Tom Rex was a former baseball player who pursued his dreams of starting a vintage car business and investing in start-ups after his retirement in 2000. He became a successful businessman and attained billionaire status through his ventures. Megan Mensa, interested in buying a vintage car, contacted Josh Phillips, a friend of Rex, who claimed to be an agent for Rex's vintage car company. He provided catalogs and assured Megan that the company ships cars to other states. Josh showed her pictures of him and Rex surrounded by vintage cars and a newspaper clipping where Rex stated he was a vintage car enthusiast. Rex never expressly stated or indicated in the clipping that Josh was his agent. Josh also texted Megan a clipping from another popular newspaper where Rex, when asked who Josh was to him, stated to the interviewer that "Josh was a treasured friend."

Josh told Megan he was the one who purchased all the cars that were now in Rex's inventory. He sent a picture to her via text, showing himself and Rex surrounded by vintage cars from different manufacturers. He also sent Megan a newspaper clipping with Rex standing next to him with the caption: "Rex the Vintage Car Enthusiast."

Megan and Josh entered a contract to purchase a Ford Model T car for $1 million. After Megan wired the money to Josh, he disappeared with the funds.

1. Using the legal principles of agency you have learned, short analysis of whether you think or not an agency exists between Rex and Josh. Can Megan sue for a breach of contract? If not, what can she sue for, and whom can she sue?
2. What could Megan have done to protect herself from falling victim to this situation? Guided by the legal principles of agency, can Megan collect damages from Rex, why or why not?
3. What ethical considerations should be considered when engaging in business transactions, particularly with friends or acquaintances?
4. How might Rex's reputation and business be affected by the actions of Josh in this situation, and what steps could he take to mitigate any damage?