REG

REG: Agency Law & Apparent Authority Real Life Example

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Evan Brown has a writeup over on Internet Cases that is a great real life example of Agency Law and a principal being bound to a contract due to the apparent authority of an agent.

Summary:

    • Company A used an independent contractor to negotiate an oil lease with Company B

 

    • Contractor used a Company A email address to negotiate the lease and Company A knew it

 

    • Oil prices dropped

 

    • Company B demanded Company A make good on the deal

 

    • Company A refused – claiming the contractor didn't have Actual Authority

 

    • Company B sued

 

    • Company A lost due to Apparent Authority

 


(The Court) held that a reasonably prudent person would have believed the independent contractor possessed the authority to contract on defendant’s behalf because defendant acted with such a lack of ordinary care as to clothe the independent contractor with indicia of authority.

Among the most important evidence concerning these indicia of authority was the fact that the independent contractor communicated using the email account under defendant’s domain name.

Read more at Internet Cases

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jeff

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