Question

Wilson Corporation, located in Texas, employed Nick to act as its agent to obtain oil and gas leases. Nick had authority to contact property owners, negotiate a lease for the owner’s mineral rights, and to pay a “reasonable” price for the leases. While negotiating with Brandon in Costa Rica; Brandon indicated that he did not want to sign an oil and gas lease but instead offered to sell his land to Wilson outright at what appeared to be a very good price. Brandon made the offer at 9:00 PM on July 3rd, 2020 and informed Nick that he had 24 hours to accept the offer as he had other interested potential buyers. Due to the holiday weekend Nick was unable to get instructions from Wilson, so Nick accepted Brandon’s offer. Answer the following questions, providing a legal rationale for each answer.

a) Did Nick have implied authority to accept Brandon’s offer? Why or why not?

b) Assuming that Nick did not have actual or implied authority, answer the following questions: 1. What advice would you give Wilson if it wanted to go through with the purchase? Be specific. 2. If Wilson did not want to honor the deal, what argument(s) should Brandon make?

c) Would it make a difference if the agency agreement was oral? d) Would it make a difference if Nick was a minor?

Answer 1

answer-

A- Yes, Nick has implied authority to accept Brandon's offer because Implied authority comes automatically and reasonably incidental which is not express or written but very necessary for an agent to complete transactions on behalf of principal or company. Under contract law, implied authority figures have the ability to make a legally binding contract on behalf of another person or company.

b-In case, Nick have no actual or implied authority -

I would advice Wilson to give an impression to Brandon third party that Nick was acting on his behalf and accepted the offer on company's behalf. This will help Wilson to go through with purchase.

If Wilson did not want to honor the deal then Brandon can make argument of Apparent authority. In this argument, Brandon can argue that Nick had apparent authority which binds the principal based on agent's action.

"Note- Apparent authority refers to a situation where a reasonable third party would understand that an agent had authority to act. This means a principal is bound by the agent's actions, even if the agent had no actual authority, whether express or implied."

c-No it would not make any difference if the agency agreement was oral because many of agency relationship are formed orally. The agreement that are formed either orally or in writing are express in nature so oral agreement is also enforceble.

It also does not matter if Nick was Minor because in agency law, Minors can be an agent act on behalf of principal. The only thing is that they can not be held liable by principal.

If Nick as minor make agreement with Brandon then Wilson is liable not Nick but Nick can make agreement as agent as there is no competency required except mental disability.

"Note- A principal must have contractual capacity but an agent need not. Thus, a minor can be an agent but not a principal. "