Under what theory could Dennegar be liable for the charges?

Theory??

What is Agent Theory?

• Agency theory is a principle that is used to explain and resolve issues in the relationship between business principals and their agents (Kopp, 2019).

Evidence of Agency Relationship

• Defendant allowed Knutson to manage their household's financial affairs and the “general office functions concerned with maintaining the house
• Defendant admitted during his testimony that he allowed Knutson “to handle all the mail” and “left to [Knutson's] discretion to open [the mail] and to do with it as he chose

Types of Authority

Actual authority

• Actual authority: exists when the agent takes an action on behalf of the principal and he reasonably believes that the principal wants this action taken. Actual authority includes “express” authority, where the principal tells the agent exactly what to do, and “implied” authority, where the agent takes actions reasonably necessary to accomplish the objective of the agency (Law shelf, n.d).

Apparent authority

• Apparent authority: exists when the agent takes actions for the principal with a third party that the third party reasonably believes the agent has the authority to take (Law shelf, n.d.

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Principal's Remedies

• Constructive Trust: Anything an agent obtains by virtue of the agency relationship belongs to the principal; therefore, a principal may sue to recover any benefits retained by the agent.
• Avoidance: In the event that the agent breaches her contract with the principal, the principal may elect to avoid any contract he entered into with the agent (SHSU, 2018).

Principal's Remedies

• Indemnification: To the extent that the agent's breach causes harm to some third party, who then sues the principal, the principal may seek indemnification from the agent (SHSU, 2018)

Undisclosed Principal

• Undisclosed Principal: When neither the fact of agency nor the identity of the principal is disclosed by an agent to the third party at the time a contract is made, the agent is presumed to be acting on his or her own behalf, and will be liable as a party to the contract.

Undisclosed Principal cont

• If, in fact, the agent was authorized to act on behalf of the undisclosed principal, then the principal will also be liable on the contract and subject to indemnification. (Shsu, 2018)

Conclusion

• After review of all the information, Lee Dennegar is liable for the actions of the agent Mark Knutson. Dennegar provided Mark with actual authority to act on his behalf. Because of the undisclosed information to AT&T, payments were being made, which makes Lee liable for "knowing" of this contract.

Reference

• Business Law: The Principal-Agent Relationship. (n.d.). Retrieved from https://lawshelf.com/shortvideoscontentview/business-law-the-principal-agen...
• FISHER, J.A.D. (n.d.). NEW CENTURY FINANCIAL SERVICES INC v. DENNEGAR. Retrieved from http://caselaw.findlaw.com/nj-superior-court-appellate-division/1263011.htm...

Reference

• Implied Authority: actual authority that is. (2018). Retrieved from https://www.shsu.edu/klett/agency et al.htm
• Kopp, C. M. (2020, January 29). Understanding Agency Theory. Retrieved from https://www.investopedia.com/terms/a/agencytheory.asp