Sunday, September 9, 2012

Learning Agency Law from the Digital Commons

Erich C. Stern, A Problem in the Law of Agency, 4 Marq. L. Rev. 6 (1919) is an excellent starting point for lawyers confronted with secret instructions by which a principal seeks to disclaim authority which it is known that the agent is exercising.

Stern believed:

Liability in both cases should frankly be rested, not upon false
appearances as to the extent of the agent's authority, but upon
the general proposition that when a man appoints an agent to
make a certain class of contracts, the law will not allow him to
limit that authority so as to exclude any of the reasonably necessary,
convenient, or customary ways of executing that authority.
The consequence would be to render it immaterial whether the
third party knows of any attempted limitations upon the authority
or not. The law would then be expressed by changing the above
quotation from Justice Holmes to read as follows: "It is true
that in determining how far authority extends, the question is of
ostensible authority. This illustrates the general rule which governs
a man's responsibility for his acts throughout the law. If
the principal knowingly employs the agent to exercise a certain
power, he ipso facto gives the agent all- those powers which, in
the majority of the same or similar cases, are usually connected
with the power expressly given."