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Andrew Jaco
Dr. John Grether
87936-LEAD-6350-SP12
1 March 2015
Case 4.1- Implied Authority: Kanavos v. Hancock Bank & Trust Company
There are three questions that I will be discussing on this case. Mr. Kanavos
accused Mr. Brown of not having apparent authority to do a major bank transaction
with Mr. Kanavos and the Hancock Bank & Trust Company where Mr. Brown
worked. Mr. Kanavos used that argument as a means to get out of the transaction
agreement with Mr. Brown. Here are the case questions:
1. Why are “titles of office” insufficient to establish apparent authority?
It is the actions of the agent that established apparent authority; not position
title of that office alone establishing apparent authority. In this case, Mr. Brown
was in daily communications with the bank president and has done many
transactions together gaining experience which included negotiations. He was
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included and brought up to speed which gave him leverage as vice president to
have apparent authority for transactions.
2. Why are “trappings of office” insufficient to apparent authority?
It is the actions of the agent that establishes apparent authority because the
signs of the office, the office furnishings, office equipment, etc. by themselves are
not sufficient to establish apparent authority. Because of Mr. Brown’s transaction
that was done and the actions of it suggested authority because of the completeness
of the transaction; that also established apparent authority other than the “trappings
of office.” He was working with the bank president before on other major bank
transactions which helped Mr. Brown establish apparent authority and was kept in
the loop as well. The evidence showed experience in dealing with transactions
similar to the transaction agreed to.
3. What is the relationship between apparent authority and estoppel? Who is
estopped to do what, and why?
Apparent authority is: “in agency, the situation in which a principle (a
company itself, in this case, the bank) leads a third party to believe that an agent
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has authority to bind the principle, even where the agent lacks the actual authority
to bind the principle. It can arise from previous business transactions.” Whereas
estoppel “is the doctrine that a person will not be allowed to deny a promise or
assertion [they] previously made where there has been detrimental reliance on that
promise or assertion. Estoppel is commonly used to avoid injustice.” (Mayer,
Warner, Siedel and Lieberman 2014 p. 273). There is a relationship between the
two. The fact that the new evidence that came up later in the case which proved
that Mr. Brown had apparent authority needed to complete the transaction was
enough for the judge to deny the accusation from Mr. Kanavos that Mr. Brown did
not have apparent authority at all to do the large bank transaction. So Mr. Kanavos
was estopped to deny the transaction that was previously agreed to since it was
found that Mr. Brown had the apparent authority to do the transaction with him.
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Work Cited
Mayer, Don; Warner, Daniel; Siedel, George; and Lieberman, Jethro. Business Law and the
Legal Envoronment. Washington, DC: Flat World Knowlege, 2014. Print.