Legal Question in Business Law in California

Re: Problem with the phone company

First of all, a third party can not verbally change his underwear let alone a contract to which he was not a party. If that were true, there would be a lot less lawyers, as Donald Trump could easily weigh in his two cents against some of my contracts.

If the business was "closed" and another creates a contract for that business, that person is acting as a pre-incorporation or pre-formation agent. State law is clear that pre-incorporation agents are clearly liable unless the corporation or business affirmatively assumes the debt, assuming that the debt is not personal or non-transferrable. If the other person signed the contract, then it is he who is liable, so long as the business was closed. It is also interesting to determined how he signed the contract. Most contracts ask for name and title for business contracts. If he stated that he was the owner, manager, etc, it even puts more weight that he was assuming the debt.

Bottom line, if the amount of payment is not too considerable, pay the damn thing and put this into the ah sure happy it's thursday drawer and keep it there as a reminder. You do not need you credit ruined or yourself hassled for this. You can always take him to small claims court if he is refusing to pay this under the premises of acting as he was the buyer of the closed company and thus he assumed the liability of the debt.

Learn a lesson at a comparably cheap cost. Lawyers are sometimes seemingly expensive but in the long run they are usually quite cheap. Call me if you want more sage (or rosemary) advice or how to structure a small claims action. I would need some more particulars to help you.

Re: Problem with the phone company

You didn't say whether the business is a corporation, a proprietorship, or something else. This would affect the reasoning in the answer, but the end result would be nearly the same.

I believe the business is liable for the directory advertising bill. The reason is that the person who originally placed the ad would be considered the agent of the business (of the corporation if it's incorporated, or your agent if it's a sole proprietorship).

An agent is able to bind his principal. That's the reason agents exist.

One could argue that the yellow pages salesperson had no right to assume the persons contacting him or her for advertising was authorized and therefore an agent. However, the directory people have sold millions of ads over the last century or so, and I'm sure they have had plenty of opportunity to refine their techniques for being reasonably sure that people they take orders from are indeed sufficiently insiders at the client business so they can be legally assumed to be authorized. This could be as simple as knowing the person they're speaking with is at the business location because they dialed the number.

The fact that a proof was mailed and approved, or at least not objected to, further establishes the agency of the person who ordered the ad.

Allowing the ad to be paid for over 12 months is a convenience; the contract is for publishing the ad in the first place, not for the directory remaining out there unreplaced for 12 months.

Finally, even if the agency theory collapsed for some reason, the publisher could argue a theory called quasi-contract, i.e. that the business received the benefit of the advertising and should pay for it, even if the authority of the presumed agent wasn't sufficient.