## Facts

- Hotel owners/developers H.H. (Todd) Taylor and C.A. Taylor (and their company) hired Ramsay-Gerding Construction Co. as general contractor for a Lincoln City, Oregon hotel.
- The contractor proposed and installed ChemRex, Inc.’s SonoWall stucco system through a subcontractor.
- During construction, Todd Taylor became concerned that galvanized metal fittings in the system could rust, and construction was suspended pending assurances.
- A meeting occurred at the project site with the Taylors, contractor representatives, the stucco installer, and Mike McDonald, ChemRex’s Oregon territory manager.
- At the meeting, McDonald made product and warranty representations, including that ChemRex provided a five-year warranty for the SonoWall system.
- After the meeting, McDonald sent a letter on ChemRex letterhead, signed “Territory Manager,” confirming a five-year warranty for the SonoWall system installed on the Taylors’ hotel.
- After completion, rust was discovered; the Taylors notified the contractor and ChemRex, but the condition was not corrected.
- The Taylors sued for breach of the express five-year warranty; a jury found McDonald had apparent authority to grant the warranty, found breach, and awarded damages (reduced for comparative fault).
- The Court of Appeals reversed for insufficient evidence of apparent authority; the Oregon Supreme Court granted review limited to the apparent-authority issue.

## Issues

1. Whether there was legally sufficient evidence for a reasonable jury to find that ChemRex’s territory manager had apparent authority to bind ChemRex to an express five-year warranty.

## Decision

- The Oregon Supreme Court reversed the Court of Appeals.
- The Court held the evidence permitted a reasonable jury to find ChemRex, through its manifestations, caused the Taylors to reasonably believe McDonald had authority to issue the warranty.
- The Court remanded to the Court of Appeals to address remaining issues not previously reached.

## Legal Principles

- Apparent authority exists when a principal’s manifestations cause a third party reasonably to believe the agent has authority to act for the principal on a particular matter.
- Apparent authority turns on the principal’s conduct as perceived by the third party, not solely on the agent’s own assertions of authority.
- A principal’s manifestations may include placing an agent in a position of responsibility, authorizing the agent to act as the principal’s spokesperson in dealings with the third party, and permitting written assurances on company letterhead with an official title.
- When reviewing a jury verdict on apparent authority, appellate courts must view the evidence in the light most favorable to the prevailing party and must not reweigh competing inferences if the record supports a rational inference of authority and reliance.

## Conclusion

The Oregon Supreme Court held that ChemRex’s conduct—sending its territory manager to address on-site concerns and allowing him to confirm warranty coverage in writing on company letterhead—could support a jury finding of apparent authority to issue an express five-year warranty, requiring reinstatement of the verdict and remand for consideration of other unresolved appellate issues.


Taylor v. Ramsay-Gerding Constr. Co., 345 Or. 403, 196 P.3d 532 (Or. 2008)