer the following questions. What is the key factor in determining whether Buy-Mart is liable under this doctrine? DEBATE THIS: The doctrine of respondeat superior should be modified to make agents solely liable for some of their tortious acts.
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