[nc-transfer] Thoughts on the conference call - Part I "Apparent Authority & Indirect Channels"

["Ross Wm. Rader" <ross@tucows.com>]

I'd like to thank everyone for their participation on the teleconference
yesterday. It is an important step forward on this issue and our
constituency appreciates the sacrifice of time towards this goal.

In general, I think that the teleconference went very well. Each party made
some very salient and worthy points that we should take care to include in
our deliberations. Some of these points however have very deep roots that
bear further examination.

After writing this message, I realized that it was interminably long. I have
since broken them up into a number of separate messages which should make
it more digestible ;) and allow for a more focused discourse if any of you
would like to pick up on any of the specific points I've made. The first of
these messages is picked up below.

On the issue of "Apparent Authority" & "Indirect Channels"...

Apparent Authority is not defined within any of ICANN's contracts -
registrar, registry, whatever. This has caused concern with some parties
because any perceived ambiguity in interpreting this specific statement can
lead to the implementation of inappropriate process by registrars. The
victim of these inappropriate processes will almost always be the
registrant. It is important to note however that the Apparent Authority is a
concept of law and not some creation of ICANN policy;

"The elements of apparent authority are: (1) a "holding out" of the party as
an agent; and (2) reasonable reliance by a third party on the principal's
conduct.  See Raglin, 230 Ill. App. 3d at 647-650; Gilbert, 156 Ill. 2d at
523.  See also Restatement (Second) of Agency, 265, 267 (1957). The apparent
authority theory focuses on "holding out" someone as an agent and reasonable
reliance by a third party on such representations.  See Raglin, 230 Ill.
App. 3d at 647-650; Gilbert, 156 Ill. 2d at 525-526.  As the court in
Gilbert put it:

'Apparent authority in an agent is the authority which the principal
knowingly permits the agent to assume, or the authority which the principal
holds the agent out as possessing.  It is the authority which a reasonably
prudent person, exercising diligence and discretion, in view of the
principal's conduct, would naturally suppose the agent to possess.' Gilbert,
156 Ill. 2d at 523.

 Whether a person has notice of an agent's lack of authority is a question
of fact.  Gilbert, 156 Ill. 2d at 524."

 [For more details, refer to
http://www.state.il.us/court/Opinions/AppellateCourt/1998/1stDistrict/March/
HTML/1953959.txt where this text was originally excerpted from.]

 As Louis Touton has already clarified in communications to the Registrar
Constituency, "If there was a contractual provision in the ISP subscription
agreement appointing the ISP as an agent/attorney-in-fact for registrar
sponsorship, this would be acceptable as apparent authority. Simple
contractual language absent this agent/attorney-in-fact language would not
be sufficient to convey apparent authority to an ISP. Notwithstanding, the
gaining registrar would still have to provide existence of this
documentation to the losing registrar if requested."

Thus, contract law in the United States and English-speaking jurisdictions
is quite clear on the concept of apparent authority.

If a formal statement of definition is desired (as I think it is by some
parties), then care must be taken to ensure that the statement is consistent
with existing law.

I turn now to the contention that "...indirect channel models will be
negatively impacted if we don't study the issue further". It very plainly
appears that all a registrar must do to facilitate an indirect sales model
is to govern the relationship and rights of the registrant and resellers
through tri-partite agreements, as Louis has already explained. As far as I
am aware, this model is already followed by all registrars employing
indirect sales channels.

Thanks,

-rwr