A. Formation of Agency Relationship.
Agency Generally: 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
Agency is formed when there is (elements – all must be satisfied):
1. Some manifestation by the principal that the agent act on his behalf and subject to his control; and
2. Some Manifestation of consent by the agent so to act.
Key is the intentions of the parties (intent = agreement) as manifested in any way (express/implied) or by their actions;
Characteristics/Results of the relationship (factors – any or all can be met):
1. Agent’s power to alter the legal relations of the principal,
2. Agent’s duty to act primarily for the benefit of the principal (fiduciary duty),
3. The principal’s right to control the agent.
These are NOT ELEMENTS to be tested. Once the relation exists, all of this will occur. We can use them as factors to support our finding of Agency.
a) Green v. H&R Block: Court found agency because HRBlock was the agent for the tax returns, it couldn’t “turn off” its agency & become the bank’s agent for the loans. Correct result, but used the court erred by using the characteristics/results of the Agency as elements of Agency. Right result, wrong analysis.
b) Basile v. H & R Block: Same facts as Green, but the opposite result. The Court used the correct elements, but got the analysis wrong because it didn’t consider the Agency for purposes of the tax returns. Right analysis, wrong result.
Harmonizing Green & Basile (so that they both come out the same):
(1) Find agency for the purposes of the tax returns, but it was not breached because it was trivial.
(2) Find agency for the purposes of the tax returns, but say that there was no duty to disclose.
Steps: (a) Finding an agency relation,
(a)(1) Creates a fiduciary duty in Green, the Court didn’t mention this.
(a)(2) Creates a duty to disclose. (Neither court went into this.)
c) Bunting v. Koehr:The Court used the “altering legal relationships of the principal” characteristic/result of the Agency as an element. Koehr wanted to sue boat dealer for boat injury. The Court said that Mercury Dealer in the city was the agent for venue purposes. The dealer appealed.
The Court of Appeals Held: Not an agent because the dealer could sell other companies products, sells the Mercury for its own profit, not the profit of Mercury. As for the warranty argument, the court said that there was no agency because the dealer could not alter the legal relationships between Mercury & the ultimate consumer. Wrong analysis, wrong result.
Ricks’s Analysis for Bunting v. Koehr:
(a). Selling Motors: May be not. They buy from Mercury & dealer is responsible for inventory. What about merchandise (pu
(5) Financial arrangement and exact terms of compensation of the attorney-in-fact or of any other person concerned with the matter
(6) Copy any agreement concerning compensation
(7) Name of any attorney representing the attorney-in-fact
a) State of Giannopoulos: Court found there was no PoA where all the elements of the Statute were not satisfied. Also there were aspects of the PoA that gave the Court the impression of a fraud, such as the lack of an address, the translation of the document, the signature in Greek, etc.
1.- See Duty of Loyalty – Shock v. Nash for more on PoA.
2.- See King v. Bankerd about duty to the Principal
3.- Bright-line Rule: A PoA is strictly construed, & broad all-embracing expressions are discounted or discarded. No extrinsic evidence is considered to show otherwise. The document itself counts.
B. The Firms Contractual Liability.
Authority Generally: The Agent’s power to affect the legal relations (bind) of the principal by acts done in accordance with the principal’s manifestations of consent. R2A§7.
Principal is bound by the authorized acts of his Agent in entering into K’s on the principal’s behalf.