Story Case

George Beal said to his construction foreman: "When the contract for building the Kaiser House is ready, you sign it for me, in my name." Later, when the contract was ready, the foreman signed it in the name of the principal, as he was instructed to do. Two weeks later Beal defaulted in this contract, refusing to do anything under it. When suit was brought on the contract, Beal defended on the ground that the foreman had not the authority to act, since this was a parol instruction to sign a written contract, and therefore not good. Is this a valid defense?

Ruling Court Case. Hedrick Vs. Piercy, Volume 98 Of The American Decisions At Page 774

One John Piercy was given parol authority by his father and uncle to settle a certain controversy with Hedrick and to sign their names to bonds given for the settlement of the controversy. In accordance with this request, John Piercy settled the controversy and gave a note for $100, and signed the names of his father and uncle, by himself, as agent.

In an action upon this note it was contended by the obligees of the note that the authority of the agent should have been in writing. Justice Maxwell rendered the opinion: The Court held that since the act of the agent was not done under seal and did not pertain to land or other matter covered by the Statute of Frauds, there was nothing to prevent John Piercy from executing the note in question under parol authority and that written authority was unnecessary. Therefore the defendants, the father and uncle, are liable on the note, and the finding is for Hedrick, the plaintiff.

Ruling Law. Story Case Answer

Unless some statute otherwise provides, the grant of authority need not be in writing. An agent need not have written authority to make a written contract. A written contract and a parol contract are said to be of the same rank. We will note later, however, that the Statute of Frauds requires that certain contracts must be in writing. This is not true, however, of the usual agency contract, i. e., contracts not having reference to land or work to be done more than a year from the time when the contract is made. Since, in the Story Case, the act done by the agent was merely the signing of the building contract, authority to do this need not be in writing and Beal is bound by the contract.