MDELECCE said:
What is the name of your state? California. There's a telemarketing co. in the state of Washingington that solicits customers to purchase advertising for a national directory. They called our business and spoke with an employee to get authorization to publish our co. in their directory. The employee gave authorization not knowing what he was talking about (he's illiterate). Now this co. says we owe them $450 for a directory we've never received. My husband or I are the sole proprietors of our business and the ONLY persons who can authorize any business transactions - which we explanined to these people, but they don't care. Also, these people continually call our business wanting to know why we haven't paid. My question is, are we liable for this? Must we pay for something we didn't authorize or haven't received?
My response:
Third party callers to your company do not know who is "authorized" or not. But, the presumption of authority can be presumed when you allow an employee to pick up the telephone. So, regardless whether your employee is "illiterate", you allowed him, nonetheless, to pick up the telephone and converse with third persons. A third party does not have to presume that your employee is "illiterate". The third party caller can, however, presume that whoever picks up the telephone and agrees to a contract has, at least, "ostensible authority" to act on behalf of your business.
An employee of a corporation who is running its business operations may be found to have ostensible authority to do "any act appropriate in the ordinary course of business." [Englert v. Ivac Corp., supra, 92 Cal.App.3d at 190, 154 Cal.Rptr. at 810
Recovery on a theory of ostensible authority rests upon the doctrine of estoppel. Like estoppel, therefore, the essential elements are:
• a representation (or omission) by the principal (some act or neglect by the principal sought to be charged leading plaintiff (the caller) reasonably to believe the third person was the principal's agent/employee);
• The caller's justifiable reliance thereon (the caller dealt with the supposed agent/employee in the reasonable belief he or she was authorized to act on the principal's behalf and was not negligent in relying upon the supposed agent's/employee's apparent authority);
• The caller's change of position or injury resulting from such reliance. [Yanchor v. Kagan, supra, 22 Cal.App.3d at 549, 99 Cal.Rptr. at 370-371; Saks v. Charity Mission Baptist Church, supra, 90 Cal.App.4th at 1138, 110 Cal.Rptr.2d at 62; see also Associated Creditors' Agency v. Davis (1975) 13 Cal.3d 374, 399, 118 Cal.Rptr. 772, 788; and BAJI 13.20.5]
You're on the hook for this one and, in the future, if you don't want your "illiterate" employees agreeing to bind you to contracts, then don't have your "illiterate" employees answer the telephone. It's not for the world to figure out that you employ "illiterates" and others who may not have "ostensible" or "actual" authority.
IAAL
