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Business Associations/Corporations
Temple University School of Law
Lipson, Jonathan C.

Agency
–          Definition –
o        an agent is any person who is authorized to act on behalf of another (known as the principal)
o       Restatement (Second) – agency relationship is a consensual relationship between a principal and an agent
–          developed as part of common law
–          Creation (from the Restatement (Second) of Agency §§1, 15
o       Principal consents to have the agent act on the principal’s behalf and under the principal’s control
o       The agent consents so to act 
o       No K required
–          Control
o       Key element to principal/agent relationship
o       For court to recognize P/A relation ship agent needs to have control to act for principal
o       From Basile v. H&R Block – where tax service recommended high interest rate loan. There was no P/A relationship b/c the D did not have the control to negotiate or enter the K for the loan.
–          Duties
o       Agent has a duty of loyalty to the principal
o       Agent must act solely for the benefit of the principal in all matters connected with the agency. Restatement (Second) of Agency §387
o       When are agents disloyal?
§         When their acts are inconsistent with promoting the best interest of their employer at a time when they were on its payroll.
§         Employee competes directly with her employer either on her own or as an agent for a rival company
§         Misappropriates her employer’s profits, property or business opportunities
§         Breaches her employer’s confidences
§         When you promote the interests of one principal to the detriment of another principal you have committed the tort of disloyalty. Food Lion Inc. v. Capital Cities/ABC, Inc.
·         you need a requisite intent to act against the interests of their second employer for the benefit of the main employer
·         simply working two jobs and inadequately performing during the second job b/c you are tired is not a breach of loyalty
o       ends the day the agency relationship ends
§         may compete against the former employer as soon as relationship is over
–          Principals of Attribution
o       Principals can be held liable for the tortious actions of their agents
o       Can be required to fulfill Ks into which their agents entered
–          four sets of rules
o       Express
§         actual express authority
·         Principal has actually said to the agent go and do something on my behalf
·         I tell someone to go buy a car for me
§         Implied authority
·         Almost always included when an actual authority is given
·         Run my business (actual authority)
o       Implied
§        

discrimination by the corporation
o       Unique only to the employer/employee relationship
o       Control
§         Principal must be able to understand 3rd parties reliance on what it is the agent is saying
§         To what extent did the principal control the agent’s creating the relationship
§         Do not need to control the precise decisions of the employer. Dias v. Brigham Medical Associates where hospital attempted to escape liability because they did not control precise treatment decisions of doctor
o       Benefit
§         Generally speaking principals benefit from agents action
o       Manifestation/consent
§         To what extent was the principal manifesting consent either apparent or actual    
o       Distinguishing between an employee and an independent contractor
§         Restatement (Second) of Agency § 220(2) lists ten factors
·         Where the work is done
·         Whose tools are used
·         Who directs the specifics of the work
·         How the person is paid
·         Fact specific inquiry
 
CORPORATIONS