The principal must know all of the material facts involved in the transaction. If a principal ratifies a contract without knowing all of the facts, the principal can rescind (cancel) the contract. Application 2: Mouse did not know all of the material facts; since, she did not know that Farad gave Fads a 10% discount when she was only allowed up to 5%. Moreover, Mouse did not know that Farad had allowed Fads to pay in three installments, when Mouse expected payment to be made 30 days of delivery. Therefore, Mouse would be considered as principal who did not know all of he material facts in the contract.

Rule 3: The principal must affirm the agent’s act In Its entirety. Application 3: In this case, Mouse, the principal, Is considered to have ratified her agent’s act since she has given authority to her to make contracts. Moreover, Fad’s call to Mouse might have been an act of ratification when she assured him that Farad was indeed given authority to make contracts and offer discounts, even though the amount of discount was not disclosed. Rule 4: The principal must have the legal capacity to authorize the transaction at the mime the agent engages In the act and at the time the principal ratifies.

The third party must also have the legal capacity to engage in the transaction. Application 4: Mouse, acting as the principal, does have the legal capacity to authorize transactions when her agent Farad engages in making contracts. Moreover, Fads as a customer does have the legal capacity to engage in contracts. Rule 5: The principals affirmation (ratification) must occur before the third party withdraws from the transaction. Application 5: Here, Mouse’s act of galling Farad authority to make contracts and offer discounts is a sign of ratification to the transactions with customers.

Therefore, the ratification occurred before Fad’s refusal to pay for the transaction. Conclusion: Since Mouse gave Farad authority to make contracts and offer discounts; However, since Mouse did not know that Farad had offered a 10% discount when she was only allowed 5%, and that Farad had offered the payment to be paid in three installments allows Mouse to rescind the contract. Therefore, the court would likely enforce Mouse’s interpretation of the contract and the contract may be rescinded.

Johnson kept telling Pastier that his account was making money, and the monthly statement from E. F. Hutting did not indicate otherwise. The manager at E. F. Hutting was aware of Johnny’s activities but did nothing to prevent them. When Johnson left E. F. Hutting, Pastern’s account-?which had been called the “laughingstock” of the office-?had shrunk from $196,000 to $96,880. Pastier sued E. F. Hutting for damages. Issue Was Gilbert J Johnson acting within the scope of his employment? Is E F Hutting liable or Gilbert J Johnny’s tortuous conduct?

A principal and an agent are each personally liable for their own tortuous conduct. However the courts will hold a principal liable for the actions of its agent if the agent was acting within the scope of his or her authority. The court will examine the situation to see If:- (1) The act was one which the agent was hired to perform. (2)Did the act occur during the agent’s employment? (3) Was the act requested or authorized by the principal A principal has the duty to oversee the work of It agents.

The principle of negligence will hold a principal accountable although they are not the one committing the act. Our text page 474 refers to frolic and detour as a situation In which the Agents does things to benefit themselves rather than the principal. In this situation the agent becomes personally liable. Johnson was gainfully employed by E F Hutting and was acting as an agent of the company. The fact that the manager knew about Johnny’s actions and did nothing.

This shows that the principal was negligent; this will not be hard to prove, the tenements were not reflecting the loss of Johnny’s portfolio. E F Hutting may try to get out this slut by claiming he had no knowledge of what Johnson was doing. The portfolio suffered a tremendous loss and Is one which should be detected easily because It an Investment firm. The fact that management kept silent made them a party to the act The court should hold E F Hutting liable for the action of Its agent Business Law By antiradar Fiduciary Duty after Francis Pastier retired; he met with Gilbert J.

Johnson, a authority. The court will examine the situation to see if:- (1) The act was one which A principal has the duty to oversee the work of it agents. The principle of negligence Our text page 474 refers to frolic and detour as a situation in which the Agents does get out this suit by claiming he had no knowledge of what Johnson was doing. The portfolio suffered a tremendous loss and is one which should be detected easily because it an investment firm. The fact that management kept silent made them a party to the act The court should hold E F Hutting liable for the action of its agent