Book Opener

If a corporation’s appointed agent leaves the state, the secretary of stateautomatically becomes its statutory agent for service of process. Thestate has a special interest to protect in these cases: It wants to make certainthat its citizens have a way to sue a corporation that has injured them.By RatificationAt times a person may act as an agent without the authority, or anagent who has the authority to negotiate one type of contract overstepsthat authority and negotiates another type of contract. Ratificationoccurs if the principal, with full knowledge of the facts, accepts the benefitsof the unauthorized act. The act is thereby approved or ratified. Aprincipal’s failure or refusal to ratify the unauthorized act makes thewould-be agent or the agent who has overstepped his or her authorityliable to the third party.Example 14. In The Opening Scene, Caterina was not Mr. Pellis’sagent nor was she an agent of his newspaper when she tookmoney from Mrs. Tui to pay for advertising. However, Mr. Pellisis bound by this transaction because he ratified the agreementbetween Caterina and Mrs. Tui when he accepted Mrs. Tui’smoney from Caterina.Reviewing What You Learned1. How are most agency relationships created?2. How are agency relationships created byoperation of law?3. What is the difference between a generalagent and a special agent?4. What are the differences among a subagent,a coagent, and an agent’s agent?Critical Thinking ActivityTypes of Agents Why is it important to be ableto distinguish between a general agent and aspecial agent?Legal Skills in ActionApparent Authority Tony believes that Sara isa salesperson working in the appliance departmentat the Alomar Brothers Department Store.It turns out that she is actually a disgruntledformer employee who is now impersonating asalesperson. Tony gives Sara $100 as a downpayment for a new DVD player, and she runsoff with the money. Write a paragraph thatexplains whether the Alomar Brothers DepartmentStore will be compelled to return the$100 to Tony.Chapter 18: Creation of an Agency 407