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Andrew Jaco

Dr. John Grether

87936-LEAD-6350-SP12

1 March 2015

Case 4.1- Implied Authority: Kanavos v. Hancock Bank & Trust Company

There are three questions that I will be discussing on this case. Mr. Kanavos

accused Mr. Brown of not having apparent authority to do a major bank transaction

with Mr. Kanavos and the Hancock Bank & Trust Company where Mr. Brown

worked. Mr. Kanavos used that argument as a means to get out of the transaction

agreement with Mr. Brown. Here are the case questions:

1. Why are “titles of office” insufficient to establish apparent authority?

It is the actions of the agent that established apparent authority; not position

title of that office alone establishing apparent authority. In this case, Mr. Brown

was in daily communications with the bank president and has done many

transactions together gaining experience which included negotiations. He was

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included and brought up to speed which gave him leverage as vice president to

have apparent authority for transactions.

2. Why are “trappings of office” insufficient to apparent authority?

It is the actions of the agent that establishes apparent authority because the

signs of the office, the office furnishings, office equipment, etc. by themselves are

not sufficient to establish apparent authority. Because of Mr. Brown’s transaction

that was done and the actions of it suggested authority because of the completeness

of the transaction; that also established apparent authority other than the “trappings

of office.” He was working with the bank president before on other major bank

transactions which helped Mr. Brown establish apparent authority and was kept in

the loop as well. The evidence showed experience in dealing with transactions

similar to the transaction agreed to.

3. What is the relationship between apparent authority and estoppel? Who is

estopped to do what, and why?

Apparent authority is: “in agency, the situation in which a principle (a

company itself, in this case, the bank) leads a third party to believe that an agent

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has authority to bind the principle, even where the agent lacks the actual authority

to bind the principle. It can arise from previous business transactions.” Whereas

estoppel “is the doctrine that a person will not be allowed to deny a promise or

assertion [they] previously made where there has been detrimental reliance on that

promise or assertion. Estoppel is commonly used to avoid injustice.” (Mayer,

Warner, Siedel and Lieberman 2014 p. 273). There is a relationship between the

two. The fact that the new evidence that came up later in the case which proved

that Mr. Brown had apparent authority needed to complete the transaction was

enough for the judge to deny the accusation from Mr. Kanavos that Mr. Brown did

not have apparent authority at all to do the large bank transaction. So Mr. Kanavos

was estopped to deny the transaction that was previously agreed to since it was

found that Mr. Brown had the apparent authority to do the transaction with him.

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Work Cited

Mayer, Don; Warner, Daniel; Siedel, George; and Lieberman, Jethro. Business Law and the

Legal Envoronment. Washington, DC: Flat World Knowlege, 2014. Print.