Author Question: When a principal creates an impression of authority in an agent that leads a third party to conclude ... (Read 62 times)

tiara099 · **on:** Jun 24, 2018

When a principal creates an impression of authority in an agent that leads a third party to conclude that the agent has authority to act for the principal, the agent is said to have:
a. implied authority b. express authority c. legalized authority d. actual authority
e. none of the other choices

Question 2

Covenants Not to Compete. In 1993, Mutual Service Casualty Insurance Co and its affiliates (collectively, MSI) hired Thomas Brass as an insurance agent. Three years later, Brass entered into a career agent's contract with MSI. This contract contained provisions regarding Brass's activities after termination. These provisions stated that, for a period of not less than one year, Brass could not solicit any MSI customers to lapse, cancel, or replace any insurance contract in force with MSI in an effort to take that business to a competitor. If he did, MSI could at any time refuse to pay the commissions that it otherwise owed him. The contract also restricted Brass from working for American National Insurance Co for three years after termination. In 1998, Brass quit MSI and immediately went to work for American National, soliciting MSI customers. MSI filed a suit in a Wisconsin state court against Brass, claiming that he had violated the noncompete terms of his MSI contract. Should the court enforce the covenant not to compete? Why or why not?

leeeep · **Reply #1 on:** Jun 24, 2018

Answer to Question 1

e

Answer to Question 2

Covenants not to compete
The court granted a summary judgment in Brass's favor, finding that the contract was overbroad in its time and geographic limitations. On MSI's appeal, a state intermediate appellate court affirmed this judgment. The court quoted from a state statute, which said that a covenant not to compete is enforceable only if the restrictions imposed are reasonably necessary for the protection of the employer. The court emphasized that under the MSI contract, after Brass's termination, Brass is to have nothing to do with MSI policyholders, known or unknown, in Wisconsin or anywhere else in the world. Thus, . . . the geographical limitation is over broad and fails. The court also noted that the contract allowed MSI to cancel compensation at any time after Brass's termination. Because there is no specific time limitation within this provision . . . one could easily construe that MSI may seek enforcement at any point following Brass's termination. This time restriction is over broad. The court also concluded that the contract was over broad because it prohibits Brass from accepting any type of employment with American National. Finally, the court held that nowhere has MSI demonstrated that these restrictive provisions were necessary to preserve the interests of MSI. . . . These restrictive provisions are onerous and unreasonably dampen the economic interests of Brass to earn a living. The restrictive covenant, as a whole, is unenforceable.