Dennegar's  Liability

Under what theory could Dennegar be liable for the charges?

The laws of agency
This is the main theory regarding Dennegar's liability - the question we should ask is: Was Knutson legally acting as an agent for Dennegar?

Knutson is "apparently authoritative"

• To prove Knutson was an acting agent for Dennegar, therefore holding Dennegar liable for the debt, we will evaluate Knutson as acting under apparent authority for Dennegar. Furthermore, " no written permission or official agreement was present between Knutson and Dennegar" (Fisher, n.d.)

Acting as "apparent authority"

• The legal definition for apparent authority under agency law is the following: " An agent's power to act on behalf of a principal, even though not expressively or implicitly granted" (Cornell.edu)

Apparent authority

• Authority is not necessarily explicitly covered, but implied ( cornell.edu) and it protects third parties from losing money on transactions made under the idea of "implied" authority (Cornell.edu)

To prove Apparent authority

• To successfully prove apparent authority, the third party must show that it reasonably believed the agent to have authority to act on behalf of the principal (Fabunmi, 1980).

Third party relationship

• Furthermore, in a court case the third party relationship is the key concept that can prove apparent authority. The third party is most affected by the outcome of the case, and most be able to prove that to the court. Moreover, in order to prove this it must demonstrate that the case satisfied the major factors of apparent authority.

in this case..

• All factors that prove the apparent authority status have been satisfied, proving that Knutson was acting under apparent authority holding Dennegar liable for the charges
• let's take a look...

Major factor #1:

• Reasonable conclusion of apparent authority: this is the first factor that proves Dennegar's liability; the third party must believe the agent's authority and this belief must be reasonable (Conant, 1968)

Reasonable belief

• Knutson often wrote checks for Dennegar to sign and oftentimes, Knutson signed Dennegar's name with his consent. In this case, New Century Financial Services was reasonable in assuming that the actions made by Knutson were under contract of agency with Dennegar, specifically under apparent authority (Fisher, n.d.).

Major factor #2:

• Reliance of the third party: the second major factor that proves apparent authority in court is the "third party reliance" on the manifestation of the principal

Reliance of the third party: NCFS

• The reliance of the third party in Dennegar's case is obvious, the size of the unpaid bills are a fact, it is reasonable to conclude that New Century Financial Services (NCFS) is reliant of the amount beyond $14K. The court should base its decision on this factor and conclude in favor of New Century Financial Services ( Fisher, n.d.).

Major factor #3:

• Negligence and apparent authority: In most cases where a plaintiff has succeeded in establishing apparent authority, the third party was able to establish some type of negligence by the principal (Britcher & Brown,2008).

Negligence on Dennegar's side

• In this case there was negligence on Dennegar's side. By unofficially authorizing Knutson to act as an agent, Dennegar was highly negligent in managing his funds. Dennegar, blindly signed checks written by Knutson. Moreover, Dennegar provided him the consent to write checks in his name. Payments were made only occasionally, and multiple times leaving bills unpaid; proving further negligence by Dennegar in approving Knutson as acting agent.

Conclusion..

• Dennegar should have kept better control of his finances, and also the terms of agency should have been clearly defined. He should have not given full blank control of his finances without keeping things on check. Because of his negligence now he is being held responsible for charges he didn't even knew about.

References

• Apparently Authority (n.d.) Law Cornell. Retrieved from: https://www.law.cornell.edu/wex/apparent_authority
• Britcher, E. & Brown, A. (2008). The 'Doctrine of Apparent Authority' in Medical Malpractice Cases. Retrieved from:https://www.law.com/njlawjournal/almID/1202425457234/
• Conant, M. (1968). Objective Theory of Agency: Apparent Authority and the Estoppel of Apparent Ownership. University of California Berkeley Haas School of Business. Retrieved from: https://digitalcommons.unl.edu/cgi/viewcontent.cgi?article=2532&context=nlr
• Fabunmi, J.O. (1980).The Scope Of Agents Authority and Power. Retrieved from: https://www.jstor.org/stable/43950704?seq=1#page_scan_tab_content
• Fisher, J.A.D. (n.d.). New Century Financial Services Inc. v Dennegar. Retrieved from: http://caselaw.findlaw.com/nj-superior-court-appella

Thank you