Dennegar Liability by Rebecca Dambach

1 of 10

Slide Notes

Good Morning, My name is Rebecca Dambach and in this presentation, we are going to examine the case of Dennegar and Knuston and where liability will fall based on a case for MBA 530 - Legal and Ethical Dimensions of Strategic Management.

Dennegar Liability

Published on Feb 01, 2021

No Description

View Outline

PRESENTATION OUTLINE

Dennegar Liability

By Rebecca Dambach - MBA 530 Legal and Ethical Dimensions of Strategic Management

Photo by Kimberly Farmer

Agenda

Overview of the case
Agency Theory
Agency Relationship
Apparant Authority
Conclusion
References

This presentation will answer the following question: Under what theory could Dennegar be held liable?

Photo by Hope House Press - Leather Diary Studio

Overview

Dennegar & Knutson
Analyze Authority given by Dennegar to Knutson
In the wake of Knutsons untimley death, is Dennegar liable for debt created by Knutson.

Dennegar and Knutson lived together and with Dennegar's permission, Knutson took care of all of the finances for the house, as well as collecting all of their mail (Fisher, n.d.).

Dennegar even allowed Knutson to sign his name on many household expense checks.

In 2001 AT&T issued Dennegar a credit card. In 2003 Knutson died and Dennegar was notified of a credit card in his name with a balance of $14,752.93 (Fisher, n.d.).

AT&T's finance company - New Century Financial Services Inc. is trying to hold Dennegar liable for the credit card debt.

Photo by SunCon Photos

Overview

New Century Financial Services Inc. v. Dennegar
Can New Century Financial Services Inc. hold Dennegar Liable?

New Century Financial Services Inc. is trying to hold Dennegar liable for a large amount of credit card debt that was accumulated without his permission.

Previously Dennegar gave Knutson permission to overlook his finances, including signing checks for him.

At no point did Dennegar give permission to Knutson to open a credit card in his name. Additionally, no physical contract or paperwork was ever filed to outline the extent Dennegar was allowing Knutson to have to his finances.

Photo by Scott Graham

Is Dennegar Liable?

Normally if someone opens a credit card in your name without your knowledge you would only be liable for up to $50.00.

Generally, if someone opens a credit card in your name without your permission you are only liable for up to $50.00. This is considered identity theft and you would need to report this to the credit card provider and the credit bureaus.

Since Dennegar gave Knutson rights to oversee his finances this raises the question of if Dennegar is liable for the debt that Knutson has accumulated in Dennegars name now that Knutson is deceased.

There is a theory that could be used to hold Dennegar liable. That theory is agency theory.

Photo by Sean MacEntee

Agency Theory

Agency theory is the relationship between a principal (Dennegar) and an Agent (Knutson)
Agency theory examines problems with inconsistencies between principals and agents (Linder & Foss, 2015).

Agency theory is a relationship between a principal and an agent.

Agency theory examines problems with inconsistencies between principals and agents (Linder & Foss, 2015). In most cases, a principal will hire an agent to do things for a company (Finance Management, 2019). For example, a bank (principal) may hire a cleaning service (agent) to perform certain cleaning duties.

This case is not far off, other than no payment was given to Knutson for taking care of Dennegar's finances.

Under Agency theory there is something known as agency relationship.

Photo by Daniel Ari Friedman

Agency Relationship

An agency relationship is a fiduciary relationship that can be made through a written or verbal contract (Legal Shelf, 2020).

An agency relationship is a fiduciary relationship that can be made through a written or verbal contract (Legal Shelf, 2020).

In this situation, Dennegar gave consent to Knutson to:
1. Manage household finances.
2. Manage other functions related to maintenance of the house.
3. To obtain all mail and "do with it what he chooses".
4. Write out checks on behalf of Dennegar.
5. Sign checks for Dennegar.

These are all under actual authority given by Dennegar to Knutson. Deneggar gives "express authority" for Knutson to do the listed things. Then Knutson does these things on a daily/weekly basis under "implied authority"

Since Dennegar gave consent to Knutson to do all of these things, it can be said that Dennegar and Knutson were in a principal-agent relationship.

Photo by Cytonn Photography

Actual vs. Apparent Authority

Apparent authority is when an agent acts on behalf of the principal even when not expressed or implied by the principal. This only comes into play when a third party (vendor, company, etc.) thinks that the agent has the authority from the principal to do so (Cornell Law School, 2017).

There are two types of authority: Actual Authority and Apparent Authority.

Actual authority is when an agent, acting on behalf of the principal, takes an action that he believes the principal would want (Legal Shelf, 2020). In this situation, Knutson did not ask Dennegar if he wanted a credit card open in his name therefore he could not have believed that Dennegar wanted a credit card with now over $14,000 in debt.

Apparent authority is when an agent acts on behalf of the principal even when not expressed or implied by the principal. This only comes into play when a third party (vendor, company, etc.) thinks that the agent has the authority from the principal to do so (Cornell Law School, 2017).

In this case, the credit card company would not be aware of who was signing up for or receiving the card. AT&T Universal was under the assumption that it was Dennegar who was using the card. Knutson was acting under apparent authority in this situation.

Photo by Got Credit

Conslusion

Under Agency Theory, Dennegar can be held liable for the charges made by Knutson.

In conclusion, under Agency theory, Agency relationship, and Apparent Authority, Dennegar can be held liable for the charges that Knutson made on the credit card.

Although Dennegar gave Knutson authority to take his mail, New Century Financial Services Inc was sending monthly statements. Dennegar should have been monitoring his mail and all financial accounts.

Under Agency Theory Dennegar can be held liable for the charges that Knutson made.

Photo by Avery Evans

10.