Legal Question in Business Law in California

Re: Can an employee contractually obligate their employer?

Put all those statements and reasons into a well drafted letter to the company, telling them you are not going to let them enforce their 'hidden' terms that your mgmt didn't agree to. Refuse to accept unwanted shipments if they send them, and if they threaten to sue you, then call a lawyer. They succeed if you are afraid to be assertive.

Re: Can an employee contractually obligate their employer?

If the employee had apparent authority, then perhaps. However, your best defense may be to reform the contract due to mistake. Contact me directly.

Re: Can an employee contractually obligate their employer?

The supplier has an "apparent authority" argument because authority is construed broadly to protect the innocent (you are in the best position to prevent the harm). But I think the better argument here falls under the exception; that is, the capacity to bind as well as the reasonable argument as to the "nature and extent of authority." Unless your signer for receipt purposes is also one who signs contracts or there is some other ground for someone acting as a "shipping clerk" in your company to have the authority to bind the co. beyond acknowledging receipt of the item, then I think they have no contract.

We can review the contract and write them a letter for $750.00. Based on these facts the matter should not go beyond that.

Re: Can an employee contractually obligate their employer?

I agree with Terry regarding a course of action - often times these companies rely on intimidation and the perceived difficulty in fighting this type of agreement to obtain your acquiescence to such tactics - and letting them know that you intend to take action against them if they do not cease and desist is likely to make them go away (there are many others who WON'T fight them).

The issue at hand is one of agency - and an employee can have three types of authority: actual, usual or ostensible.

It's clear from your question that the employee did not have ACTUAL AUTHORITY - or explicit permission to bind the company in the matter at hand.

USUAL AUTHORITY would be authority that would reasonably arise from an employee's position within the company (e.g. President, materiel manager, etc.). If this is the type of employee that simply signs for deliveries, it's also not likely there is a colorable argument for usual authority, either.

OSTENSIBLE AUTHORITY would apply where those individuals within the company who DO have authority to bind have indicated to the world (or the party in question) that the signing employee has the authority to sign the type of instrument in question, then that party has no reason to doubt them and ostensible authority may be granted. If, for example, the company's President spoke with the supplier and said "Employee X will handle all of our interaction with you from here on out..." that could be construed as ostensible authority. Even in this case, though, that's a thin argument.

There are likely also a host of additional problems with the subject contract, including fraud in the execution, and unconscionable terms - just to start.

If you don't get a favorable result from a nice nasty letter - or don't want to write that letter yourself - get a lawyer. This sounds like a very simple case that could be handled expeditiously and without a great deal of expense.

Please feel free to contact me if I can be of additional assistance!