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Hello. My name is Tanner Harris and I will be discussing the case of New Century Financial Services Inc vs. Denneger that took place in 2007 in New Jersey.
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Denneger Liability

Published on Jul 26, 2024

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1.

Denneger Liability

Tanner Harris
Hello. My name is Tanner Harris and I will be discussing the case of New Century Financial Services Inc vs. Denneger that took place in 2007 in New Jersey.
2.

Case Overview

  • Mark Knutson was living in Lee Dennegar's home from 1999 - 2003
  • During this time, Knutson was responsible for managing all the household's financial affairs
  • After Knutson passed away in 2003, Denneger discovered credit card debt
  • Denneger claims he never knew this credit card existed
Mark Knutson was living with Lee Denneger in Dennegar's home in New Jersey from 1999 - 2003. During this time, Knutson was responsible for managing all the household's financial affairs. After Knutson's passing in 2003, Denneger discovered unpaid charges on a credit card in his name, totaling over $14,000. However, Denneger claims he never knew this credit card existed, and therefore, believes that he is not liable for the expenses.
3.

Under what theory could Dennegar be liable for the charges?

Theory of Agency
Under what theory could Dennegar be liable for the charges? The answer is: the theory of agency.
4.

What is theory of agency?

When one party is designated to act for another party.
Theory of agency is a concept that explains the relationship between principals and agents. An agency relationship arises when one party is designated to act for, or represent, the other party, for a specific set of decision problems. In the Denneger case, Knutson is the agent because Denneger gave him consent to manage his financials.
5.

How did Denneger give consent to Knutson?

  • Allowed Knutson to manage financials and general office functions
  • Gave Knutson permission to handle all mail, and do what he chooses with the mail
  • Denneger signed checks that Knutson prepared
There are three ways Denneger gave consent to Knutson, and therefore, established that agency relationship. First, Denneger allowed Knutson to manage their financials and general office functions. Second, Denneger gave Knutson permission to handle all mail, and to do what he chooses with that mail. Lastly, Denneger signed checks that Knutson prepared. All of these actions confirmed that Denneger and Knutson are in an agency relationship. And therefore, Knutson has apparent authority.
6.

What is apparent authority?

The power of an agent to make decisions on behalf of the principal.
Apparent authority is the power an agent holds to make decisions and act on behalf of the principal. While Denneger may have not known about the credit card, he did give permission to Knutson to make all the financial decisions. And principals are held liable for the actions of the agent for decisions involving the relevant scope. Specifically, this is true because the charges found on the credit card were the type of charges that Knutson had permission to make for Denneger’s home.
7.

Knutson (the agent) opened the credit card when making financial decisions on behalf of Denneger (the principal). Therefore, Denneger is responsible for the credit card debt.

In conclusion, Knutson (who acted as the agent) opened up the credit card when making financial decisions on behalf of Denneger (who acted as the principal). Therefore, Denneger is responsible for the credit card debt under the theory of agency and apparent authority.
8.

Thank you!

Thank you for listening!
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References:

Apparent Authority (2024). Cornell Law School. Retrieved from: https://www.law.cornell.edu/wex/apparent_authority#:~:text=Typically%2C%20i....

Apparent Authority (2013). The National Public Accountant. Retrieved from: https://www.proquest.com/docview/232353633?accountid=33575&sourcetype=Trade...
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References (cont.):

Chapter Two: Agency (2013). UH Law Center. Retrieved from: https://www.law.uh.edu/assignments/spring2013/30114-first.pdf

New Century Financial Services Inc v. Dennegar (2007). Find Law. Retrieved from: https://caselaw.findlaw.com/court/nj-superior-court-appellate-division/1263...
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References (cont.):

The Economic Theory of Agency: The Principal's Problem (n.d). American Economic Association. Retrieved from: https://www.aeaweb.org/aer/top20/63.2.134-139.pdf

Tanner Harris

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