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Chapter 39 Third Persons in Agency

Chapter 39 Third Persons in Agency. Twomey, Business Law and the Regulatory Environment (14th Ed.). Liability Issues for Principals, Agents, and Third Parties [39-1]. Agents’ Signatures [39-2]. Liability of Agent to Third Person [39-3]. AUTHORIZED ACTION. Disclosed Principal. Agent

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Chapter 39 Third Persons in Agency

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  1. Chapter 39Third Persons in Agency Twomey, Business Law and the Regulatory Environment (14th Ed.)

  2. Liability Issues for Principals, Agents, and Third Parties [39-1] Chapter 39

  3. Agents’ Signatures[39-2] Chapter 39

  4. Liability of Agent to Third Person [39-3] AUTHORIZED ACTION Disclosed Principal Agent Makes Contract Liable No liability on the contract Third Party UNAUTHORIZED ACTION OR NO PRINCIPAL WITH CAPACITY Liable Third Party Principal Unauthorized Agent No Principal or Principal Without Capacity Third Party Agent Liable Unless all material facts are made known to third party Unless agreement made with third party that agent shall not be liable Chapter 39

  5. Partially Disclosed Principal Agent Makes Contract Liable Third Party Undisclosed Principal Agent Makes Contract Liable Third Party Liability of Agent to Third Person[39-4] (cont’d) Chapter 39

  6. Chapter 39 Summary An agent of a disclosed principal who makes a contract with a third person within the scope of authority has no personal liability on the contract. It is the principal and the third person who may each sue the other in the event of a breach. A person purporting to act as an agent for a principal warrants by implication that there is an existing principal with legal capacity and that the principal has authorized the agent to act. The person acting as an agent is liable for any loss caused the third person for breach of these warranties. Chapter 39

  7. Chapter 39 Summary[2] An agent of a partially disclosed or an undisclosed principal is a party to the contract with the third person. The agent may enforce the contract against the third person and is liable for its breach. To avoid problems of interpretation, an agent should execute a contract “Principal, by Agent.” Agents are liable for harm caused by third persons by their fraudulent, malicious, or negligent acts. Chapter 39

  8. Chapter 39 Summary[3] An undisclosed or a partially disclosed principal is liable to a third person on a simple contract made by an authorized agent. When a third person makes payment to an authorized agent, it is deemed paid to the principal. Chapter 39

  9. Chapter 39 Summary[4] A principal or an employer is vicariously liable under the doctrine of respondeat superior for the torts of an agent or an employee committed within the scope of authority or the course of employment. The principal or the employer may also be liable for some crimes committed in the course of employment. An owner is not liable for torts caused by an independent contractor to third persons or their property unless the work given to the independent contractor is inherently hazardous. Chapter 39

  10. Chapter 39 Summary[5] A salesperson is ordinarily an agent whose authority is limited to soliciting offers (orders) from third persons and transmitting them to the principal. The principal is not bound until he or she accepts the order. The customer may withdraw an offer at any time prior to acceptance. Chapter 39

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