Delilah, Does Not Return with Wood Pulp, but Brings Back Three Contracts. Acting Within the Scope of Her Authority, She Contracted with Evon, Who Knew Your Identity at the Time; Felipe, Who Knew That Delilah Was Acting

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You run a successful paper mill and send out your three best personnel to secure new wood pulp sources using due diligence and skill. Applying the agency principles outlined in this chapter, answer the following questions. Delilah, does not return with wood pulp, but brings back three contracts. Acting within the scope of her authority, she contracted with Evon, who knew your identity at the time; Felipe, who knew that Delilah was acting on behalf of someone but not whom; and Giorgio, who did not know that Delilah was acting on anyone’s behalf. For which contracts, if any, are you liable? For which contracts, if any, is Delilah liable? Explain. In this scenario, Delilah and I have an agency relationship. An agency relationship is where a principal engages an agent to carry out various duties on his or her behalf. This relationship involves delegating decision making powers to the agent by the principle; hence trust is a fundamental requirement for it to succeed. In this scenario, I’m known as the principal and Delilah is known as the agent. Our agreement is that Delilah will negotiate the contract for wood pulp with the third parties. When determining the liability of the contracts made by the agent, the liability is based on whether or not the identity of the principal was made known to the third party at the time the contract was being negotiated. The contract with Evon is considered a disclosed principal contract which means that the principal whose identity is known by the third party at the time the contract was negotiated. I, as the principal, am the only one that can be held reliable in the disclosed principal contract. The contract that Delilah was negotiating with Felipe is considered a partially disclosed principal which means the identity of the principal was not known at that time but Felipe and Delilah were negotiating the contract on behalf of

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