1. Basic Research LLC advertised its products on television networks owned by Rainbow Media Holdings Inc through an ad agency Icebox Advertising Inc. As Basic's agent Icebox had express authority to buy ads from Rainbow on Basics behalf, but the authority was limited to buying ad with cash in advance. Despite this limit Rainbow sold ads to Basic through Icebox on credit. Basic paid Icebox for the ads, but Icebox did not pass all of the payments on to Rainbow. Icebox filed for bankruptcy. Can Rainbow recoup the unpaid amounts from Basic? Explain.

2. Western Fire truck Inc contracted with Emergency One Inc (EO) to be its exclusive dealer in Wyoming and Colorado through Dec. 2003. James Costello, a Western Salesperson, was authorized to order EO vehicles for hi customers. Without informing Western, Costello emailed EO about Westerns diffuclties obtaining cash to fund its operations. He asked about the viability of Westerns contract and his possible employment with EO. On EO's request and in disregard of Western's instructions, Costello sent some payments for EO vehicles directly to EO. In addition, Costello, with EO's help, sent a competing bid to a potential Western customer. EO's representative emailed Costello, "you have my permission to kick (Westerns) ass". In April 2002, EO terminated its contract with Western, and, after reviewing Costellos email, fired Costello. Western Filed a suit in Colorado state court alleging Costello breached his duty as an agent, and that EO aided and abetted the breach.

a) Was there an agency relationship between Costello and Western? Western required monthly reports from its sales staff however Costello didn't report regularly. Does this indicate Costello wasnt Western's agent. In determining the existence of agency relationship, is right to control or the fact of control more important?

b) Did Costello owe Western a duty? If so, what was it and did he breach?

c) A Colorado statute allows punitive damages to be awarded if there is malice, fraud, or will/wanton conduct. Did that exist in this case and should punitive damages be assessed in this case?