BUSINESS ASSOCIATIONS
Closed book exam; multiple choice (more than usual) & essay (about half/half)
A. Facts
1.
B. Procedure
1.
C. Legal Question
1.
D. Argument
1.
E. Rules
1.
F. Opinion
1.
G. Dissent
1.
Business Forms
– Agency
– General partnership
– LLC
– Corporation
I. AGENCY
SECTION 1 – Who is an agent?
A. AUTHORITY
Gordon v. Doty (p1)
A. Facts
1. The son was injured in a car accident while being transported to a school football game. The son’s coach was the driver of the owner’s car
B. Procedure
1. Plaintiffs, father and son, brought suit against defendant owner for injuries sustained in an automobile accident. The District Court entered judgments in favor of Π. The trial court denied the owner’s motions for new trial. The owner appealed.
C. Legal Question
1. Was the coach the agent of the owner while and in driving her car?
D. Argument
1. Π: theory of recovery against the owner was based upon the alleged negligence of the coach, acting as the special agent of the owner
2. Δ: no agency relationship existed, because she loaned her car to the coach
E. Rules
1. agency indicates the relation which exists where one person acts for another. It has these three principal forms:
1). The relation of principal and agent;
2). The relation of master and servant; and,
3). The relation of employer or proprietor and independent contractor
2. agency is the relationship which 1) results from the manifestation of consent by one person to another that 2) the other shall act on his behalf and subject to his control, and consent by the other so to act
3. principal-agent relationship: one undertakes to transact some business or manage some affair for another by authority and on account of the latter
F. Opinion
1. For Π; the evidence supported the finding that the relationship of principal and agent existed between the coach and the owner.
G. Dissent
1. Agency means more than mere passive permission
2. Loan was nothing more than kindly gesture;
a. Fact that coach should drive it was mere precaution that boys shouldn’t drive it
3. One who borrows car for his own use is a gratuitous bailee and not an agent of the owner
Owner could have taken more steps to ensure safety
Restatement of Agency (Second)
– Requires control of agency; if you reserve right to control
A. Gay Jenson Farms Co. v. Cargill, Inc. (p7) (E&E 176-186)
A. Facts
1. Plaintiffs (86 individuals, partnerships, or corporate farmers) sue Δ (Cargill – creditor, PRINCIPAL) and Δ (Warren – debtor – AGENT) to recover losses sustained when the debtor defaulted on contracts made with the farmers for the sale of grain
2. creditor financed the debtor’s grain elevator operation and purchased the majority of the debtor’s grain
a. Warren stored 90% of Cargill’s grain, and Cargill also gave Warren lines of credit subject to information and reports by Warren to Cargill. Cargill is sued as principal for Warren’s default on other loans.
B. Procedure
1. For Π; Δ creditor appealed
C. Legal Question
1. whether the creditor, by its course of dealing with the debtor, became liable as a principal on contracts made by the debtor with the farmers
D. Argument
1. Δ Cargill:
a. Cargill never consented to agency (wrong)
b. Warren didn’t act on behalf of Cargill (wrong)
c. Cargill didn’t exercise control over Warren (wrong)
e. relationship b/t Δ and Warren was buyer-supplier
E. Rules
1. A creditor who assumes control of his debtor’s business may become liable as principal for the acts of the debtor in connection with the business. A security holder who merely exercises a veto power over the business acts of his debtor by preventing purchases or sales above specified amounts does not thereby become a principal. However, if he takes over the management of the debtor’s business, he’s an agent
2. An undisclosed principal is not discharged from liability to a third party by payment to an agent, unless it does so with reliance on the conduct of the third party.
F. Opinion
1. For Π; agency relationship was established (Cargill is principal)
2. First, a creditor who assumes control of his debtor’s business may become liable as principal for the acts of the debtor in connection with the business.
a. A creditor becomes a principal when he assumes de facto control over the conduct of his debtor, whatever the
e church member for the hours worked by the Δ prior to the injury. The Δ filed a claim for workers’ compensation benefits, and the old board denied compensation. The new board later reversed that decision and remanded the case to an administrative law judge to determine the amount of compensation, and the Π appealed
B. Procedure
1.
C. Legal Question
2.
D. Argument
3.
E. Rules
4. Implied authority is actual authority circumstantially proven which the principal actually intended the agent to possess and includes such powers as are practically necessary to carry out the duties actually delegated
a. In examining whether implied authority exists, it is important to focus upon the agent’s understanding of his authority. It must be determined whether the agent reasonably believes because of present or past conduct of the principal that the principal wishes him to act in a certain way or to have certain authority. The nature of the task or job may be another factor to consider. Implied authority may be necessary in order to implement the express authority. The existence of prior similar practices is one of the most important factors. Specific conduct by the principal in the past permitting the agent to exercise similar powers is crucial
5. Apparent authority is not actual authority but is the authority the agent is held out by the principal as possessing. It is a matter of appearances on which third parties come to rely
Agency cannot be proven by a mere statement, but it can be established by circumstantial evidence including the acts and conduct of the parties such as the continuous course of conduct of the parties covering a number of successive transactions. Specifically one must look at what had gone on before to determine if the agent had certain authority
