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What kind of authority did he have?What were his limitations?Was the principle disclosed?Is there a question of interpretation?Is the principal bound by the agents statements?Tests 1. An agency is a relationship based on an express or implied agreement by which 1 person, the agent, is authorized to act under the control of or for another, the principle, in negotiating and making contracts with third persons. 2. A general agent is authorized by the P to transact all affairs in connection with a particular kind of business/ trade.
3. The usual method of creating an agency is by express authorization, that is a person is appointed to act for, or on behalf of another. **A majority of states, by statute, require the appointment of an agent to be in writing when the agency is created to acquire/dispose of any interest in land4. An A.
has implied incidental authority to perform any act reasonably necessary to execute the express authority given to the A. **3rd persons should recognize that a contract made with an officer of a private corp. may not be binding unless ratified by the P. 5. When the A, makes know the identity of the P.
and the fact that the A is acting on behalf of that P. , the P is disclosed. 6. To avoid any question of interpretation, an A should execute an instrument by signing the Ps name and either By: or Per: and the agents name7. A P. is bound by a statement made by an A.
while transacting business within the scope of authority. This means that the P cant later contradict the statement of an A and show that it is not true. Application The Alexander Sumner Company is one that buys and sells real estate and has subsidiaries that act as brokers bringing together commercial landlords with businesses that need to rent commercial space. One of those subsidiaries is the Alexander Sumner Industrial Company which is a corporation. James Hanson works as VP for that corporation. As VP Hanson negotiated and made contracts with businesses to rent commercial space, for the AS Company.
He was an agent for the company in many of these situations before, and so he did have the authority as an agent to make arrangements with Ms. Rogers. Now, when the arrangements were being made, Hanson told Ms. Rogers that a current tenant of a building had over 40,000 sq.
ft. of space, of which that tenant only needed 15000 sq ft. He told her that the tenant Bendix Corp. , would be willing to give up its current lease if it could get a sublease for the 15000 sq ft that it needed. Rogers was advised by Hanson to lease the 40,000 ft and sublet 15000 ft of it for 2 years, when her company would probably need the whole space.
He also told her that if at the end of the 2 yr period Allied Aluminum, Rogers company, still did not need the additional 15000 ft. it would be easy to sublet that space to a different tenant at a profit to Rogers company. On November 5, 1998, Ms. Rogers attended a meeting with the intent and purpose of finalizing the lease agreement, however she told Hanson that she would not do so unless someone would guarantee that the 15000 ft of space would be sublet for 2 yrs. At that point, Hanson left the room to make a phone call.
In that period of time he made 2 phone calls. The first call was to the Bendix Corp. but he could not get in touch with anyone in the position to make a decision. He then called his boss, Sumner who he also could not reach.
Knowing that he needed to sign the lease agreement immediatedly or else Rogers would probably sign a lease agreement with someone else, he acted on the authority which had been given to him previously. Mr. Hanson had been working as a general agent for the Sumner Co. because he was authorized by sumner to transact all affairs in connection with his real estate business.
This was shown by Hansons incentive to contact Ms. Rogers about the advertisement she had placed. This general authority was also incidental authority because Hanson was told by sumner just a few days before the meeting that he was sure Hanson would do the necessary work to get the deal done. This translated gave Hanson the authority to perform any act reasonably necessary to execute the express authority given to him as an agent. Hanson acted with the authority that sumner had recently given to him. He typed a letter guaranteeing the sublease, signed it, and gave it to Ms.
Rogers. She, having read the letter, asked Mr. Hanson whom Sumner Company was and was told by Hanson that he worked for Sumner as the broker of this lease. He produced a business card and with his title on it, as VP of ASIC. Ms.
Rogers, having been assured that Mr. Hanson was an agent for ASC and that the company would guarantee the sublease, signed the contract. Ms. Rogers had little reason not to believe Mr. Hansons word.
Not only did he disclose the principle and show his business card, but he reduced any question of interpretation by signing the principles name, writing By, colon, and signing his own name underneath. Mr Bendix never executed the sublease for the 15000 sqare feet and Ms. Rogers company was not able to sublet the space to another party for 6 months despite diligent efforts to do so. She sent a bill for 6 months rent on the 15000 sq ft of the Potvin building to Sumner. Sumner having forgotten about giving Mr.
Hanson the authoritiy to make the agreement, sent Ms. Rogers the bill back. Accompanying the bill in the envelope was a letter that said sumner had no idea about the rental agreement and would not pay the bill. Although Mr.
Sumner claims that he did now know anything about the lease agreement, he is still bound by the statement made by Mr. Hanson, his agent, since he was transacting business within his scope of authority. This means that Mr. Sumner, the principle, cannot later contradict the statement and show that it is not true.
Conclusion In closing, there was undoubtedly a principle agent third party relationship. The principle was disclosed, before the contract was signed and the agent was authorized to perform the act. Therefore, the ASC is responsible for paying the 6 months rent of the sublease, since the company
