13. Tim Shine owns five furniture stores in Indiana, which he runs as a sole pro

Question

13. Tim Shine owns five furniture stores in Indiana, which he runs as a sole proprietorship under the name of HIGH LOW FURNITURE, "high in quality, low in price." Tim hired Brian Burke as the manager of his West Lafayette store on June 1, 2017. Tim told Brian, "You have full authority to run the store and if you do a good job, I will stay out of your way as much as possible." Tim also told Brian, "You can hire employees, but only subject to my approval. l don't want any salespersons on the floor of any of my stores unless I have personally approved their employment." On June 5, 2017, Brian hired Katherine Regester as a salesperson and told her to report for work the following day. Katherine had just graduated from college. Although she didn't have any sales experience, she was eager to learn and just a little bit apprehensive about her first, fulltime job. Brian told her, "Don't worry. You will probably make a few mistakes at the beginning, but we'll back you up. You'll get the hang of the job in a couple of weeks." Tim traveled around to each of his five stores. During June he was in and out of the West Lafayette store a number of different times. Katherine knew who Tim was and what he looked like from his frequent TV commercials. Katherine also knew that Tim owned HIGH LOW FURNITURE. Tim spoke to Katherine each time he came into the store. On one occasion he watched her sell a dining room set from a distance. After the sale was successfully concluded, Tim came up to her and said, "Young lady that was a very good sales effort." Tim also reviewed all the sales invoices from the West Lafayette store, including those signed by Katherine as a “salesperson". On June 27, Brian and Tim had an intense disagreement over the advertising budget. Brian quit and walked out of the store not to be seen again. On June 30, Katherine looked for her first paycheck. There was none. She continued to work in the store until July 3rd, when she saw Tim come into the store. She asked Tim when she would get paid. Tim told her that he was unaware that she was an employee. He also told her that "it is a common practice in the furniture business for family, friends, and relatives of salespeople to assist them in making sales. Tim told her that he had never approved hiring her and that she simply wasn't an employee. He said that he would hire her as a salesperson effective July 3, but that she would have to get her pay for June from Brian You must make your decision on the basis of general agency principles. a. Brian was an agent b. Katherine was an agent c. This case involves apparent authority d. This case involves ratification under agency law e. All of the above

Explanation / Answer

Under the General Agency principles, agent is a person who works on the behalf of "Principal".

a. If Brian was an agent then he was working on behalf of Tim and according to tim if he works well, then he will not interfere but he has to approve the employees to be appointed. Under this, Brian must seek the appointment of Katherine through Tim.

b. If Katherine was an agent, then she should know that the store belongs to Tim and she will be employed under him only, where Brian is also an employee of Tim. Katherine in her defence can cite any written appointment order where Tim has signed.

c. This case is an example of Apparent Authority which means when a person, an agent is given the position by the prinicpal to act on his behalf then third parties have to conduct according to the agent's directives and till the third party continues to do so, there is no problem. In the case, Katherine follows the orders of Brian who is the apparant authority.

d. Ratification under agency law means when the principal approves of the agent's decision. The principal here is Tim who has approved Brian of his decisons by praising katherine during one of their earlier meetings.

e. In case of all of the above Brian can indemnify Tim who is the principal in this case as apart fromn that he has given the authoritites to Brian he has also approved and praised Katherine for his performance as a sales person.

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