Business Law Q&A 5&8

Essentials of Business Law
Chapter 29 – Questions 5 & 8

Q5.
Palmer made a valid contract with Ames under which Ames was to sell Palmer’s goods on commission from January 1 to June 30. Ames made satisfactory sales up to May 15 and was about to close an unusually large order when Palmer suddenly and without notice revoked Ames’s authority to sell. Can Ames continue to sell Palmer’s goods during the unexpired term of her contract?

Once Palmer initiated the revocation of Ames’s authority to sell, Ames no longer had the authority to sell Palmer’s goods, even during the unexpired term of the contract. Although Palmer terminated the agency before the set date of the contract, legally he did not have the right, but he did possess the needed power. Therefore, because the authority of an agent is based upon the consent of the principal, the agency is terminated upon the withdrawal of such consent.

Q8.
Timothy retains Cynthia, an attorney, to bring a lawsuit upon a valid claim against Vincent. Recently enacted legislation has shortened the statute of limitations for this type of legal action. Cynthia fails to make herself aware of this new statute. Consequently, she files the complaint after the statute of limitations has run. As a result, the lawsuit is dismissed. What rights, if any, does Timothy have against Cynthia?

In accordance with the duty of obedience, the agent is required to act in the principal’s affairs only as actually authorized by the principal and to obey all lawful instructions and directions of the principal. In regard to the duty of obedience, the agent is expected to act in a fashion that is only authorized by the principal, and she is to obey all lawful instructions and directions of the principal. The agent has the duty of diligence, and is therefore, expected to act on behalf of the principal using reasonable care and skill in addition to any special skill that she may own. Thus, in reference to the agreement with the principal, an agent has a duty to the principal to act with the care, competence, and diligence. Respectfully, any special skills or knowledge possessed by an agent are circumstances to be taken into account in determining whether the agent acted with due care and diligence. Therefore, Timothy would have judgment in his favor based upon the assumption that a lawyer acting reasonably would have had taken the necessary steps demanded to remain informed of changes such as, the revised statute of limitations.