Case Scenario:
Harold owned the Great Value grocery store and hired Ed as his produce manager. Ed's job description described his duties as overseeing the purchasing, inventory and presentation of fruits and vegetables, maintaining the appropriate product assortment and inventory levels for the department, confirming price accuracy, ensuring that the produce department was clean and sanitized daily, supervising department employees, and overseeing other department activities to maximize sales and gross profit.
When attending a grocery store trade show, Ed met Mary, a salesperson for American Grocery Equipment (AGE), a computer company that sold point-of-sale checkout systems for the grocery stores. Mary demonstrated the checkout system to Ed and Ed thought that this would not only help him keep track of produce sales, but would also provide more efficient inventory control for the entire grocery store. Mary offered to give Great Value a trade show discount if the store purchased the system that day. Ed told Mary that, as the produce manager for the store, he could sign a purchase agreement for the store, and had Mary prepare a contract, which Ed signed as agent for Great Value.
Two weeks later, AGE employees arrived at the Great Value store and asked a clerk when they could start installing the checkout system equipment. The clerk called Harold, who was in the store's office, and Harold met with the AGE employees. When Harold said he had not ordered any such equipment, the AGE employees showed Harold a copy of the contract that Ed had signed as Great Value's agent. Harold told the AGE employees that he needed to speak with Ed, who was not working that day, and that they would need to come back in two days. The next day, after reading the contract and discussing the matter with Ed, Harold decided that the equipment was overpriced, and called Mary to tell her that Great Value did not want the equipment. Mary insisted that AGE had a firm contract with Great Value.
- Discuss whether Ed had authority to sign the contract, and include in your answer a full discussion of all potential types of agency authority (actual [express and implied], apparent [ostensible], and agency by ratification), the factors required to establish each type of authority, and whether Ed did, or did not, have each of these types of authority based on the facts.