I. Introduction: Unincorporated Business
A. Sole Proprietorship (Agency)
1. What is an Agent?
Restatement 2d Agency
Rst. 2d. Sec. 1: Agency; Principal; Agent
(1) Agency is the fiduciary relation which results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act.
(2) The one for whom action is to be taken is the principal.
(3) The one who is to act is the agent.
-Agency includes an employee relationship.
Test for Agency
1) Manifestation by the principal that the agent will act for him;
2) Acceptance by the agent of the undertaking
3) Understanding between the parties that the principal will be in control of the undertaking
Gorton v. Doty (p.1)
Facts: Gorton (P) was injured in an automobile accident after Doty (D) loaned her vehicle to Garst to transport Gorton (P) and others to a football game. Gorton (P) (Student in car) sues Mom/teacher, claiming coach was agent of Mom.
Rule: An agency relationship results from one person’s consent that another will act on his behalf and subject to his control, and the other person’s consent to act.
A principal-agent relationship not only arises when one transacts business for another, but also when one is generally authorized to manage some operation for another person. Def. here volunteered her care on the express condition that Garst drive it. She could have driven the car herself but wanted Garst to drive it specifically. No contract is needed. When a driver has control over another person’s car, whether the owner is present or not, the driver’s permissive use of the vehicle is a prima facie case of agency. Affirmed.
-Consent – she consented to use of the car.
-Control – she conditioned use of her car on the coach driving.
-The Court makes a point of her failure to tell the coach that she was “loaning” the car. Perhaps if there had been a formalization of a borrowing, then perhaps she would have been excused.
-If plaintiff merely “loaned” her car, then there is no agency.
-Form v. Substance: This case was about form.
– Mrs. Doty should have had a rental agreement w/ the coach which placed no conditions upon his use of the car and control is his and disclaiming liability and requiring him to represent that he had his own insurance and that he will indemnify her if there is an accident.
A. Gay Jenson Farms Co. v. Cargill (p.2)
Facts: The plaintiffs entered into grain contracts with Warren Grain and Seed Co. which was financed and controlled wit
. Alfonse sells her car for a third of its value. Is Patty obligated to sell the car for a third of its value to the customer? You would have to look at what a reasonable person would do. If the manifestations are sufficient, then Alfonse had the Authority to sell the car.
Rst. 2d. Sec. 2: Master; Servant; Independent Contractor
Rst. 2d. Sec. 3: General Agent; Special Agent
Every now and then, the Restatement of Agency (2nd) makes a distinction between acts done by a “general” agent and acts done by a “special” agent. The Restatement defines a general agent as “an agent authorized to conduct a series of transactions involving a continuity of service.”
2. Agent =s Authority & Duty
Rst. 2d. Sec. 2: Master; Servant; Independent Contractor
Rst. 2d. Sec. 3: General Agent; Special Agent
Rst. 2d. Sec. 7: Authority (Principal-àagent)
-Authority is the power of the agent to affect the legal relations of the principal by acts done in accordance with the principal’s manifestations of consent to him.
