First Principles of Business Law

8.1. Acquisitions and dispositions of property by an agent

8.2. An agent's ability to transfer a principal's real rights to a third party

Read the facts below, and then answer the questions.

A is considering selling his car. He takes it to a saleyard owned and operated by B and asks B what price he might get for it. B says: "I'll have to check it out carefully before I can suggest a fair price. Leave it here with me until later this afternoon?" A says: "Sure. Have a good look at it. The relevant ownership papers are in the glove compartment." When A returns later that day, his car is nowhere to be seen, and B tells him that C saw it in the yard and offered to buy it for $15,000. B thought this was a good offer and sold the car to C on behalf of A. A, who would not have sold the car for that amount, says he never authorised the sale, and he wants to reclaim the car from C.

1. Assuming they have the necessary authority, is it possible for an agent to legally transfer ownership of their principal's property to a third party?

2. If an agent does not have authority to transfer a principal's property rights to a third party, but does so, can the principal recover the property from the third party?

3. In the present case, will A be entitled to recover the car which B has transferred to C?