Essco Geometric v. Harvard Ind. case brief summary

Essco Geometric v. Harvard Ind. (extent of authority)
 

                                                                                  i.            Facts: 2 year exclusive requirements contract entered into between foam producer and purchasing manager; pres of chair manufacturing company refuses to honor the K; supplier sues; prez said mgr had no authority to enter into exclusive K

                                                                                 ii.            Issue: did mgr have some sort of authority to enter into the K?

                                                                               iii.            Held: yes. Enough to go to jury.

a.       Principal argues express limitations defense to implied authority

1.       Internal memos req'd sign off on all purchase orders, and no requisition more than $50 unless department and prez approval

2.       Answer: he didn't violate these memos - there was no purchase order or requisition involved in this K - Diversified's cute argument - K itself doesn't fall under these, what happens afterwards does

3.       Implied actual authority: enter into contract for quality material at low cost complied with WCMP - enough to get to the jury

4.       But Prez never followed through on his powers, never refused to sign off on anything and was easily swayed

b.      In close cases of authority apply hypothetical bargain: who has the cheapest ability to avoid these costs: THE LEAST COST AVOIDER theory (underlying principle); when you formulate the case for the court, try to convince the court that the other party as being the least cost avoider or the one who should bear the loss

c.       Rules:

1.       Actual authority: agent must establish that P has empowered him, either expressly or impliedly, to act on the P's behalf

1.       Express - telling agent what to do or knowingly acquiescing

2.       Implied- power to act in ways reasonably necessary to accomplish the purpose for which express authority was granted; custom and relations

2.       Apparent authority: created by the conduct of the P which causes a 3d person to reasonably believe that the A has the authority to act for the P; even though such authority has not been granted

1.       Express- P tells 3d party that A may act

2.       Prior acts - P allowing A to carry out similar transactions

3.       Position - ordinary course of business in trade