Question

A. Mike owns a restaurant and hires Alex to be the evening manager. Mike discovers the restaurant is running low on coffee and tells Alex to go across the street to Terry’s Market to buy some more. As Alex departs, Mike calls Terry to tell him to expect Alex, and to charge the coffee to Mike’s account. Is Mike liable for the amount of the coffee purchase? Under which type of authority?

What if Mike had not called Terry? Would Mike still be required to pay for the coffee?

B. Later that month, Mike is out of town, and Alex is in charge of the restaurant for the evening. Alex notices that ketchup is in short supply, and goes to Terry’s Market and charges $60 worth of ketchup to Mike’s account. Is Mike liable for the amount of the ketchup purchase? Why or why not?

What if Alex had gone to Quinn’s Market instead, where there was no customer relationship? Is Mike still liable for the amount purchased?

What if Alex had purchased $100,000 worth of kitchen equipment without asking Mike? Is Mike liable?

C. Later that year, Mike terminates Alex’s employment. In retaliation, he goes to Terry’s Market and charges $300 worth of groceries to Mike’s account and takes them home. Is Mike liable for these charges? Why or why not?

Answer 1

A) Express Authority : principal expressly authorizes Agent to do a certain thing in Written or oral . Notice to third party not required in such cases.

Mike is liable towards payment of coffee under express authority. Yes, even if Mike had not called Terry , he would have been responsible for payment as Alex is just an agent acting on behalf of Mike.

B) Implied Authority:-   usual duties of the agent

Mike is responsible for purchase of ketchup due to implied authority . If Alex had gone to other market then also Mike would be ultimately responsible for the purchase . (It should be reasonable act ) .

For purchase of kitchen equipment :- When an Agent exceeds the scope of his authority, or has no authority, the Agent is liable on the contract. The Principal will not be liable unless ratification occurs.

C) Agency by estoppel : - The Principal will be liable on any contract the Agent enters into on her behalf as long as one of the four types of authority is present (Express, Implied, Apparent, Ratification). Principal’s conduct gives third party reason to believe the agent has authority; AND Third party relies on that conduct. Mike would be responsible for payment of 300$ of groceries if Terry had no reason to doubt Alex being agent . Ultimately, Mike can sue Alex.