Should David succeed in an action to collect on the loan? Explain.
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Serges is the owner of a retail meat marketing business. Without authority, his managing agent borrowed $3,500 from David on Serges’s behalf for use in Serges’s business. Serges paid $200 on the alleged loan and on several other occasions told David that the full balance owed eventually would be paid. He then disclaimed liability on the debt, asserting that he had not authorized his agent to enter into the loan agreement. Should David succeed in an action to collect on the loan? Explain. |
Explanation
The managing agent of Individual S took a loan from Individual D on the behalf of Individual S for the needs of the company. Out of the $3,500 loan, $200 was repaid to Individual D by Individual S. Also, Individual S promised to repay the whole loan amount to Individual D on multiple occasions. All these actions ratified the action of the managing agent, thereby making Individual S liable to Individual D. On the other hand, if Individual S did not repay some of the loan amounts and made promising statements to Individual D, Individual S would not have been liable.
Verified Answer
Individual D would succeed in collecting the loan back from Individual S. Individual S repaid $200 out of the $3,500 debt taken by the agent on Individual S's behalf. Individual S also made statements that confirmed the repayment of the loan. By doing so, Individual S has ratified the actions of the agent, thereby making Individual S liable for repayment. If such ratification was not made, Individual S would not have been liable.
