There are many laws in the world today that some may find are neither rational nor fair for all the parties involved in the situation. I have chosen two laws that I do not think are logical, these two are apparent authority and executory process. The first law I will be discussing is an agency this is the right one person has to execute business on behalf of another person or corporation. There are three important parties involved in an agency relationship; the agent (this is who can enter a contract on behalf of someone else), a principal (this is the seller), and a third party (this would be the buyer).
Under this law there are three different types of agency authority; expressed authority, implied authority, and apparent authority. I do not agree with the last of the three, apparent authority. Apparent authority refers to a situation where a reasonable person would understand that an agent had authority to act. Another word the principal is bound by the agent’s actions, even if the agent had no actual authority. For the principal to be bound there must be some act or some knowing omission on the part of the principal.
However if the agent acts in the presence of the principal and the principal does not say anything to the third party to correct the agent, the principal is bound by the agreement made between the third party and the agent. An example of this would be, if I owned a clothing store and my friend, Alisha, walked in and I told her I was busy at the moment, she could have a seat behind the counter and I would be with her as soon as I finished with my customer.
Alisha heard my business phone ringing and took it upon herself to answer the phone. When doing so she offered the customer a deal of a life time buy two shirts get ten shirts free. Even though I did not give Alisha the authority to answer my business phone nor did I give her authority to give such a deal to a customer, the customer has no idea of this, which therefore would give Alisha apparent authority in this situation. Due to this I would be obligated to give this customer the buy two shirts get ten shirts free deal.
Even though I just told Alisha to sit behind the counter and I did not give her any authority to answer the phone, I would still be liable for the deal she made with the customer. Even though I could later sue Alisha for the loss my company took for her actions it would not benefit me in anyway. This is due to Penrod’s first rule of Business Law; people who do bad thing do not have any money. Yes I may get justice and the judge order Alisha to pay me back, but this would not do any good since she has no money in the first place to pay me back with.
I do not find this law “fair”. Yes it would not be good business manners for me not to fall through on the deal for the customer. But if my business could not afford a transaction of this size and it would end up hurting me, I should not have to take responsibility for this if I did not give verbal nor written authority to Alisha to make such transaction. In such situation Alisha should be held liable for making this business transaction right to the customer (third party). She should be liable for purchasing to ten shirts for the third party.
The second law I do not fully agree with is the executory process. This is a fast-track way for creditors to enforce security interest against debtors. It gives the creditor the right to seize the collateral quickly instead of having to have a normal court proceeding which could take months or years. The steps involved in an executory process are as followed: First the creditor must file a petition for the process, this must include the names of the parties, the description of the collateral, and the amount owed to the creditor.
There are three documents that must be filed along with the petition; promissory note (is a loan contract that specifies the amount owned and loan terms), security agreement (it needs to only be signed by debtor and must contain a confession of judgment clause), and verification (signed statement by the creditor that all of the allegations in the petition are true). After the petition is filed the judge signs an order for executor process and grants the sheriff the right to seize the collateral. The debtor has no say and can only file a wrongful seizure lawsuit against the creditor, but cannot keep the collateral in the meantime.
An example of this would be if Morgan mortgaged a housed with First Financial Credit Union. She defaulted on the loan, the bank would fill for an executory process and the house would be seized from Morgan. I do not fully agree with the law, simply because the creditor can does not have to provide the judge with proof of default. For instance say Morgan was being faithful and paying her mortgage every month on time and First Financial Credit Union brought all the necessary paperwork to the judge to file for an executory process.
She would lose her house and would not be able to get anything done without going through a lengthy court proceeding. I think that in order for the creditor to take property there must be proof given to the judge showing where the creditor defaulted on payments and the creditor should have to wait a certain amount of time before being able to file. For instance, the debtor should have to be at least 90 days late on payments before seizure of their property could occur.