The cats are worried. They invested their entire share of the profits from our publishing business in an application for a franchise to sell an invisible electric fence called, “Shock-A-Dog.” Before making their investment they purchased and installed the Shock-A-Dog along our boundary line shared with you. They then tested the system by placing a dish of their wet cat food, Savory Gravy, on our side of the line and turning up the electricity level to “large dogs,” even though Bowser only weighs 35 pounds. The results were convincing, and the cats signed an application to be a Shock-A-Dog distributor and sent in a deposit to acquire a franchise for the Ashland-Talent area.
Two weeks later the cats received a notice that they would have to share the Ashland-Talent territory with another Shock-A-Dog distributor, even though they had been promised an exclusive franchise by the Oregon Shock-A-Dog field agent. When they complained to the company they were told that the Oregon field agent had no authority to promise them an exclusive distributorship, and they could either share the territory with another distributor or they would forfeit their deposit. The cats felt that they had been cheated, but their San Francisco attorneys would not return their calls because they hadn’t been paid in six months. In desperation, the cats turned to me.
I advised the cats that even if the Oregon field agent lacked actual, or express, authority to promise them an exclusive distributorship, he had apparent authority to do so, and the Shock-A-Dog company was bound by their agent’s promise. I explained to the cats that an agent has apparent authority to bind the agent’s principal if the agent is allowed to give the appearance of being authorized to act on behalf of the principal even if the agent is acting beyond the authority actually granted by the principal.
The cats are relieved to know that the Shock-A-Dog company is obligated to honor the promise of its Oregon field agent to award them an exclusive distributorship, but they have a lingering concern. One of the requirements for a Shock-A-Dog distributor is that the applicant must be a dog owner and use Shock-A-Dog as an invisible electric fence to contain the distributor’s dog. They stated on their franchise application that Bowser was their dog and that they used Shock-A-Dog to keep him in. I told them that a materially false statement on their application would be a sufficient basis for the company to deny their application for a franchise, and if they sue the company for breach of promise by their agent with apparent authority, it was almost certain to be revealed that they were, in fact, cats, and that they did not own Bowser. At this, the cats let out a yowl as the world had, once again, conspired to frustrate their well conceived plans.
Allen Drescher has practiced law in Ashland and Southern Oregon since 1973. His practice areas include real estate, business law, estate planning and elder law.
© Allen Drescher