News & Noteworthy

Authored - NJ Contract Law Update - Apparent Authority Must Be Shown Unambiguously
JUNE 19, 2013

In Shazo v. Greentree Closet Design, __ N.J.Super. __, 2013 WL 1776103 (App.Div. April 26, 2013), the plaintiff tried to construct an apparent-authority argument on what the Court ruled was insufficient evidence. Specifically, the plaintiff sought to impose liability--for work done by later-bankrupted parties--upon deeper-pocketed parties who eventually satisfied the Court that they were mere landlords of the bankrupt parties.

As noted, the evidence proffered by the plaintiff as to the alleged vicarious contractual responsibility of non-bankrupt parties (later proven to be mere landlords) was premised on "apparent authority"--i.e., the landlords supposedly being the principals for the actual workers, and thus responsible presumably as 'principals for disclosed contractual agents'. That evidence consisted of two facts that the plaintiff claimed established apparent authority:

  1. Evidence that the bankruptcy parties had introduced the main landlord party as his "partner". The Court found it sufficient to reject this claim that "there was no evidence suggesting the landlord...responded to or even heard this statement"--invoking the principle that an agent's" words or acts alone are insufficient to cloak the [agent] with apparent authority."
  2. The landlord's reiteration of the length of time the later-bankrupt worker said it would take the project to be done. The Court found this insufficient, as a matter of logic, to induce a reasonable belief in a principal-agent relationship.

The Court further rejected out of hand (indeed, without analytical discussion) the assertion that the alleged sharing of work-space was sufficient to create a triable issue of fact on apparent authority. The Court was further influenced by the fact that there were prior dealings between (a) the bankrupt parties and (b) the plaintiff--dealings having no relationship to the landlord.

The moral of the story is that to prove apparent authority under Shazo, one needs evidence which specifically and unambiguously reflects precisely such a relationship--as opposed to potentially indicating some other relationship or some other conversational context. Ambiguity will not suffice under Shazo.

Contact & Legal Disclaimer

Clark Alpert is the author of Guide to New Jersey Contract Law, published by the New Jersey Institute for Continuing Legal Education, originally published in 2007 and updated in November 2011. His updates on New Jersey contract law are based in recent issues and practical methods for addressing similar situations in your practice or business. They are not intended to serve as legal advice. Clark welcomes your questions and comments.

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