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Liability of Agent

Liability of Agent. Effect on Principal. Determined by state law. Problem 147, p. 463. Effect on Agent. Principal = MegaStore , Inc. Agent = Nancy, the bookkeeper authorized to sign notes and checks

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Liability of Agent

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  1. Liability of Agent

  2. Effect on Principal • Determined by state law. • Problem 147, p. 463

  3. Effect on Agent • Principal = MegaStore, Inc. • Agent = Nancy, the bookkeeper authorized to sign notes and checks • Issue = Is Nancy personally liable when she signs notes and checks forMegaStore?

  4. Avoiding personal liability • Agent (Nancy) can avoid personal liability if: • 1. Identify principal (MegaStore, Inc.) on the instrument, and

  5. Avoiding personal liability • Agent (Nancy) can avoid personal liability if: • 1. Identify principal (MegaStore, Inc.) on the instrument, and • 2. Indicate agent (Nancy) is signing for principal (MegaStore, Inc.) for example: Nancy, as agent for MegaStore, Inc. Nancy, bookkeeper.MegaStore, Inc. by Nancy

  6. Liability if not avoided • To HDC • Agent is liable unless HDC on notice that agent not intended to be liable.

  7. Liability if not avoided • To non-HDC • Agent is presumed liable but can show that original parties did not intend agent to be liable.

  8. Special rule for checks • Agent not liable if principal’s name is on the check, even if agent not indicate agency status.

  9. Problems • Problem 148 – p. 464 • Problem 149 – p. 467 • Problem 150 – p. 468

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