Menard, Inc. v. Dage-MTI, Inc.
Indiana Supreme Court
726 N.E.2d 1206 (2000)
Dage-MTI, Inc. (defendant), an electronics manufacturer, was run for years by its president, Arthur Sterling, with little board oversight; he had previously bought land on the company's behalf without board approval. When Menard, Inc. (plaintiff) offered to buy part of a 30-acre parcel Dage owned, the board rejected certain terms. When Menard later offered to buy the entire parcel, the board told Sterling he could only solicit offers for board review, not bind the company. Sterling nonetheless negotiated with Menard and signed an agreement — containing the same terms the board had objected to — representing that he had authority to bind Dage. The board later tried to unwind the deal and told Menard it would challenge the agreement. Menard sued for specific performance; the trial court sided with Dage, finding Sterling lacked authority.
Whether the president of a corporation has inherent agency power to bind the corporation to a contract that is within the ordinary scope of his duties, when the third party has no notice that he lacks authority.