Reference no: EM131192399

Question:

Manchester Automobile Repair is a small car repair shop. The owner, Jason Chambers, hired Tim Davidson as a mechanic. Tim was not given any authority to act on behalf of the shop. All prices for services are predetermined, and only Jason Chambers can provide estimates to customers for car repairs, purchase supplies for the business, or enter into contracts on behalf of the repair shop.

One afternoon, Jason Chambers had to leave the business at noon for an afternoon family event. Before he left he gave a key to Tim and said, "Please lock up the business at 5 p.m. and bring the key back tomorrow morning." While Jason is gone, a customer comes to the repair shop to have his car repaired. Tim provides the customer with an estimate of charges for the repair. The customer asks Tim if he can repair the car for less. Tim knows that he is not supposed to negotiate cost, but he doesn't want to lose a customer, so Tim verbally tells the customer that they can do it for $100 less, and Tim changes the estimate to reflect a cost of $100 less. The customer returns two days later to pick up his car. When Jason Chambers is processing payment, the customer pulls out his copy of the estimate showing the lesser amount, and calls Tim into the office. Tim confirms that he gave the customer a different cost estimate. Jason Chambers is not happy with Tim's actions but he does not want to alienate a customer so he processes payment for the lower amount.

What are the elements for an agency relationship to be created? Was Tim Davidson an agent of Manchester Automobile Repair? Why or why not? Was the customer entitled to conclude that Tim was an agent of the business? What legal concepts are implicated by these facts?