Legal Question in Business Law in California

Re: Verbal Agreement/Contract

Assuming that the person was acting within the scope of her employment with the non-profit -- or if she was an authorized agent for the non-profit -- then the non-profit entity is liable on the contract.

If the person was acting outside the scope of her agency, than she is liable on the contract. The non-profit is also on the hook under these circumstances if you reasonably believed she was an employee/agent of the entity.

Re: Verbal Agreement/Contract

The situation involves the basic principles of the law of agency. Two facts are key: (1) what was the person's actual authority? and (2) what did the person's authority appear to be to the vendor?

If the person had actual authority to place the order and acted within the scope of that authority, the non-profit is liable and the agent is not. If the person had apparent authority but did not really have authority, the non-profit is liable to the vendor and the person is liable to reimburse the non-profit.

If the person had neither authority nor the reasonable appearance of authority, the vendor cannot collect from the non-profit under an agency or contract theory. If the non-profit benefitted by using the goods, it still might be liable under a theory of 'quasi contract.' Explaining how this works is a bit too complex for a bulletin-board answer. Also, the person might be liable to the vendor under a fraud theory if certain additional facts (deception, justifiable relaince on the deception, etc.) could be proven.

The fact that the organization here is a non-profit is not especially significant. By and large, the same principles apply as when the party employing an agent or ostensible agent is a for-profit corporation or any other kind of employer or principal.

Finally, actual authority can be of two kinds: it can be express authority, e.g. where the board of the non-profit instructs the person to buy certain classes of goods. Or, it can arise out of office, as where the person holds the title 'president' or 'purchasing manager.'