Asked by Sushil Kumar Pradhan on Jul 29, 2024
Verified
Barstock Enterprises LLC that employs Joseph as a sales agent,files for Chapter 11 bankruptcy protection.The agency continues under apparent authority principals.
Chapter 11 Bankruptcy
A form of bankruptcy that involves the reorganization of a debtor's business affairs, debts, and assets, allowing the business to continue its operation.
Apparent Authority
An accountability doctrine whereby a principal, by virtue of words or actions, leads a third party to believe that an agent has authority but no such authority was intended. Also called ostensible authority and agency by estoppel.
- Acknowledge situations that lead to the termination of agency relationships and analyze the outcomes of diverse methods of termination.
- Assess the legal impact on the principal emanating from the actions of an agent in diverse circumstances, including incapacity and ending of agency.
Verified Answer
SG
Sallie GriffinJul 30, 2024
Final Answer :
False
Explanation :
When a company files for Chapter 11 bankruptcy protection, it is seeking to reorganize its debts and business operations under court supervision. This process does not automatically dissolve the agency relationships or the authority of agents. However, the bankruptcy court may have a say in the continuation of such relationships and any new contracts or obligations. The concept of "apparent authority" relates to third parties' perceptions of an agent's power to act on behalf of the principal, which can be affected by the principal's actions or inactions. The filing for bankruptcy itself does not directly impact the principles of apparent authority, but the restructuring process might alter the company's ability to engage in certain activities through its agents.
Learning Objectives
- Acknowledge situations that lead to the termination of agency relationships and analyze the outcomes of diverse methods of termination.
- Assess the legal impact on the principal emanating from the actions of an agent in diverse circumstances, including incapacity and ending of agency.