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.
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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