Herschel contracts with Ivy to buy a certain coffee shop, Java Jive, for Ivy, who asks Herschel not to reveal her identity. Herschel makes a deal with Kendal, the owner of the restaurant, and makes a down payment. Ivy fails to pay the rest of the price, and does not pay Herschel for his services. Does Herschel have any recourse against Ivy? If so, on what basis and to what extent?

Question

What will be an ideal response?

Answer 1

Herschel can seek to hold Ivy liable for breach of contract, and Ivy may be liable for whatever damages Herschel has to pay to Kendal, and more. With respect to the contract with Kendal, a principal has a duty to indemnify an agent for liabilities incurred because of authorized and lawful acts and transactions and for losses suffered because of the principal's failure to perform his or her duties. With respect to payment for Herschel's services, if an agent is not a gratuitous agent (that is, one who does not perform for money), a principal owes the agent compensation for his or her services rendered. In the facts of this question, if no amount had been agreed to, Ivy would owe Herschel the customary amount for his services. Of course, payment must be timely, and there may be a penalty associated with the delay. Also, a principal's duties include the responsibility to reimburse an agent for expenses related to the agency, unless the parties have agreed otherwise. Thus, Ivy may owe an amount for Herschel's disbursements, including the down payment, and other expenses, as well.