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Business Organizations
Touro Law School
Crincoli, Shayna

 
Agency Law
 
Agency
I.       Who is an Agent?
A. Hypo 1:
B. Agency is the fiduciary relation which results from
i.    Consent by the principle for the agent to act
ii. Agent acting on behalf of the principle (& both parties intend this)
iii.         Understanding that the agent is subject to control by the principle.
a. Control only over the goal, not the means of accomplishing it (lawyers).
C. There’s an asymmetrical fiduciary duty (agent has duty to principle, but not vice versa)
D. An agency is inherently hierarchical – The principle controls (Courts will assume this fact)
E.   Formation & termination of an agency relationship
i.    Unlike a contract (which is negotiated etc.) an agency agreement is created very easily. Once A agrees to do something for P, and A is acting on P’s behalf & is subject to P’s control the agency relationship is created.
a. Gorton v. Doty, 69 P.2d 136 (1937) – woman tells the football coach who needs to transport students to a game to use her car (but only he can drive it). She volunteered the use of her car, no compensation. Accident happens & suit against the woman, as the principle. Agency relationship existed here between woman & coach. Woman consented that coach act in her behalf in driving her car by volunteering her car & her condition that only he drive it shows the control she had.
a. Principle: Dorty who loan the car Agent: Garst, the couch who drove the car TP: The minor student Gorton
b. How you describe it makes the diff on whether or not it’s agency:
(a) Gave permission – this is a loan, not agency
(b) Directed – telling him what to do – this is agency.
c. This is a little extreme b/c it almost looks like it was only a loan. But fact is that insurance is covering the woman, and the boy injured has no insurance. So looks like court just wanted to cover the boy.
d.Solution: if she had specified she is loaning the car to him, then that would have settled it.
e. The presumption is that the driver is the agent of the owner of the care. Must look at other factors, though.
f.   Can advise that saying this is loan and not agent in writing? It should be more complicate that you can be released by liability. And should be more specific that it is your liability that you drive this car b/c there is 3rd party.
g. School is immune b/ of sovereign immunity
b.It is not essential that there be a contract between the principle and agent or that the agent promise to act as such, nor is it essential to the relationship of principle and agent that they, or either, receive compensation.
ii. Agency can be terminated at the will of either party (notion that we don’t like involuntary servitude). Different from contract relationship which you cannot just breach & court will enforce.
F. Creditor-debtor relationship vs. agent-principal relationship
i.    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
ii. Gay Jenson Farms Co. v. Cargill, Inc., 309 N.W.2d 285 (1981) – Warren (W) is a local firm operating as a grain storage facility & as a middle man between the grain farmers & the worldwide dealer, Cargill (C). W then insolvent; doesn’t pay farmers, and farmers sue C. W & C had an agreement where C finances W, C buys grain from W & C has right of first refusal on the grain.
a. Principle; Cargill Agent; Warren- the storage facilities TP; Farmers
b. Why to store in their property? Wants to store in their property
c. What benefit Cargill would have by putting W? 1) control, but still can get interest by loaning money to W 2)by financing symbiotic reltionship to distribute the seed..?
d.By their symbiotic relationship C has responsibility to famers
e. The court found an agency relationship was created here. Existence of an agency may be proved by circumstantial evidence which shows a course of dealing between the two parties.
a. Consent by principle – C consented by directing W to implement certain procedures
b. Agent acting on behalf of principle – W acted on C’s behalf in procuring grain for C, as part of its normal operation which were totally financed by C.
c. Principle exercise control over agent – C had a lot of influence and control over W’s financial situation.
f.   9 factors; the solution to avoid the responsibilities? Less control! Less financing,
g. more control or less control; being principle is better than founding out they were principle by surprise.
h.An agreement may result in the creation of an agency even though parties didn’t call it an agency and did not intend the legal consequences of the relation to follow.
i.Someone who contracts to acquire something from a 3rd person and convey it to another is an agent only if it is agreed that he is to act primarily for the benefit of the other.
j.Problem – banks giving out loans being subject to agency
a. Difference for a bank is that the lender’s reason for financing is for the interest received. In Cargill, the reason for the financing was to establish a source of market grain for its business & took control of the operation for this purpose.
b. If you’re lending money to a borrower, you would probably take the steps Cargill did to make sure operating properly. Any of the measures Cargill took would be appropriate, but the problem in Cargill is that there is an extraordinary amount of control – too many of these things put together.
II.       Agency Power to Bind – Liability of Principle to third parties in contract
A. Actual Authority – principle gave the agent the authority explicitly; completely clear
                                    Should be agent’s belief
B. Implied Authority – 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.
i.    To determine whether implied authority exists, it must be determined whether the agent reasonably believes because of present or past conduct of the principal that principal wishes him to act in a certain way or have certain authority.
a. Sometimes may be necessary to implement express authority
b. Prior similar conduct
ii. Have authority because it’s something that normally goes along with the actual authority given.
iii.         Mill Street Church of Christ v. Hogan, 785 S.W.2d 263 (1990) – Church has hired Bill to paint in the past & has previously told Bill he can hire his brother Sam to help. Bill only uses Church’s tools & if he needs something goes to store & charges it to Church’s account. Church hires Bill again, needs help & goes to Church to ask for help. Church says to call Petty, but doesn’t tell Bill he must hire Petty, & told Bill that Petty’s hard to reach. Bill gets his brother Sam to help & Sam falls off a ladder owned by the Church. Church pays Sam for hours worked. Sam wants workers comp, but only employees get it.
a. Bill is an agent of the Church (an employee – Church hires Bill & has control over Bill)
b. Bill didn’t have actual authority to hire Sam, but had implied authority. And actual authority
a. past conduct – Bill had been allowed to hire Sam for previous work.
b. necessary to implement the express authority – in order to finish the work, Bill had to hire a helper.
c. agent reasonably believed he had the authority – practice in the past; Bill never told otherwise; Church even paid Sam for hours worked.
d.Is matter what sam believes? If it is issue it should be under apparent authority. Thus in this case it is irrelevant.
e. Hypo 3; w/o the principle’s authority is ann has still responsibility to janitor? What is the manifestation? The custom itself is manifestation by P to T. Generally Ann is the building manager in
C. Apparent Authority – when a principle acts in such a manner as to give the impression to a third party that the agent has certain powers which he may or may not actually possess.  It is a matter of appearances on which third parties come to rely.
i.    3rd parties have the right to believe the agent has the authority it is reasonable to believe they have by some manifestation of the principal.
ii. Dweck v. Nasser
a. Principle; Nasser Agency: Siboleth TP: Dweck
b. Counsel of record? Hayman, for the agency purpose the assumption is the counsel of record is agency. If the principle choose the lawyer that lawyer is the one who is going to be the agency.
c. Siboleth; he works with the dweck’s atty and hayman
d.Actual authority; shibboleth believes that he is the agent,
e. Implied authority; past conduct
f.   Apparent authority; tp believes that siboleth, either principle or hayman should have let tp(dweck) knows shibboleth is not agent.
iii.         Three-Seventy Leasing Corporation v. Ampex Corporation, 528 F.2d 993 (1976) – Joyce, the only employee of 370 corp, is in negotiations to buy HW from Ampex & is speaking to Ampex’s employee, Kays (salesperson). Kays sends Joyce an offer at the direction of Kays’ superior.
a. No manifestation to kays and no kay’s belief. Thus should focus on what joyce thought.
b.For this case, the sales person has authority to grant the agreement? The custom is hard to be understood by different industries.
c. Joyce and kays are friends eventhough the direct impact from the ampex that kays are the agent.
d.Unauthorized acts of general agent.
e.  To hire ppl as the sales person in the first sight can mean something?
f.   Even if agent made up that she has authority if the TP reasonably believes she is the agent there is apparent authority
g. Ampex does not have any connection with TP other than thorough Kays, how man

ncipal on a contract made by an alleged agent […] the party must assume the obligation of proving the agency relationship. It is not the burden of the alleged principal to disprove it.” Hoddesonv. KoosBros. (47 NJ  Super 224 (App Div 1957); p. 40) Hoddeson ordered furniture from a supposed salesman in a furniture store, paid cash, didn’t get a receipt. When checked back later, no record of order; appeared the salesman was a con artist who walked off with the cash. Court found furniture store liable for the order because it was the proprietor’s duty to protect its customers from such con artists.
Types of authority: “(1) express or real authority which as been definitely granted; (2) implied authority […] to do all that is proper, customarily incidental and reasonably appropriate to the exercise of the authority granted; and (3) apparent authority, such as where the principal by words, conduct, or other indicative manifestations has ‘held out’ the person to be the agent.” Hoddesonv. KoosBros. (47 NJ  Super 224 (App Div 1957); p. 40)
Estoppel 
ii. Hoddeson v. Koos Bros.
                                Joan Hoddeson went to the Koos Bros. furniture store to buy bedroom furniture.
                                She was helped by “a tall man with dark hair frosted at the temples and clad in a gray suit.” He accepted her order and her $168.50 in cash, but he turned out to be an imposter.
                                When Hoddeson realized that she was not going to get her furniture, she sued.
•     Why isn’t this a case of the apparent authority of an apparent agent?
•                             No holding out by Koos that tall man was its agent.
•     Why doesn’t Koos’ failure to police its sales floor constitute the requisite manifestation?
•                             “A manifestation is conduct by a person, observable by others, that expresses meaning.” Restatement (Third)  ง 1.03 cmt. b.
•     On remand, what will Hoddeson have to prove to make out a case of estoppel?
•                             Acts or omissions by the principal, either intentional or negligent, which create an appearance of authority in the purported agent
•                             The third party reasonably and in good faith acts in reliance on such appearance of authority
•                             The third party changed her position in reliance upon the appearance of authority
Some curious points 
•     Where agent had authority (of any kind) contract is binding on both P and T.
•                             Estoppel only binds P
•     Could the result in Watteau be explained on estoppel grounds?
•     Why did Koos Bros. litigate this case so vigorously?
Precedent as a public good
Class note
1. more like tourtourious duty not mere estoppel
2. what evidence she has to prove to show that the transaction lasts 30 to 40 mins
3. also they moved the furniture and plus all the relevance evidence which can make her reasonably believe he is the salesman in order to win.
4. they do not want other ppl sue them, if they are legally reliable then there is guidline in the future … now ppls see u whether this person is there for illegimate purpose ( to check the customer whether there is any fraudulent)
5. most estoppel case deals with the retail store.
D.          Agents Liability on the Contract
Atlantic Salmon A/S v. Curran (Mass. 1992)
Facts: Curran was the president, treasurer 경리[재무]부장, clerk, a director, and the sole stockholder of a corporation called Marketing, Designs, Inc. that was organized in 1977. In 1983 Marketing Designs, Inc. dissolved. 취소하다. But in 1983, Marketing Designs, Inc. filed a certificate with the city clerk declaring that it was conducting business under the name of “Boston Seafood Exchange.” In 1985, Curran began purchasing salmon from Salmonor; and in 1987, from Atlantic Salmon. Curran represented