Week 4 Individual Assignment: Dennegar Liability Presentation using Haiku Deck
Morganna Passano
Cambridge College
MBA 530 – Legal and Ethical Dimensions of Strategic Management
Professor William J. Aquilino, JD, MBA, MHR, SPHR, SHRM-SCP


Good Afternoon, My name is Morganna Passano and in this presentation, we are going to examine the case of Dennegar and Knutson and where liability will fall.

This presentation will answer the following question: Under what theory could Dennegar be held liable?

Defendant, Lee Dennegar, is held liable for a credit card debt despite knowing he had ever applied for or used the credit card.

The defendant lived with Mark Knutson from 1999 to 2003. The defendant allowed Knutson to manage his household financial affairs using the defendant's funds in that time frame until Mark Knutson passed away (Fisher, n.d.).

When Mark Knutson passed away, the defendant learned that Knutson incurred obligations in his name of which he was previously unaware. This obligation resulted in over $14,000 worth of charges on a credit card to AT&T opened in 2001 (Fisher, n.d.).

Therefore, AT&T's finance company, New Century Financial Services, Inc., is trying to hold the defendant, Lee Dennegar, liable for the accrued debt that is still pending payment on the account.

Under what theory could Dennegar be liable for the charges?

The answer is the Theory of Agency Law.

Agency law enables principals to act through agents; it also ensures that principals using agents do not thereby escape liability or other consequences of their choices. The foundational principle of agency law is that the principal, who has chosen to conduct her business through an agent, must bear the foreseeable consequences created by that choice (Dalley, 2010). Agency theory studies the problems and solutions linked to a delegation of tasks from principals to agents (Linder&Foss,2015)

In this case, Dennegar was the principal, and Knutson was considered the agent. They didn't have this agreement in writing but it was done verbally. This oral agreement is considered an implied agency. An implied agency may arise where the principal places the purported agent in circumstances where it is understood that the agent represents and acts for the principal (Harris,2005).

Lee Dennegar allowed Mark Knutson to manage the household's financial affairs. This allotted for Knutson to be in a position of authority that he could potentially abuse.

Fiduciary duty originates in trust. A fiduciary relationship requires the fiduciary to act with loyalty towards the beneficiary, even if the meaning of loyalty in fiduciary law is a matter of some dispute (Smith, 2020). In this case, Dennegar is the beneficiary supplying Knutson with complete trust and loyalty.

Dennegar gave Knutson consent to:
1. Manage mortgage payments and other household expenses to maintain the home.
2. To obtain all mail and do with it as he chooses.
3. Write out checks for Dennegar to sign and know Knutson signed his name to many of the checks.

An agent acts with apparent authority when they transact without the express authority of the principal, but the third party has a reasonable basis for assuming the agent has authority (Barnes&Oldham, 2019).

Knutson transacted without Dennegar knowing. Knutson was acting under apparent authority in this situation with AT&T. AT&T knew the cardholder was Dennegar and assumed he was solely using the credit card. AT&T was unaware of who signed up for the card or who was using it. Dennegar acknowledged some of the charges that he authorized Knutson to make, and New Century Financial Services, Inc. was able to reveal that payments were periodically made to the credit card.

In conclusion, under agency law, fiduciary relationship, and apparent authority, Lee Dennegar can be held liable for the charges made on the credit card. Lee Dennegar should have overseen what Mark Knutson was doing with his funds, especially with allowing him to open mail that wasn't in Mark's name. Although Lee Dennegar gave Mark Knutson the authority to handle all mail, Dennegar did not notice that he was receiving monthly statements for a credit card that he didn't know he signed up for.

The courts stated Lee Dennegar is accountable for putting the agent, Mark Knutson, with the authority to incur debt on his behalf. Even though Knutson may have deceived Dennegar, he must bear the burden of debt (Fisher, n.d.).

Barnes, V., & Oldham, J. (2019). The Legal Foundations of Apparent Authority. Journal of Corporation Law, 44(4), 649–664.

Dalley, P. J. (2010). A theory of agency law. U. Pitt. L. Rev., 72, 495.

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...


Harris, J. (2005). Lifting the corporate veil on the basis of an implied agency: A re-evaluation of Smith, Stone and Knight. Company and Securities Law Journal, 23.

Linder, S., & Foss, N. J. (2015). Agency Theory. In J. D. Wright (Ed.), International Encyclopedia of the Social & Behavioral Sciences (2. ed., Vol. 1, pp. 344-350). Elsevier. https://doi.org/10.1016/B978-0-08-097086-8.73038-8


Smith, L. (2020). Parenthood is a fiduciary relationship. University of Toronto Law Journal, 70(4), 395–452. https://doi.org/10.3138/utlj.2017-0098