Question

Consider the following hypothetical: Jamie worked as a buyer for Desserts, Inc. Coco offered to sell Jamie 6 tons of chocolate chips for the account of Desserts. Jamie accepted the offer. Later, Jamie discovered that Coco was an agent for Hershey Co.

Answer the following questions: Who is liable on this contract? Identify at least two types of contractual authority an agent may have and provide an example of each.

Answer 1

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Who is liable on this contract?

Since COCO is an agent for Hershey Co. and also this fact was known to Jamie even at a later point of time. ALl the actions done by an agent will bind the principal also. So Hershey Co. is also responsible and liable for the performance of this contract.

Identify at least two types of contractual authority an agent may have and provide an example of each.

1 - Actual authority includes express authority and implied authority (not to be confused with implied appointment, that is, appointment by estoppel). Express authority is the authority which the principal has expressly given to the agent whether orally or in writing. Implied authority (sometimes described as usual authority) is the authority of an agent to do acts which are reasonably incidental to and necessary for the effective performance of his duties. The content of implied authority depends on the facts of each case and is sometimes determined by the usages and customs of a trade, business or profession.

2 - Apparent or ostensible authority - An agent is said to have apparent or ostensible (not actual) authority if - The principal has made a representation (whether by words or conduct) to the third party to the effect that the agent has the authority to act for him although the agent does not in fact have such authority ; The third party has in fact relied on such representation to deal with the agent; and The third party has altered his position resulting from such reliance, for example, assuming obligations under a contract with the agent.

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