1.
I: The issue in this case is to identify what type of authority had the agent.
R: Actual authority depends upon consent that the principal manifests to the agent. It may be either express or implied. In either case, such authority is binding and confers upon the agent both the power and the right to create or affect the principal’s legal relations with third persons. The express authority of an agent, found in the spoken or written words the principal communicates to the agent, is actual authority stated in language directing or instructing the agent to do something specific. Implied authority is not found in express or explicit words of the principal but is inferred from words or conduct that the principal manifests to the agent. When agent has actual authority and the principal is disclosed, the principal is bounded to the third party.
Apparent authority is based upon acts or conduct of the principal that lead a third person to believe that the agent, or supposed agent, has actual authority, upon which belief the third person justifiably relies. By exceeding his actual authority, the agent violates his duty of obedience and is liable to the principal for any loss the principal suffers as a result of the agent’s acting beyond his actual authority. When agent has apparent authority but not actual authority and the principal is disclosed, the agent is liable to the principal and principal is bounded to the third party.
Finally, when agent has no actual or apparent authority, only the agent is liable to the third party.
A: In this case, Kapperman is the disclosed principal, Schladweiler is the agent, and Truck Repair is the third party. The principal, who is an equipment owner and wants to sale his broken road grater for $8,500, authorized the agent to obtain three bids to have the engine repair work. Once he receives the price quotes, the agent has to report them to Kapperman to decide if it is affordable or not.