Also known as: general agency powers · general agency · agency power
Written by attorneys — see sources below.
The inherent power of an agent to bind the principal derived solely from the agency relation and existing for the protection of persons harmed by or dealing with the agent when the agent is the general manager in charge of the entire business.
Grace Gupta served as general manager for Grove Manufacturing and negotiated a long-term supply agreement with a vendor. Grove Manufacturing later refused to perform claiming the terms exceeded any granted authority. The vendor relied on Gupta's position running the entire business so the agreement binds the company under general agency power.
Giselle Guerrero acted as general manager for Golden Gate Logistics and assured a client of priority service terms during contract talks. The company disavowed the assurances as unauthorized. The client had dealt directly with Guerrero in her broad operational role so general agency power protects the client and binds the company.
Kimberly Ellerth worked as a salesperson for Burlington Industries in its Chicago office from March 1993 until May 1994. During this period her supervisor Ted Slowik, a midlevel vice president based in New York, made repeated boorish and offensive remarks and gestures toward her. In the summer of 1993, while on a business trip, Slowik invited Ellerth to a hotel lounge and, after she gave no encouragement to his remarks about her breasts, told her he could make her life very hard or very easy at Burlington. In March 1994, when Ellerth was being considered for a promotion, Slowik expressed reservations during the promotion interview because she was not "loose enough." The comment was followed by his reaching over and rubbing her knee. Ellerth did receive the promotion; but when Slowik called to announce it, he told Ellerth, "you're gonna be out there with men who work in factories, and they certainly like women with pretty butts/legs." In May 1994, Ellerth called Slowik asking permission to insert a customer's logo into a fabric sample. Slowik responded, "I don't have time for you right now, Kim . . .— unless you want to tell me what you're wearing." A day or two later, Ellerth called Slowik to ask permission again. This time he denied her request, but added something along the lines of, "are you wearing shorter skirts yet, Kim, because it would make your job a whole heck of a lot easier." A short time later, Ellerth's immediate supervisor cautioned her about returning telephone calls to customers in a prompt fashion. In response, Ellerth quit. She faxed a letter giving reasons unrelated to the alleged sexual harassment. About three weeks later, however, she sent a letter explaining she quit because of Slowik's behavior. Ellerth did not inform anyone in authority about Slowik's conduct despite knowing Burlington had a policy against sexual harassment. In October 1994, after receiving a right-to-sue letter from the Equal Employment Opportunity Commission (EEOC), Ellerth filed suit in the United States District Court for the Northern District of Illinois, alleging Burlington engaged in sexual harassment and forced her constructive discharge, in violation of Title VII. The District Court granted summary judgment to Burlington. The Court of Appeals en banc reversed in a decision which produced eight separate opinions and no consensus for a controlling rationale. The Supreme Court granted certiorari to assist in defining the standards of employer liability.
View caseGeneral agency power arises solely from the agency relation itself rather than from any manifestation by the principal. It protects third parties who deal with a general manager even when no actual or apparent authority exists. The doctrine fills gaps left by other agency theories and allocates risk to the principal who placed the agent in the position.
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Courts examine the typical functions of the general manager position and the reasonable expectations of third parties who interact with that person. Ongoing customer contact and responsibility for the entire business create the relation from which the power flows. The analysis does not depend on specific manifestations by the principal.
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No. The power extends only to commitments consistent with the agent's general managerial responsibilities. Extraordinary terms that depart from established patterns and require separate approval fall outside the scope of the agency relation. Third parties must still act reasonably in relying on the agent's position.
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