Case original owners of the necklace. For example,
Study A (50%):
It is important to establish what type of property the
necklace is before we can determine who it belongs to. There are two classifications of property
that are used to answer this question. The
first classification that must be determined is whether the necklace is
tangible property or intangible property. Tangible property is something that
can be touched while intangible property is something that cannot be touched (McInnes,
2013). An example of tangible property
could be a wristwatch, a novel, or even a house while intangible property could
consist of a copyright or trademark that an individual owns. The second classification that we must determine
is whether it is real property or personal property. Real property cannot be moved while personal
property can be moved. (McInnes, 2013) An example of real property would be the
land or house you own because it cannot be moved from one place to
another. Personal property would consist
of a wallet or a book because those can be moved to other places. Based on these definitions, the type of
property that the necklace is classified as would be tangible personal
It is important to consider certain legal rules
when attempting to acquire personal property rights over the necklace. The first of these involves the fact that
certain things may not have an owner. An
example of this could be a broken down, rusty car in the middle of nowhere out
in a field or even an abandoned factory from many years ago. In this particular situation, you can attain
ownership of an object by acting alone and taking possession with, “intention
of controlling it for yourself.” (McInnes, 2013). Bonzi could do this by simply taking the
necklace for himself to either sell or keep in his possession, therefore
fulfilling the requirements of this first rule.
Unfortunately, it is difficult to tell if the necklace was abandoned or
if it was simply misplaced which makes it much more difficult for Bonzi to
simply take control of it for himself.
However, there are other legal rules that should be considered
that involve the original owners of the necklace. For example, say someone found your property
that had been lost and they decided that they wanted to keep it for
themselves. While this person who found
it may have acquired all of the rights of ownership over everyone else, they
cannot acquire ownership over the true owner of the object. This is applicable in Bonzi’s situation. He has a found a necklace that presumably
isn’t his. He can legally take ownership
of the object if no one comes back to claim it.
However, if the original person or true owner returns to claim it, then
they have the full rights to the necklace.
It’s also necessary to consider Alpha Corp., the
establishment that he found the necklace in.
Even though it isn’t always certain, “it appears that an occupier is
entitled to things that are found in private, but not the public, parts of its
premises.” (McInnes, 2013) This applies to Bonzi’s situation. Depending on where he had found the necklace
could help determine his ownership over it.
If he had found the necklace in the specific hotel room he was staying
in, then he would satisfy the rule that he can take possession of it because it
was found in the private part of the premises.
However, if he had found the necklace in the lobby, a public part of the
premises, then the ownership would be to the hotel and not to Bonzi. It’s also important to note that, “Although
a finder acquires substantial rights, they may also incur some obligations. A
finder may be required to make a reasonable effort to locate the true owner and
preserve the goods.” (McInnes, 2013).
This could apply to both Bonzi as well as Alpha Corp.
The necklace belongs ultimately to the original
owner and if they choose to collect the misplaced necklace then they have
rights over all others to the object.
However, if the original owner does not come forward to collect the
necklace, then we would need to know where exactly Bonzi had found it to
determine who has ownership. If it had
been found in the privacy of Bonzi’s hotel room, then he may take ownership of
it but if it was found in the public space of the lobby, then the hotel may
have ownership of it.
Case Study B (50%):
The legal question which will likely be raised by MC Electric
Inc is whether it is liable to pay the 50 percent commission to GB Circuits Co because
of the business transaction that their agent, Dortmund, approved.
There are two important rules to consider when attempting to
assign liability in a situation such as this.
The first is whether Dortmund, the agent, had disclosed that he works
for a principal to GB Circuits Co. The
second thing to consider is if there was any breach of warranty of authority. A breach of warranty of authority, “occurs if
an agent indicates that they are authorized to act for a principal when they
are not.” (McInnes, 2013) For example,
if an agent is selling a product to a customer, he is obligated to disclose
that he is working for a principal. If
he does not reveal this information, then there is a breach of warranty of
When applying the facts of Dortmund’s case to these principles,
it is possible that MC Electric Inc may not be liable to pay the commissions to
GB Circuits Co for several reasons.
First, Dortmund could be guilty of the undisclosed principal rule. Based on the information above, it does not
appear that he divulged that he was an agent for MC Electric Inc to GB Circuits
Co when they approached him with this business opportunity. Dortmund may have also caused a breach in
warranty of authority. By accepting this
proposal, it is possible that he gave the appearance of having the same
authorization as the principal when he may not have that authority. It is clearly stated above that he is
responsible for managing the sales force and promoting sales. The president, on the other hand, is
responsible for pricing decisions and overall strategy. Therefore, this transaction may be out of the
scope of what was expected of Dortmund’s duties. Second, it seems possible that Dortmund
breached his fiduciary duty as well as his duty of care, both of which requires
him to act with the best interests for the principal and, “take reasonable care
in the performance of their responsibilities” (McInnes, 2013). This business transaction does not appear to
be within the best interests of the principal nor does it seem that a duty care
was considered. Based upon the fact that
Dortmund may have breached several necessities to his job, it is possible that MC
would not be held liable to pay the commissions to GB Circuits Co in this deal.
However, according to the text, “The principal is liable to a
third party under any contract that an agent creates within the scope of the
agent’s apparent authority.” (McInnes, 2013) Dortmund’s apparent authority
occurs when MC Electric Inc gives the impression that Dortmund is authorized to
act on its behalf. (McInnes, 2013) If MC
Electric Inc has given the impression that Dortmund is permitted to act on
their behalf, then it is possible they will have to honor the deal that
Dortmund completed. It is also important
to discuss usual authority when determining liability. Usual authority allows Dortmund to act with
the same authority that someone of his position or title would normally
have. Because Dortmund is the director
of sales and the deal with A-Tel is still a sale for the company, he has acted
in a way that is congruent with his title.
Furthermore, if MC Electric Inc gave the impression that Dortmund had
the apparent authority to put a deal such as this together and if we accept
that Dortmund had the usual authority given his job title, it is possible that
MC Electric Inc would be liable for the successful completion of this deal. They would therefore have to honor the
commission that was promised to GB Circuits Co.
on the information provided, I believe that a case could be made that MC does
not owe commissions to GB. While
Dortmund is the director of sales, it appears that MC clearly stated what his
job entailed as their agent. This
included managing the sales force and promoting sales. When he decided to accept a deal that has
possible influences on the overall sales strategy, he was overstepping his
bounds for his position. He seems to
have neglected his fiduciary duty and duty of care to MC Electric Inc. It also seems he caused a breach of warranty
of authority, by possibly failing to recognize that he might lack the necessary
clearance to authorize such a transaction between himself and GB Circuits Co.
McInnes, Mitchell, Ian Kerr, J. VanDuzer. (2013) Managing the Law:
The Legal Aspects of Doing Business, 4th Edition. Pearson Learning
Solutions, VitalBook file.