liability on the contract

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jubzr

Business Finance

Description

The Principal’s Liability on the Contract

Crash agrees to have Steve represent him in various transactions as an agent to secure him performance contracts and endorsement deals.

Crash writes a letter to Bob that Steve is his agent. Unbeknownst to Bob, Crash specifically instructed Steve to only make endorsement deals with Bob. However, Steve signs a contract for Crash to attend a birthday party performance.

In all other cases, Steve has express authority to enter into any contract on behalf of Crash. So Steve makes a contract with Jimmy for a performance at a bar. Jimmy knows Steve is an agent, but he doesn’t know who Steve is an agent for.

Finally, Steve makes an endorsement contract with Fred.

Fred has no idea whether Steve is representing anyone.

  • Is Crash liable for any of these contracts?
  • Is Steve liable for any of these contracts?

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Running head: LIABILITY ON THE CONTRACT

The Principal’s Liability on the Contract
Name
Instructor
Course
Date

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LIABILITY ON THE CONTRACT

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Authority is the prime factor in determining whether a principal is liable to the contracts
made by his agents. The question is simple, was the agent authorized to make arrangements on
behalf of the principal and close the deals? In this case, crash agrees with Steve to be his agent
and secure him performance and endorsement deals. The principal is liable to these contracts
mentioned herein. The principal is responsible for the contract made between Steve and Bob. In
their agreement between Crash and Steve, Steve would search for both performance and
endor...


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