Three-Seventy Leasing Corporation v. Ampex Corporation case brief

Three-Seventy Leasing Corporation v. Ampex Corporation

                                                              i.     FACTS: Three-Seventy Leasing Corp. executed a document provided by an Ampex Corp. representative for the purchase of computer leasing equipment, but Ampex never executed the document. 

HOLDING:  Ampex representative had apparent authority.

                                                            ii.      Apparent Authority

1.      Generally, Two Steps

a.       Principal must hold out agent as possessing authority.

b.      Third party must reasonably believe agent has authority.

2.      “An agent has apparent authority sufficient to bind the principal when the principal acts in such a manner as would lead a reasonably prudent person to suppose that the agent had the authority he purports to exercise.  Absent knowledge on the part of third parties to the contrary, an agent has the apparent authority to do those things which are usual and proper to the conduct of the business which he is employed to conduct.”

a.       What must be apparent?  A: An agency-type action manifested by a principal.

3.      “Absent knowledge of a limitation of authority by third parties, i.e., an agent’s principal, that limitation will not bar a claim of apparent authority.”

4.      May be shown by course of dealing or custom, e.g., treasurer carries certain recognized duties.

5.      Two Factors Showing Apparent Authority

a.       Kays, Ampex representative, was employed by Ampex as a salesman.

b.      Joyce, lessor of computer equipment, indicated to Kays and Mueller, Kays’ principal, that he wished all communications to be channeled through Kays.

6.      Court focuses a lot on what the agent does that looks like an agent, but it does not focus very much on what the principal does.  It should have focused more on Ampex’s actions in holding Kays out as an agent.

                                                          iii.      Eliminating Apparent Authority – To communicate to third parties that someone is no longer your agent, put out a press release saying, “X is no longer our agent.”  (Think about law firms issuing press releases congratulating former partners on moving onto another position.)

                                                          iv.      Implied Authority

1.      Look at the fact that Kays is an employee of Ampex and then look at what is within the scope of Kays’ employment.

2.      What a third party believes is not as important here unless the third party has knowledge that the agent has no authority.

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