Hello! Today, we'll be examining the case of New Century Financial Services v. Dennegar (2007). We will determine under what theory Dennegar could be liable for the charges brought against him by the acts of his agent. We will address areas of contract law, perform an analysis of theories being applied to the principal-agent relationship, and provide a conclusion.

Dennegar, acting as principal, owned a household and lived with a man named Knutson, who Dennegar permitted to act as his agent; he would open and handle all mail, handle household duties, and sign Dennegar’s name to checks when needed. Prior to Knutson’s passing two years later in mid-2003, Knutson had opened a credit card in Dennegar’s name, using it in part for household expenses, and was routinely making monthly payments in Dennegar’s name as well. With Knutson’s passing, a debt of nearly $15,000 had accrued which was now owed to the debt collector New Century Financial Services (NCFS). Dennegar was charged with breach of contract and debt default.

Dennegar attempted to claim that the trial judge admitted hearsay evidence, unfairly denied additional discovery, and that the credit card contract failed to comply with the Truth in Lending Act (TILA). The appellate court found insufficient merit in such claims, as Dennegar didn’t object to the evidence during the trial, the judge had provided additional discovery though Dennegar didn’t act timely or follow protocol, and that there was no TILA violation. In short, the court agreed that the promises of the agent (Knutson) were legally binding and that the principal (Dennegar) was liable.

“A principal-agent relationship is created when the agent is given authority to act for the principal” (Cornell Law, 2022). The court well established that Knutson was authorized by Dennegar to act on his behalf. The Theory of Liability could apply to Dennegar. This legal framework is the “basis upon which a party can be held responsible or accountable for a particular action or event that has caused harm or damage to another party” (Pusch & Nguyen, 2024). This can include breach of contract. Additional doctrines that could apply would be Promissory Estoppel, and Unjust Enrichment.

Promissory Estoppel is another doctrine pertaining to contract law that can allow the recovery of damages “despite no actual contract, when the defendant made a promise that the plaintiff detrimentally relied upon, and the plaintiff’s reliance on that promise was reasonable” (Cornell Law, 2024). As NCFS couldn’t show that Dennegar entered into a contract (FISHER, J.A.D., n.d.), they had to rely on the promises between agent and principal. This included that Knutson was “authorized to conduct the financial affairs of their household” (FISHER, J.A.D., n.d.). The Knutson-Dennegar arrangement is what NCFS relied on.

Cornell Law. (2022). Breach of contract. Legal Information Institute. https://www.law.cornell.edu/wex/breach_of_contract

Cornell Law. (2022, June). Agency. Legal Information Institute. https://www.law.cornell.edu/wex/agency#:~:text=A%20principal%2Dagent%20rela....

Cornell Law. (2024). Promissory estoppel. Legal Information Institute. https://www.law.cornell.edu/wex/promissory_estoppel

Cornell Law. (2024, June). Unjust enrichment. Legal Information Institute. https://www.law.cornell.edu/wex/unjust_enrichment#:~:text=Unjust%20enrichme....

FISHER, J.A.D. (n.d.). NEW CENTURY FINANCIAL SERVICES INC v. DENNEGAR. Retrieved from http://caselaw.findlaw.com/nj-superior-court-appellate-division/1263011.htm...

Pusch, G., & Nguyen, C. (2024). Theory of liability. Pusch and Nguyen Law Firm. https://puschnguyen.com/glossary/theory-of-liability/#:~:text=The%20theory%....