Liability of Agent

Effect on Principal Determined by state law. Problem 147, p. 463

Effect on Agent Principal = MegaStore, Inc. Agent = Nancy, the bookkeeper authorized to sign notes and checks Issue = Is Nancy personally liable when she signs notes and checks for MegaStore?

Avoiding personal liability Agent (Nancy) can avoid personal liability if: 1. Identify principal (MegaStore, Inc.) on the instrument, and

Avoiding personal liability Agent (Nancy) can avoid personal liability if: 1. Identify principal (MegaStore, Inc.) on the instrument, and 2. Indicate agent (Nancy) is signing for principal (MegaStore, Inc.) for example: Nancy, as agent for MegaStore, Inc. Nancy, bookkeeper. MegaStore, Inc. by Nancy

Liability if not avoided To HDC Agent is liable unless HDC on notice that agent not intended to be liable.

Liability if not avoided To non-HDC Agent is presumed liable but can show that original parties did not intend agent to be liable.

Special rule for checks Agent not liable if principal’s name is on the check, even if agent not indicate agency status.

Problems Problem 148 – p. 464 Problem 149 – p. 467