Legal Question in Credit and Debt Law in California

We had an employee who no longer works for us give verbal authorization saying he was the manager (which he was not) to start an ad online for our business. He had NO authorization to do so. To top it off, this company never had our business up on their website and is now threating to take us to collections. We can't be held responsible for this, right? Any advice?


Asked on 10/30/12, 9:13 am

1 Answer from Attorneys

The law on the authority of agents and employees to bind the principal/employer to obligations is rather complex. The core concept, however, is the reasonableness of the other party in accepting the employee's representations that they were authorized to enter into the transaction. Obviously the standard is very different for, say, a local news outlet accepting a call to place a want ad in the employment section of their newspaper and online want ads, versus an employee saying they are authorized to sign a contract buying a 60-second advertising slot on the Super Bowl. If they never placed the ad, however, what in the world are they trying to bill you for? That makes no sense.

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Answered on 10/30/12, 1:02 pm


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