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Business Organizations
Touro Law School
Miller, Meredith R.

Agency is the relationship 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

Consent…which is by outward manifestation (parties words)
Agent acts on behalf of principal
Principal exercises control

Restatement (second) of Agency §14 O
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

If the lender exercises more than ordinary control than were going to
have an agency/principal relationship

Restatement 2d Agency §14 K: One who contracts to acquire property
from a third person and convey it to another is an agent of the other
only if it is agreed that he is to act primarily for the benefit of
the other and not for himself.
That he is to receive a fixed price for the property irrespective of
the price he paid.
That he acts in his own name and receives the title to the property
which he thereafter is to transfer.
That he has an independent business in buying and selling similar property.

** Implied Authority:-_ 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

**Apparent authority: Authority the agent is held out by the
principal as possessing

** Concepts of ACTUAL vs. APPARENT authority –_ for a principal to be
on the hook for an agent’s action there has to be authority
established —- so we can conclude the principal is liable
ACTUAL –an objective manifestation by the principal followed by the
agents reasonable interpretation of that manifestation, which leads
the agent to believe he is authorized to act on behalf of the
a) Expressed Authority -_ where principal tells agent you are
authorized to do this and that Ex) Joe owns a house, wants to sell
house, gets real estate agent and tells him your authorized to sell my
house, therefore agent expressly authorized to sell Joe’s house (were
looking at the manifestations of the principal to the agent)

b) Implied Authority — Authority to do acts which are incidental to
it uasually accomapny it or are reasonable necessary to accomplish
it… sometimess based on custom or past dealin
Different ways that authority can be conferred that might not be

Ex) Authority given to an agent that is incidental (Joe has just said
that you can sell my house, he didn’t say you could take an ad in the
paper, but that is incidental to selling the house, so its part of the
act, and its implicit so its all good— he has the authority) —
other things like CUSTOM and PRIOR DEALINGS —- its customary for an
agent to put an ad in the paper saying open house and prior dealings
(how the parties dealt in the past)

2) APPARENT—_ We decided that the agent wasn’t authorized to act in
this way, but it appeared to the world that the agent had the
authority to do what he did
– In this scenario, were looking at what the principal manifested to
the 3rd party (the big distinction)
– Was the 3rd party reasonable in believing there was authority?
– What the principal has done (the principal’s actions or inactions)
to indicate to 3rd party that agent has the authority

** Apparent authority arises when a principal acts in such a manner as
to convey the impression to a 3rd party that an agent has certain
powers which he may or may not actually possess

Apparent Authority

w Albert and Vespaholics?
Yes and No. What do you need to show to have an agency relationship?
Did Vespaholics consent to Albert being an agent? Yes, b/c they gave
him the domain name but you could argue in the alternative; b/c it
doesn’t necessarily mean that you work for that company—Albert
doesn’t even work for Vespaholics—if we look to whether the company
had control over what Albert did here—
1st issue is whether there is an agency agreement — what it would
appear to the world if Albert was authorized
– if there is no agency relationship than you cant ask the next question
– Let’s say Albert is an employee, but he’s hired to sweep the
floors—next question is whether its actual or apparent authority
—with this hypo—no actual authority — but there is apparent
authority—it would be reasonable for Len to believe that Albert had
this authority to make these deals with the domain name based on
Vespaholics manifestations — whats the argument that Len’s belief
might not be reasonable (he never had dealings with the principal)

** domain name without more doesn’t create a reasonable belief that
the person is cloaked with the ability to act (decision of a Mass
court on a similar case) — what are your next two
issues—ratification and estoppel —

Estoppel argument
-vespaholics was careless and we look to estopp them from asserting no
agency relationship since the guy relied and is out moeny to