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Agent Authority - legal principle applied

Paulette is the owner of the Rock On Mobile Home Park. For several years, Albert regularly collected rent for Paulette from the tenants of the mobile home park. Recently, Paulette learned that Albert pocketed some rent he collected, so Paulette fired Albert, and revoked his authority to collect rent payments from tenants. However, neither Paulette nor Albert told any tenants of Albert's termination. Yesterday, Albert went around to Theresa's mobile home and asked for the rent. Theresa paid Albert the money owed to Paulette. Albert never gave this money to Paulette. Is Theresa liable to pay Paulette? Why or why not? What legal principle did you apply? Discuss an agent's obligations toward his principal.

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My explanations are based upon common law agency principles.
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No, Theresa is not liable to pay Paulette.  In this case, Paulette is the principal, Albert is the agent and Theresa is the third party.  Normally, the principal is bound by the contract entered into by the agent, so long as the agent performs within the scope of the agency.

To begin the analysis, we must first determine if, and what type of authority existed between the agent and principal. There are three bases by which parties may be held to have assumed the duties of principal and agent. These are actual authority, apparent authority, and implied authority.

In this case, the issue becomes what type of ...

Solution Summary

To begin the analysis, we must first determine if, and what type of authority existed between the agent and principal. There are three bases by which parties may be held to have assumed the duties of principal and agent. These are actual authority, apparent authority, and implied authority.

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