Legal Question in Business Law in California

Re: payment from client

Your complicated questions generally refer to what is called the law of agency, or principal and agent. Someone who claims to have authority to bind a third person to a contract may or may not really have authority to do so. There are variations of "authority" such as express authority, implied authority, and apparent authority. The answers to your questions depend on a number of factors such as who said what to whom, when; the details, if any, of any oral or written agreements; and the usual custom and practice in the particular area of business (radio promotion, event planning, etc.) being transacted. In general, if a deal or proposal smells bad, avoid it. In particular, see an attorney who is local to your area.

Re: payment from client

You cannot just accept someone's claim that her employer will pay for a major personal expense. Most employees aren't authorized to make contracts for their companies and most companies don't pay their employees' personal bills. These facts should have made you suspicious and you should have checked her story, but you didn't. Why? Apparently because you were greedy and wanted to believe it was OK to do this.

It seems the bride had no authority to bind the production company. But even when a person lacks actual authority to make an agreement she may have apparent authority to do so. The problem is that no one can create apparent authority by their own actions. It has to be the result of the employer's conduct. If the employer makes it seem that the employee has such authority, then legally she does.

The fact that other companies accepted your bills in the past did not give you the right to assume that this station would do likewise.

A company can ratify a contract made by an unauthorized employee by accepting the benefits of the contract despite knowing what the contract required it to do in return. The production company may have ratified your client's actions, but that is not enough because you were asked to make this look like an expense they could pass along to the station.

The station clearly doesn't owe you the money, since you knew your client didn't work for the station and thus couldn't believe she was authorized to make such an agreement for it.

You could argue that your client only promised that the production company would pay and that, since it ratified this agreement, it is stuck with the bill. This argument might not work since it seems the company did not benefit, but you can always argue that a happy employee is benefit enough. I would accept that argument if I were the judge in your case.

But the agreement called for you to make the wedding look like a radio expense so that the company could recoup its funds from the station. This is what we lawyers call fraud, and you willingly participated. Not a wise move.

The station can refuse to pay the production company for this expense. If the company sues you for the money, you can argue the defense of "unclean hands" - in other words, that the company is only in this mess because it did exactly what it accuses you of doing.

If I were the judge and you made that argument, I would probably rule in your favor. But I would do it reluctantly because it seems to me that you and the production company - and the bride - are all equally culpable. I would enter judgment in your favor, but only after I gave you a very harsh lecture about your actions and about how lucky you are that the station noticed before it paid the bill. Why does that make you lucky? Because if the company had actually paid, you could have been prosecuted and imprisoned.

Try to be more careful in the future, since you might not be so lucky the next time.