Migerobe, Inc. v. Certina USA, Inc. - 924 F.2d 1330 (5th Cir. 1991)

Rule:

In order to recover under a theory of apparent authority, a plaintiff must demonstrate the existence of the following three elements: 1) acts or conduct of the principal indicating authority, 2) reasonable reliance on those acts, and 3) a change of position by the third person to his detriment.

Facts:

Over a six-week period, defendant watch manufacturer's agent negotiated to sell watches to plaintiff, who intended to use watches as a loss leader. After a meeting, the agent reported the sale and defendant's employee recorded it on an order form. Defendant later rejected the order. Plaintiff filed suit for repudiation of the oral contract. The jury held that the defendant was liable to the plaintiff for damages as a result of the breach. Defendant appealed, based on the statute of frauds, jury instruction error, lack of apparent authority, and an insufficient basis for the loss of corollary sales.

Issue:

Under the circumstances, was it proper to hold the defendant liable for damages for the repudiation of the contract? 

Answer:

Yes.

Conclusion:

The court affirmed. Two writings signed by defendant's representatives along with the unsigned order form sufficiently established a written contract. Denial of defendant's instructions were proper, because defendant prevented the jury from focusing too heavily on one written document. The agent had express authority to both solicit business and secure contracts; thus, the jury reasonably concluded that he had apparent authority to transact the present contract. Corollary damages were foreseeable since the purpose of the sale was to secure a loss leader, and there was no requirement that damages be determined by mathematical precision as long as they were not speculative or uncertain.