w - M ar. 25 Notes Alexandra Moxley C HAPTER 36THIRD-PARTY...

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Mar. 25 Notes Alexandra Moxley
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CHAPTER 36–THIRD-PARTY RELATIONS OF PRINCIPAL AND AGENT 913 -third parties need assurance that the principal will be bound to a contract made by an agent -greater liability for employees b/c principal has more control over them -benefit to employers who hire people to do work for them; risk is they can be responsible for agent’s actions Contract Liability of the Principal 914-917 principal liable for contract made by agent if agent had express, implied or apparent authority to make the contract (not liable if agent does not have authority) if unauthorized agent makes a contract, principal CAN bind herself to a contract by later ratifying the contract (ratification can be expressed or implied-based on principal’s actions) o principal must ratify entire act or contract o ratification is binding even if it is not communicated to third party o ratification cannot be revoked CASE: Work Connection v. Universal Forest Products o Principal must have knowledge of all material facts regarding prior act or contract at time it is ratified o Work connection = temp employment agency providing workers to companies for fee o One of universal’s employee’s was harmed and work had to compensate o They wanted universal to indemnify Universal didn’t know about back of form aka indemnification clause, so the contract was never ratified and they didn’t have to indemnify connection for the worker’s comp they paid injured employee Authority 1. Express – based on words (written or spoken) 2. Implied – do what reasonably assumed principal wants
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a. Includes actions reasonably necessary to carry on agency, b. acts customarily done when conducting that business, and c. Relations between principal and agent Examples of Authority: d. When managing a business i. Contracts for obtaining equip. and supplies ii. Making repairs iii. Employing employees iv. Selling goods or services e. When in control of property i. Contract for repairs and insurance ii. Rent if customary f. Selling goods authority i. Implied authority to make warranties on goods 3. Apparent – third party reasonably believes agent has authority
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This note was uploaded on 04/19/2011 for the course BUS 315 taught by Professor Frank during the Winter '09 term at Indiana.

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w - M ar. 25 Notes Alexandra Moxley C HAPTER 36THIRD-PARTY...

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