First Principles of Business Law

3. Obtaining authority to act as an agent

3.5. 'Apparent' or 'ostensible' authority

Read the facts below, and then answer the questions.

A owns and manages a clothing retail outlet. He employs B as a cleaner. Each day, when A goes out to lunch, he asks B to sit in the manager's office and answer the phone if it rings. He always tells B not to do anything except answer the phone and tell anyone who calls that A will be back after lunch. One day C, an advertising representative, visits the shop during the lunch hour, where he finds B in the manager's office. Thinking that B is the manager of the business, C tells B about an advertising promotion that is being organised, and says that if A's business is to be included, he needs a signature immediately. Thinking A would want to be included, B signs a contract whereby A's business will be included in the promotion for a fee of $1000.

1. Has B an express authority to represent A?

2. Has B an implied authority to represent A?

3. Can we conclude that A can avoid this contract because B had no authority to represent him?