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(solution) Chapter 37 Agency Questions 4, 5, 11, 13 4. Ken Jones, the

Chapter 37


Questions 4, 5, 11, 13

4. Ken Jones, the number-one-ranked prizefighter in his weight class, signed a two-year contract with Howard Stayword. The contract obligated Stayword to represent and promote Jones in all business and professional matters, including the arrangement of fights. For these services, Jones was to pay Stayword 10 percent of gross earnings. After a year, when Stayword proved unsuccessful in arranging a title match with the champion, Jones fired Stayword. During the following year, Jones earned $4 million. Stayword sued Jones for $400,000. Jones defended himself on the basis that a principal has the absolute power at any time to terminate an agency relationship by discharging the agent, so he was not liable to Stayword. Was Jones correct?

5. Paul Strich did business as an optician in Duluth, Minnesota. Paul used only the products of the Plymouth Optical Co., a national manufacturer of optical products and supplies with numerous retail outlets and some franchise arrangements in areas other than Duluth. To increase business, Paul renovated his office and changed the sign on it to read ?Plymouth Optical Co.? Paul did business this way for more than three years advertised under the name, paid bills with checks bearing the name of Plymouth Optical Company., and listed himself in the telephone and city directories by that name. Plymouth immediately became aware of what Paul was doing. However, because Paul used only Plymouth products and Plymouth did not have a franchise in Duluth, it saw no advantage at that time in prohibiting Paul from using the name and losing him as a customer. Paul contracted with the Duluth Tribune for advertising, making the contract in the name of Plymouth Optical Co. When the advertising bill was not paid, the Duluth Tribune sued Plymouth Optical Co. for payment. Plymouth`s defense was that it never authorized Paul to do business under the name, nor authorized him to make a contract with the newspaper. Decide.

11. Martha Christiansen owns woman`s apparel stores bearing her name in New Seabury, Massachusetts; Lake Placid, New York; Palm Beach, Florida; and Palm Springs, California. At a meeting with her four store managers, she discussed styles she thought appropriate for the forthcoming season, advised them as always to use their best judgement in the goods they purchased for each of their respective stores, and cautioned ?but no blue jeans.? Later, Jane Farley, the manager of the Lake Placid store, purchased a line of high-quality blue denim outfits (designer jeans with jacket and vest options) from Women`s West Wear, Inc., for the summer season. The outfits did not sell. Martha refused to pay for them, contending that she had told all of her managers ?no blue jeans? and that if it came to a lawsuit, she would fly in three managers to testify that Jane Farley had absolutely no authority to purchase denim outfits and was, in fact, expressly forbidden to do so. Women`s Wear sued Martha, and the three managers testified for her. Is the fact that Martha had explicitly forbidden Farley to purchase the outfits in question sufficient to protect her from liability for the purchases made by Farley?

13. Barbara Fox was the agent of Burt Hollander, a well-known athlete. She discovered that Tom Lanceford owned a 1957 Chevrolet convertible, which had been stored in a garage for the past 15 years. After demonstrating to Lanceford that she was the authorized agent of Hollander, she made a contract with Lanceford on behalf of Hollander to purchase the Chevrolet. Lanceford later discovered that the car was much more valuable than he originally believed, and he refused to deliver the car to Fox. Fox sued Lanceford for breach of contract. Can she recover?


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