Saturday, May 17, 2014

Watteau v. Fenwick case brief summary

Watteau v. Fenwick England 1892
 
Facts: Humble had a business at a beer-house called the Victoria Hotel, which he had transferred to defendants, a firm of brewers, some years before the present action. After the transfer of the business, Humble remained as defendants’ manager; but the license was always taken out in Humble’s name. Under an agreement between Humble and defendants, Humble had no authority to buy any goods for the business except bottled ales and mineral waters; all other goods required were to be supplied by the defendants themselves. The plaintiff gave credit to Humble only for goods such as cigars, bovril(used for flavoring), and other articles. Humble was given these goods from plaintiff for use in the Victoria Hotel. This action was brought to recover the price of goods that plaintiff gave to Humble for use in the Victoria Hotel, not knowing that the Victoria Hotel was sold by Humble to defendants.
Issue: Is Humble an agent of defendants thus making defendants liable for the price of goods that plaintiff gave to their agent (Humble) for use at their beer-house, the Victoria?
Holding: Once it is established that the defendant was the real principal, the ordinary doctrine as to principal and agent applies that the principal is liable for all the acts of the agent which are within the authority usually confided to an agent of that character, notwithstanding limitations, as between the principal and the agent, put upon that authority. 
Reasoning:
Actual Authority?
            -No actual authority. Humble has authority to buy ales and mineral waters, but not cigars.
-Apparent Authority?
            -Apparent authority requires that there is some manifestation to the principal; since the plaintiff    did not know that there was a principal there cannot be apparent authority.
-Inherent
            -”Once it is established that the defendant was the real principal...the ordinary doctrine is liable for           all the acts of the agent which are within the authority usually confided to an agent of that     character, notwithstanding limitations, as between the principal and the agent, put upon the           authority.”
                        -If the person interacting with you seems like they have authority and it is reasonable to               believe that they have authority, then we don’t want the principal to rely on technical               arguments to elude liability.
                        -If this was the case, the economy could not function because third parties could not trust                       whether or not the person they are dealing with has the authority to act. 
 
Liability of Undisclosed Principal - Restatement (Third) Agency s. 2.06
“An undisclosed principal is subject to liability to a third party who is justifiably induced to make a detrimental change in position by an agent acting on the principal’s behalf and without actual authority if the principal, having notice of the agent’s conduct and that it might induce others to change their positions, did not take reasonable steps to notify them of the facts.”
-”An undisclosed principal may not rely on instructions given an agent that qualify or reduce the agent’s authority to less than the authority a third party would reasonably believe the agent to have under the same circumstances if the principal had been disclosed.”

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