JRC/Fall 2010/Fendler/Business Assoc
(c)That he has an independent business in buying and sellingsimilar property.II.Liability of Principal to Third Parties in ContractsA.The Agent’s Authority1.2 Broad Classifications of Power
a.Actual (Real) – arises from the
manifestation of consent
from the principal to theagent (not to a third person) that the agent should act for the principal.(1)Express Authority – actual authority contained within the “four corners”of the agency agreement between the principal and the agent,
,authority expressly granted by the principal to the agent.(2)Implied Authority – An agent’s authority includes not only the authorityexpressly granted by the principal to the agent, but also any authorityimplied by the agent from the words or conduct between the principaland the agent.b.Apparent (Ostensible) – a principal will be bound by his agent’s unauthorized actsif the principal has
manifested to a third party
, through words or conduct,
that theagent has authority
, and the third party
on this manifestation.(1)An agent cannot create apparent authority by his own manifestations.The manifestations must be from the principal to the third party.(Conduct and silence can be a manifestation from the principal).(a)
. If the principal gives the agent express authority totell third parties that he has authority.2.
Mill Street Church of Christ v. Hogan
(Ky. 1990) (
Implied v. Apparent Authority
. Implied authority is actual authority circumstantiallyproven which the principal actually intended the agent to possess and includessuch powers as are practically necessary to carry out the duties actually delegated.Apparent authority on the other hand is not actual authority but is the authoritythe agent is held out by the principal as possessing. It is a matter of appearance onwhich third parties come to rely.(1)
Implied Authority Rule
. In examining whether implied authority exists, itis important to focus upon the agent’s understanding of his authority. Itmust be determined whether the agent reasonably believes because of present or past conduct of the principal that the principal wishes him toact in a certain way or to have certain authority.(a)
Nature of task/job
. The nature of the task or job may beanother factor to consider. Implied authority may be necessaryto implement the express authority.(b)
Prior similar practices
. The existence of prior similar practices isone of the most important factors. Specific conduct by theprincipal in the past permitting the agent to exercise similarpowers is crucial.b.
Burden/Standard of Proof
. The person alleging agency and resulting authority hasthe burden of proving that it exists. Agency cannot be proven by a merestatement, but it can be established by circumstantial evidence including the actsand conduct of the parties such as the continuous course of conduct of the partiescovering a number of successive transactions.c.
. One agent appoints someone else who will also be an agent of theprincipal.(1)When a principal engages an agent to perform a task, the principal has ineffect delegated the task to the agent. If the agent, acting with authority,in turn delegates part of all of that task to an agent of its own, then theThe power to bind is equal. The principal is equally bound whether based on actual or apparent authority.