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Business Organizations
UMKC School of Law
Luppino, Anthony (Tony) J.

Bus Org Outline – Fall 2007 – Luppino

I. Agency Law
a. Terms
i. Actual authority: an agent acts w/ actual authority when, at the time of taking action that has legal consequences for the principal, the agent reasonably believes, in accordance w/ the principal’s manifestations to the agent, that the principal wishes the agent so to act
ii. Agency: fiduciary relationship that arise when one person [principal] manifests assent to another person [agent] that the agent shall act on the principal’s behalf and subject to the principal’s control and the agent manifests assent or otherwise consents so to act
iii. Apparent authority:
1. 3rd party involved
2. they have to have the reasonable believe of the 3rd party that the agent has authority to act on behalf of the principal and that belief is traceable to the principal’s manifestation
3. an agent cannot create extra authority by saying that they have it
4. 3rd party has to rely on manifestations by the principal not the agent
5. manifestations is a very broad term – reasonable inferences, oral, written, etc
6. what position the principal put the agent in
7. this authority ends when the party has reason to believe/knows that the authority ended – need to give notice that the relationship is over
iv. implied authority: either means when the agent and principal are tying to figure out what the authority is but it also can be implied apparent authority
v. incidental authority: standard is that you have incidental authority to get to the end point the principal has manifested to agent
vi. inherent authority: along the lines of implied authority, if one has authority to bind the company, she has authority to sign a paper that will bind.
vii. respondent superior: employer is liable for torts by employees while acting in the scope of their authority
1. who tend to be an employee will vary in degree by how much control an employer has over the agent
2. key differentiation is be distinguished b/t independent contractor – torts by an individual contractor not usually imputed to the employer
3. factors to differentiate employee from independent contractor
a. basically the more control the employer has the more likely to be an employee
b. actual control/more control = employee
c. office location
d. equipment – own equipment start looking more like individual contractor
e. length of relationship
f. limited skills so need other employees or do everything themselves
viii. principals

1. disclosed principal: 3rd party has notice that the agent is acting for a principal and has notice of the principal’s identity
a. general rule: if have a disclosed principal relationship where 3rd party knows that it is an agent situ

thority b/c:
1. didn’t think there was anything inherit in agents role to think that it was normal for the agent to do such a large deal
2. no track record for previous deals like this
iv. it doesn’t matter what the agent says, the court is going to look past the agreement and look to facts such as the course of dealing
c. Barton [car accident and the attorneys negotiated for a settlement and P’s attorney accepted the settlement but P is saying that the attorney didn’t have the authority to accept the settlement] i. Rule followed Leffler:
1. there is a rebuttable presumption that attorney’s have the authority to settle cases – manifestations don’t necessarily have to be express
ii. seems to be at odds w/ the general rule that what matters is the manifestation of the principal
d. How to figure agents actual authority
i. Basically what the principal told him to do and the actions that it takes to get to that end
ii. Standard is that you have incidental authority to get to that end point that principal has manifested to the agent
Basics of Business Organization