Consider the following scenario: Barnett was orally hired by Paula to locate desirable real estate that she could use for rental property. She stated she wanted to find a four-plex that could be purchased for under $200,000 that could be rented for at least $1,000 per month per unit (which equates to $4,000 rental per month for the property).
Barnett located a four-plex that could be purchased for $160,000 and was renting for $1,200 per unit. It was such a good deal that he purchased it for himself. About two months later he found a second property that was listed for $199,000 and rented for $1,000 per unit. Paula purchased the property. Afterwards, she learned that Barnett had bought the $160,000 four-plex for himself without telling her about it.
Paula believes that Barnett has acted improperly. Barnett claims that he did what she asked: he found a property for under $200,000 that rented for $1,000 per unit. He also claims that since their agreement was oral, he has a legal defense if she pursues the matter in court.
Discuss the following:
1. Describe the agency relationship in this scenario. Identify the principal and the agent.
2. Do you believe there was mutual consent for the agent to act on behalf of the principal?
3. Do you think that the agent was subject to the principal's control?
4. What questions about agency does this case raise?
5. Suppose you were a judge: which side would you agree with, and why?