Legal Definitions - equal-dignities rule

The equal-dignities rule is a legal principle in agency law. It dictates that if a particular legal act is required by law to be in writing, then the authority given to an agent to perform that act on behalf of another person or entity must *also* be in writing. In essence, the agent's authorization must possess the same level of formality—or "dignity"—as the act itself.

This rule is often applied in conjunction with the Statute of Frauds, a set of laws that require certain types of contracts (like those for real estate or agreements that cannot be performed within one year) to be in writing to be legally enforceable. The equal-dignities rule ensures that when an agent is involved in such a transaction, their power to act is clearly and formally documented, preventing misunderstandings and potential fraud.

Here are a few examples to illustrate the equal-dignities rule:

• Real Estate Sale: Imagine Sarah owns a vacation home in another state and wants to sell it. She verbally tells her friend, David, "Please find a buyer and sign all the necessary papers for me." David finds a buyer and signs a purchase agreement on Sarah's behalf. Because contracts for the sale of real estate are legally required to be in writing, the equal-dignities rule would require that Sarah's authorization for David to act as her agent (for example, through a written power of attorney) *also* be in writing. If David only had verbal permission, the signed purchase agreement might not be legally binding on Sarah, as his authority did not have the same "dignity" as the contract itself.

• Long-Term Service Contract: A small business, "Creative Designs Inc.," wants to hire a marketing consultant for a three-year term. The company's CEO verbally instructs the Head of Operations, Maria, to negotiate and sign the three-year consulting agreement. Since contracts that cannot be completed within one year are typically required to be in writing, the equal-dignities rule would mandate that the CEO's authorization for Maria to sign this long-term agreement on behalf of Creative Designs Inc. *also* be in writing. If Maria signs the contract based only on verbal instructions, the company might later argue that the agreement is not enforceable against them because Maria lacked proper written authority.

• Loan Guaranty: Michael wants to help his sister obtain a business loan. The bank requires Michael to provide a written guaranty, promising to repay the loan if his sister defaults. Michael is traveling and asks his assistant, Emily, to sign the guaranty agreement for him. Because a promise to pay the debt of another (a guaranty) is legally required to be in writing, the equal-dignities rule dictates that Michael's authorization for Emily to sign this specific document on his behalf *must also* be in writing. Without written authorization for Emily, the bank might not be able to legally enforce the guaranty against Michael, even if Emily signed it.