A. What is an agent?
1. Agency involves the extent to which a first person incures an obligation to 3rd person upon the words and obligations of a 2nd person.
2. 2nd Restatement of Agency
a. Agency is the fiduciary relation which results from 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.
b. The one for whom action is to be taken is principle.
c. The one who acts is an agent.
B. Elements of Agency Relationship
3. On Behalf of
-Consideration not needed. Can be gratuitous relationship
C. Proof Agency
1. Proof of agency is normally one of fact
2. The burden of proof is one asserting an agency relationship
3. However, the court is looking at agency relationships with presumptive belief since the increasing amount of agency relationships so there is presumption towards an agency relationship.
D. Parties needed for agency relationship
1. Principal-Power to commit legal act
2. Agent-Power to commit act physically or mentally
3. 3rd party
E. For an agent to be sued the agent must act or violate a duty. Douglas v. Steele
1. Duty to act with care, skill, and diligence a fiduciary rendering that kind of service would be reasonably expected to use.
2. The fact that the travel agent suggested use a different tour operator, coupled with the fact that the travelers received no immediate response from either the travel agent or the tour company, permitted an inference that the travel agent had some adverse information about the tour company which she had a duty to disclose to the travelers. There was a duty to disclose when information obtainable and was not clearly obvious.
F. Agency does not extend beyond the relationship between principal-agent relationship and there is no cause of action by a 3rd party unless the party relied on the agent’s promises. Allen v. Lindstrom.
1. Primary duty was solely to the sellers so there is no duty to the buyers that converts into liability unless there is foreseeable reliance.
G. An independent contractor can be an agent when the independent contractor is subject to control of the agent. Palmer/Carswell Inc. v. Condominium Apartment Insurance Services.
H. Seller and buyer relationship is never sufficient for an agency relationship. No control over distributers day to day business activities do not show more than this kind of relationship. Hunter Mining Laboratories v. Management Assistance.
1. Only when a manufacturer controls the day to day or operative details of the dealer’s business is an agency relationship potentially created.
I. Recognition does not mean control or that there is an agency relationship. Edwards v. National Speleological Society.
J. Agency relationship found in kids that were acting probates for estate. Dierksen v. Albert.
II. Agent as a Fiduciary
A. What is a fiduciary duty?
1. What does fiduciary mean?
“of, relating to, or involving a confidence or trust: as
a: held or founded in trust or confidence
b: holding in trust”
2. A fiduciary calls for a duty of loyalty to the principal when dealing in the agency relationship. The duty of loyalty includes a duty not to compete with the principal in the absence of his knowledge and consent. Meinhard v. Salmon
1. A conflict of interest or self dealing raises a prima facie case of breach of the duty of loyalty.
2. In this case, there was a duty to inform of new lease which D did not and D signed the new lease for self.
3. Restatement 3d Agen 8.01
a. An agent has a fiduciary duty to act loyally for the principal’s benefit in all matters connected with the agency relationship
b. Comment B- Although an agent’s interests are often concurrent with those of the principal, the general fiduciary principle requires that the agent subordinate the agent’s interests to those of the principal and place the principal’s interests first as to matters connected with the agency relationship.
B. Scope of Fiduciary Duty
3. Fiduciary obligation, although a general concept, is not monolithic in its operation. In particular, an agent’s fiduciary duties to the principal vary depending on the parties’ agreement and the scope of the parties’ relationship. The scope of an agency re
1. No liability from actions one co-agent on another.
2. To be a co-agent both agents have to work on behalf the principal.
D. Escrow Agents
1. An escrow “is a deed, money or chattel delivered to a person, the holder, by another and which the holder contracts to until the happening or non-happening of an event; if the event happens, or fails to happen before a specified time, the escrow is to be delivered to a third person; otherwise (the holder) is to return it to the depositor.”
IV. Vicarious Liability
A. What is vicarious liability?
1. Restatement 2.04
a. An employer is subject to liability for torts committed by employees while acting within the scope of their employment.
2. If a vicarious liability claim is released against the employee than the employer is released from the action. Cobb v. Corbett
3. Public Policy can be deciding factor when determining if vicarious liability. The presumption is that full time employment creates the right of control. Hardy v. Brantley, MD.
a. The court held defendant hospital was vicariously liable for negligent actions, if any, of defendant doctor who was independent contractor, because defendant hospital held itself out to the public as providing a service, patient engaged the services of defendant hospital without regard to the identity of a particular physician and relied upon defendant hospital to deliver desired health care.
b. 2 factors in deciding case:
i. Worked exclusively for hospital
ii. Used another’s provision for tool’s and supplies
c. Presumption that full time employment might create employee relationship?
4. Employee and Employer Relationship replaced servant-master relationship in 3rd Restatement.