Business Associations
AGENCY
1) Agency is a fiduciary relationship between a principal and agent where the agent Acts on the principals behalf and subject to principals control and the agent agrees t the same.
2) Rest’d Agency
a) 7.01—An A is liable to a 3d party by A’s totious conduct unless the law provides otherwise. (look me up)
b) .03—The Principal is liable when the A acts with actual authority or P’s consent AND it is tortous or if done by P would make P liable
i) If A harms someone in the course of his employment
ii) If P is negligent in selecting, supervising or controlling A.
3) The Principal manifests his assent to the Agent creates the relationship.
a) This manifestation need not be in writing and can come from ambiguous words provided:
i) Principal has right to control or does control the agent
ii) The agent has consented to be the agent.
iii) Mere titles cannot disavow an agency relationship when one exists (franchise agreements that say that you are not the agent)
4) We hold the principal liable for the acts of the agency because the P is in the best position to select competent employees. Also it allow for a better spreading of the risk to protect the innocent party.
5) Typical defenses
a) Agent was acting outside the scope of his authority or employment
i) Restd 228—Was what the A did the kind of work he was hired to do?
ii) Did he do it substantially within the time and space limits of his work?
iii) Was the purpose to serve the master?
b) Forbidden acts or criminal or totious acts MAY be within the scope of the authority.
c) The agent was really an independent contractor:
i) No right to control the contractor
(1) Dealer hires drivers, give them autonomy (business problem) and hire them carefully.
6) Agency can be created without a writing and for a gratuitous purpose (see the lady giving her car to the coach and being able to sue the school board). If the lady just loaned it she wasn’t liable, but she had a condition precedent which established control and that made an agency relationship.
7) Grainary case—Look to factors in aggregate
a) Right of first refusal
b) Constant recommendations to the other entity
c) Inability to enter contracts or financial relationships without the other’s approval
d) Ability to enter property
e) Correspondence and criticism
f) The agent co said it needed guidance
g) Financing ALL of the purchases and expenses.
h) Other factors
i) Supplier is to receive a fixed price regardless of the price paid by him (MOST IMPORTANT)
ii) He acts in his own name and receives title to the property which he thereafter transfers
iii) He has an independent business in buying and selling similar property.
8) Merely exercising a veto option is not enough to make the company a P, it is the control over the debtor that makes him a P.
9) Implied authority—Actual authority circumstantially proven which the P actually intended the agent to have including powers needed to carry out the duties delegated.
a) Church told C to paint knowing C needed an assistant. Church told C to hire G but did not tell him he had to, C had previously hired B his brother. C hired B, and B got hurt; the occur found agency.
10) Apparent authority—is not actual authority but is the authority than the P holds the A out has having. It is a matter of appearances.
11) Types of authority
a) Actual—2.01—A reasonably believes according to P’s manifestations P wishes A to ask
i) The scope is that which the P told A to act for and any power necessary or incidental to achieving P’s objective as the A understands them to be.
b) Implied—2.02(1)—Necessary or incidental to achieving the P’s objectives
i) A regional manager told a party that he would get commission, turns out the manager didn’t have the power, but the company is bound regardless because Implied authority is “the kind of authority arising solely form the designation by the P of a kind of agent who normally possesses certain powers.”
c) Inherent power—Rests 8A—power of A that is separate from apparent authority and is based SOLELY form the agency relation. Can arise without any apparent authority. P is liable if A makes a contract that other similar A’s would be able to make even if P did not authorize it.
i) A does something similar to what has is authorized to do but in violation of his orders. This binds the P.
ii) A acts for his own purposes which would have been authorized if P knew of them.
iii) A can dispose of goods and departs form authorized method.
iv) A acts for P and it is fairer that P get stuck than a 3d party
d) Apparent 2.03—Look at
i) 3d party reasonably believes the actor had authority to act on behalf of the principal AND
ii) The belief is traceable to the principal’s manifestations When id doubt go to restatement
(1) 3.03—is created by a person’s manifestation that another has the authority to act with legal consequence for the P and the above 2 are met.
(2) Principal holds someone out and 3d party believes it
iii) The case where the leasing agent signed a K for the company and they tried to get out saying she didn’t have the power to bind.
iv) The music agent case: Musical agents generally have the authority to make a singing
e of employment considering
(1) Time and place of the purpose of the act
(2) Similarity to the acts which the servant is authorized to perform
(3) Whether the act is commonly performed by servants
(4) Extent of departure from normal methods
(5) Whether the master would reasonably expect such an act to be performed.
ii) Time and place were met because taking money in the store was his job.
(1) Under purpose test D would say the cashier was not acting in the purpose o motive of the employment because she was hurting and not aiding the company.
(2) P would lose under purpose motive so they have to go after Foreseeablity and say that the conduct was foreseeablility.
19) Principal’s liability for the agent
a) 219—A master is liable for the torts of his Agent while in the cope of employment. He is not liable for those outside the scope UNLESS
i) the mater intended the consequence
ii) P was negligent or reckless
iii) Involved a non-delegable duty
iv) The Servant purported to be on the behalf of P and there were reliance on the statements OR he was aided by the existence of the agency relationship.
b) 220—A servant is a person employed to do the services of another who retains physical control over the services. Agent or Indpt contractor
i) extent of control which may be exercised by P whether used or no
ii) Whether one is engaged in a distance occupation or business
iii) The occupation with reference to the locality and customary control or lack thereof of the supervisor
iv) Skill employed in particular occupation
v) Who supplies the tools and supplies
vi) Method of payment, time or job
vii) Whether the work is part of P’s regular work
viii) Whether the parties believe it to be a master servant relationship
c) 228-Scope of employee is only
i) kind A is employed to D
ii) substantial in time and space limits
iii) done in part for the purpose of the P
iv) if force is used it was not unforeseeable by the master (bouncer)
v) If to removed in time or place or authorized limits, or not for the master than it is not in the scope of employment
