You work for me: Law of Agency
In this case scenario, there exists an agency relationship between Sarah and her employer, Fine Arts Gallery. The agency relationship is said to exist where one person (the agent) is authorized to act on behalf of another (the principal) and create a legally binding relationship with a third party (HG.org, 2017). In this case scenario, Sarah is the agent acting on behalf of Fine Arts Gallery which is the principal. The agency relationship may come into existence by express appointment by the principal, implied appointment by principal, ratification, necessity, and application of the doctrine of estoppels (HG.org, 2017). In this case, Fine Arts Gallery as the principal, hired Sarah as its employee thereby entering into an agency relationship with her by express appointment. This is further cemented by the action of sending Sarah to an auction to bid on its behalf. The existence of this type of relationship implies that any contract that Sarah enters with a third party at the auction will be legally binding to Fine Arts Gallery (the principal).
In this case scenario, Sarah failed to adhere to the instructions given on the exact tapestry to bid for at the auction. She purchases a Dufy Tapestry at $77,000. Fine Arts Gallery refused to pay for the item citing the reason that it was not the exact they had instructed Sarah to buy. Fine Art Gallery can make present the best argument by stating that they provided the conditions under which Sarah was to act as its agent. This was specifically linked to purchase of the specified item. The actions of Sarah of purchasing a different tapestry was beyond the scope defined by the principal.
Christie, the auctioneer, is demanding payment from Fine Arts Gallery for the Duffy Tapestry purchased by Sarah. Christie can lay down the argument that Sarah was in the auction as a representative of Fine Art Gallery. This means that any contract that Sarah entered into with a third party would be legally binding to the Fine Arts Gallery. The act of Fine Arts Gallery sending Sarah to the auction is an indication of express appointment of Sarah to act as a representative of the gallery. This makes Fine Art Gallery liable to make the payments of the purchase made by Sarah who at the time of making the contract was doing it as its representative.
As the judge in this suit, my ruling would be to compel Fine Art Gallery to make the payment for the tapestry purchased by Sarah. In making this ruling, the first step is to determine whether there existed an agency relationship between Fine Art Gallery and Sarah. In this case, Sarah works for Fine Art Gallery which implies that her action will be binding to the principal. For the auction, Fine Art Gallery explicitly authorized Sarah to go and act on its behalf. This supports the existence of agency relationship between Sarah and the Gallery which makes Fine Art Gallery liable for her action. The next consideration is to determine whether Sarah acted within the scope of her engagement as an agent. The scope of the agency relationship required Sarah to go to the Auction and purchase the tapestry. Her actions were within this scope thereby making the gallery liable to make the payments (DeMott, 2016).
In this lawsuit, Sarah’s role is critical as the case surrounds her actions and determining whether she was acting as an agent of Fine Arts Gallery. As an agent, Sarah cannot be individually liable to Christie as she entered into the purchasing contract as a representative of Fine Art Gallery. She may be liable to the Gallery for her failure to uphold her fiduciary duty as instructed.
DeMott, D. (2016). Defining Agency and its Scope. Duke University.
HG.org. (2017). Agent Law. Retrieved from https://www.hg.org/agency-law.html
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