Book Opener

Example 12. Shortly after Vince Arbaugh was discharged by PenroseProducts, he visited one of Penrose’s customers. While there,he accepted a payment of $125 that the customer expected himto turn over to Penrose. Penrose had given no notice to the customerthat Vince had been fired. If Vince does not turn the moneyin, Penrose will still have to credit its customer for the paymentbecause Penrose failed to give proper notice of the employee’stermination.The type of notice given to a third party depends on how the formerbusiness relations were carried out. There are three situations toconsider:l When the third party has given credit to the principal through theagent, the third party is entitled to actual notice . Notice by certifiedmail is perhaps the best way to give actual notice, because receipt ofthe notice can be obtained from the post office.l When the third party has never given credit but has done a cashbusiness with the agent, or knows that other persons have dealt withthe principal through the agent, notice by publication in anewspaper is sufficient.l When the third party has never heard of the agency relationship, nonotice of any kind is required. The third party who is dealing with anagent for the first time has a duty to investigate and determine theexact extent of the agent’s authority.Reviewing What You Learned1. How can agency relationships be terminatedby operation of law?2. How can agency relationships be terminatedby the acts of the parties?3. Which individuals are entitled to actualnotice of an agency termination?4. Which individuals are entitled to notice bypublication of an agency termination?Critical Thinking ActivityActual Notice Why is certified mail the bestway to give actual notice of the termination ofan agency relationship?Legal Skills in ActionNotice of Termination Ted has just dischargedDavid, who has served as his agent for fiveyears. Morris, who has often extended creditto Ted through David, and Sophie, who hasdealt with Ted through David on a cash basisonly, have not yet been given notice of thistermination. Write a letter to Ted explainingwhat type of notice he must give to Morrisand Sophie. In both cases, recommend apractical course of action for Ted to pursuein giving notice.Chapter 19: Agency Relationships and Their Termination 427