The Precedents and the Principle

Abstract

A February 1998 court decision granted an injunction sought by the owners of a Sheraton hotel, immediately dismissing Sheraton from operation of the hotel. Based on legal precedent, the court determined that the management contract created an agency that was revocable under common law, despite Sheraton's effort to establish an agency with interest. The court determined that Sheraton's 1-percent ownership share was insufficient to support a claim of agency with interest that could make the management agreement irrevocable. Under common law, the court held, the owner could dismiss its agent at any time (subject to possible damages under contract law).