Question

Anthony is a Vice President and works for Phillip at the company Phillip owns. Anthony sees what he thinks is a good deal for Phillip. Without asking whether he has authority to negotiate the deal, Anthony enters into a contract on Phillip’s behalf. Phillip says later that he isn't interested. Is Phillip liable on the contract? Is Anthony liable on the contract? Explain in detail.

Answer 1

A principal is liable for the acts committed by its agent if he /she has given the agent the authority to do so. This authority can be express ( in writing), implied ( the agent needs to do such tasks as commmitted here, in order to discharge his /her duties and work with authorities given) or apparent ( there is every reason to believe for the third person that the principal has authorised this person to deal, which can be governed by circumstances). Since, there was no express authority, the other two types of authorities come in question. It depends on the past employment relationship between the two parties, and the scope of past decisions taken by the Vice President on different matters. It also depends on the fact whether the principal has asked agent not do take decision on certain matters ( The present case might be one of those items). It also depends on the fact whether the agent was free to represent his /her principal in the matters such as in case, and there was an apparent authority.

If dealing with properties was within scope of employment or was an implied condition for one of the authorities expressly granted to agent, the principal is liable for his / her actions and needs to abide by conract. However, if the agent was expressly denied for doing such transactions or there was someone else responsible for such contracts, agent is liable for his /her own actions of actign without authority.