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Ebook Business law - Text and cases (11th edition): Part 2

(BQ) Part 2 ebook "Business law - Text and cases" has contents: Liability to third parties and termination, employment discrimination, sole proprietorships and franchises, partnerships and limited liability partnerships, administrative law, environmental law, personal property and bailments, real property and landlord tenant relationships,.and other contents. | A s discussed in the previous chapter, the law of agency focuses on the special relationship that exists between a principal and an agent—how the relationship is formed and the duties the principal and agent assume once the relationship is established.This chapter deals with another important aspect of agency law— the liability of principals and agents to third parties. We look first at the liability of principals for contracts formed by agents with third parties. Generally, the liability of the principal will depend on whether the agent was authorized to form the contracts. Scope of Agent’s Authority The liability of a principal to third parties with whom an agent contracts depends on whether the agent had the authority to enter into legally binding contracts on the principal’s behalf. An agent’s authority can be either actual (express or implied) or apparent. If an agent contracts outside the scope of his or her authority,the principal may still become liable by ratifying the contract. Express Authority Express authority is authority declared in clear, direct, and definite terms. Express authority can be given orally or in writing. In most states, the equal dignity rule requires that if the contract being executed is or must be in writing, then the agent’s authority must also be in writing. Failure to comply with the equal dignity rule can make a contract voidable at the option of the principal. The law regards the contract at that point as a mere offer. If the principal decides to accept the offer, the acceptance must be ratified, or affirmed, in writing. Assume that Pattberg (the principal) orally asks Austin (the agent) to sell a ranch that Pattberg owns. The second part of the chapter deals with an agent’s liability to third parties in contract and tort, and the principal’s liability to third parties because of an agent’s torts. The chapter concludes with a discussion of how agency relationships are terminated. Austin finds a buyer and signs a sales .