Agency Law: Chapter XXI

Agency Law:
Chapter XXI
Morgan Spray, Michael Wilkinson, Connor Fazzini, Korey Hawkins
● Agency deals with situations in which one person -- the principal-- uses
person -- the agent-- to act on his behalf.
● Sometimes the acts of the agent are attributed
legally to the principal, sometimes not.
● Delineating the conditions under which each is
true are what make up the law of agency
Brief Statement of Principles
There are three broad classes of agent
1. Universal agents hold broad authority to act on behalf of the principal, e.g. they may hold a
power of attorney (also known as a mandate in civil law jurisdictions) or have a
professional relationship, say, as lawyer and client.
2. General agents hold a more limited authority to conduct a series of transactions over a
continuous period of time; and
3. Special agents are authorized to conduct either only a single transaction or a specified
series of transactions over a limited period of time.
Scope of an Agent’s Authority
Express grant of authority
-Communicated directly
-Oral or written
-Power of Attorney (written)
Implied grant of authority
-Flows from express authority – gives power to what’s reasonably necessary
to carry out agent’s duties
-Emergency situations
Agency Law Terms 1
Liquidated Damages
Compensatory Damages
Parties agree on the amount of damages that will be paid to the injured party.
Provide a plaintiff with the monetary amount necessary to replace what was lost, and nothing more.
Consequential Damages
May be limited or excluded entirely where the loss is. Parties to a contract can limit or exclude
consequential damages, provided the limitation is not unconscionable
Exclusive Remedies
If the parties state that a remedy is exclusive, then it is the sole remedy.When circumstances cause
an exclusive remedy to fail in its essential purpose, however, it is no longer exclusive, and the buyer
or lessee may pursue other remedies available under the UCC.
Agency Law Terms 2
Conforming Goods
Goods that conform to the contract description in every way.
Tender of delivery
Occurs when the seller or lessor makes conforming goods available to the buyer or lessee and gives
the buyer or lessee whatever notification is reasonably necessary to enable the buyer or lessee to
take delivery.
Shipment contract
Requires or authorizes the seller to ship goods by a carrier. The contract does not require that the
seller deliver the goods at a particular destination.
Destination contract
The seller agrees to deliver conforming goods to the buyer at a particular destination. The goods
must be tendered at a reasonable hour and held at the buyer's disposal for a reasonable length of
Agency Law Terms 3
The Perfect Tender Rule
Under the common law, the seller was obligated to deliver goods that conformed with the terms of
the contract in every detail.
Exceptions to the Perfect Tender Rule
Exceptions to the per- fect tender rule may be established by agreement. Or, CURE - The UCC does
not specifically define the term cure, but it refers to the right of the seller or lessor to repair, adjust, or
replace defective or non- conforming goods
Commercially Impracticable
A delay in delivery or nondelivery in whole or in part is not a breach if performance has been made
impracticable "by the occurrence of a contingency the nonoccurrence of which was a basic
assumption on which the contract was made."
Agency Law Terms 4
Installment Contract
A single contract that requires or authorizes delivery in two or more separate lots to be accepted and
paid for separately. Buyer or lessee can reject an installment only if the nonconformity substantially
impairs the value of the installment and cannot be cured.
Destruction of Identified Goods
Sometimes, an unexpected event, such as a fire, totally destroys goods through no fault of either
party and before risk passes to the buyer or lessee.
One party has reason to believe the other party will fail to perform.
The Right of Assurance
If one of the parties to a contract has "reasonable grounds" to believe that the other party will not perform as contracted, she or he may in writing "demand adequate assurance of due performance" from
the other party.
Agency Law Terms 5
The Duty of Cooperation
When cooperation is not forthcoming, the other party can suspend his or her own performance
without liability and hold the uncooperative party in breach or proceed to perform the contract in any
reasonable manner.
Right of Inspection
The buyer or lessee has an absolute right to inspect the goods before mak- ing payment. This right
allows the buyer or lessee to verify that the goods tendered or delivered conform to the contract.
After inspection either indication of willingness to take goods or failure to reject.
Notify the seller and identify the defect causing the rejection.
Agency Law Terms 6
Partial Acceptance
If some of the goods delivered do not conform to the contract and the seller or lessor has failed to
cure, the buyer or lessee can make a partial acceptance.
Commercial Unit
Any unit treated by commercial usage as a single whole.
A unit of goods that, by commercial usage, is viewed as a "single whole" for purposes of sale and
that cannot be divided without materially impairing the character of the unit, its market value, or its
Undo the acceptance.
Agency Law: Reloaded
Example of Agency Law
Bob owned a high tech home theater business. One day the store, which had
several suites where the prospective customers could preview the various
screens and projectors, was especially busy. Bob’s sales people were busy,
so he handled the customers himself. Bob recognized Jameel, a customer
he had been working with for several days, pull up to the store. He knew in
order to close a sale, he would have to deal with Jameel personally. Bob
brought in Doris, a new employee to the store, to deal with the customers
while he dealt with Jameel. While Bob was busy, Doris sold a theater
system for half of it’s normal price. Since Bob had clothed Doris in apparent
authority, he had to go through with the sale.
What’s the Verdict?
Jared was shopping for a new car. One morning, while admiring a new
Thunderhawk sedan on a dealers lot, he was approached by Arnold, a
salesperson from the dealership. After considerable negotiations, they
arrived at an agreement for the sale of the car to Jared. However, Jared
said that he wanted to think it overnight. Arnold then wrote down the terms
of the deal that they had agreed upon, including a statement that the deal
was good until 5 PM the next day. He signed the paper and gave it to Jared.
When Jared returned to make the deal, he discovered Arnold had been fired
for speeding in a dealership car.
Is the dealership bound by the terms for the sale of the Thunderhawk?
What’s the Verdict? (cont.)
Yes, Arnold was acting within the scope of his
authority, and he bound the dealership to the
terms of sale through writing. This is an
example of express authority.