Chapter 36 - Third-party relations of the principal and the agent. When you finish this chapter, you should: Know when an agent has authority to bind a principal to a contract, understand when an agent may be liable on contracts s/he makes for the principal, recognize when an agent’s conduct makes a principal liable for torts committed by the agent. | Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 8 The Agency Relationship Third-Party Relations of the Principal and the Agent Agency Law P A R T Third-Party Relations of the Principal and the Agent P A E T R H C 36 We intend to conduct our business in a way that not only meets but exceeds the expectations of our customers, business partners, shareholders, and creditors, as well as the communities in which we operate and society at large. Akira Mori , President and CEO Mori Trust Co., Ltd. (Japan) Artwork is titled Saruwaka-machi yoru no kei, an 1856 woodcut by Hiroshige Andō, showing a commercial street at night. Learning Objectives Know when an agent has authority to bind a principal to a contract Understand when an agent may be liable on contracts s/he makes for the principal Recognize when an agent’s conduct makes a principal liable for torts committed by the agent An agent’s actual authority may be express (by words) or implied . | Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin 8 The Agency Relationship Third-Party Relations of the Principal and the Agent Agency Law P A R T Third-Party Relations of the Principal and the Agent P A E T R H C 36 We intend to conduct our business in a way that not only meets but exceeds the expectations of our customers, business partners, shareholders, and creditors, as well as the communities in which we operate and society at large. Akira Mori , President and CEO Mori Trust Co., Ltd. (Japan) Artwork is titled Saruwaka-machi yoru no kei, an 1856 woodcut by Hiroshige Andō, showing a commercial street at night. Learning Objectives Know when an agent has authority to bind a principal to a contract Understand when an agent may be liable on contracts s/he makes for the principal Recognize when an agent’s conduct makes a principal liable for torts committed by the agent An agent’s actual authority may be express (by words) or implied (by conduct) Apparent authority arises if communications by principal to third party creates reasonable appearance of authority in the agent See Opp v. Wheaton Van Lines, Inc.: Plaintiff sued Wheaton for damages and the company alleged her ex-husband had actual or apparent authority to limit coverage Actual v. Apparent Authority Hyperlink is to the opinion on the website. Court: “An agent’s authority may be either actual or apparent, and actual authority may be express or implied. Only the words or conduct of the alleged principal, not the alleged agent, establish the actual or apparent authority of an agent. We first note that Mr. Opp never received the express authority to represent Ms. Opp and to limit the carriers’ liability . We next determine whether Mr. Opp had the implied authority to limit the carriers’ liability. An agent has implied authority for the performance or transaction of anything reasonably necessary to effective execution of his express authority. .
