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Business Associations/Corporations
University of Cincinnati School of Law
Huffman, Max

I.                   Agency
A.     Definitions –
Agent- An agent is a person who by mutual assent acts on behalf of another and subject to the other’s control. Agency is the fiduciary relationship that arises when on person (principal) manifests assent to another person that the agent shall act on the principal’s behalf and subject to the principal’s control and the agent manifests consent to this. –R1.01
Principle – A person on whose behalf and subject to whose control an agent acts. Can either be: R. 1.04
·         Disclosed – when an agent and third party interact the 3rd knows of the agency
·        Partially disclosed or unidentified – 3rd knows agent Is acting for a principal but doesn’t know who it is
·        Undisclosed – 3rd doesn’t know agent is working for a principal
i.        Is an element as opposed to free-standing organizational scheme, finds its outlet in corporations and partnerships
ii.       Agency relationship is determined by actions, not language in the contract – Morris
iii.     Principal is liable for acts of Agent done on done on P’s account if such acts are usual or necessary in such transactions, even if P has previously forbidden the agent to incur such debts – Morris
iv.     A P may become liable for the unauthorized acts of his agent if the P ratifies the transaction after he acquires the material facts concerning the transaction: If a P has knowledge of the material facts of the transaction and retains the benefits or proceeds of the transaction, the P is deemed to have ratified the methods that the A used to generate the proceeds. – Morris
B.     Elements: No Contract is required to form a relationship
    Restatement 1.01: (1)A fiduciary relationship;
                                  (2)one person manifests assent to another (principal to agent);  
                                  (3)to act on his behalf;
                           (4) to be subject to his control;
                           (5)other person (agent) consents to the relationship
C. Issues to Analyze
 Consent. To what do the agent and principal consent? – Consent to control and be controlled; fiduciary relationship. It is the consent to do the things and not the legal structure.
·        R1.02- Consent can be implied
Fiduciary duties. Duty to act for another’s benefit while subordinating one’s personal interests to those of another person
Scope of the relationship. Scope is determined by the same thing we look at to determine its existence. How far does the authority go, how long might it last?
Distinct from Contract Law. Principal doesn’t have to give consideration. K is b/w two, agency includes 3rd parties
Special v. General Agent. Special agent only has authority to do one specific action, not involving continuity of service, such as sell a

ncipal and 3rd, not with agent. Principal tells 3rd that agent has power to do X. agent has aa if manifestations of the principal would a reasonable person in 3rd’s position to believe that the principal had authorized the agent to so act. If agent has apparent authority, principal is bound-R.2.03, 3.03
iii. Agency by Estoppel. 3rd relies to their detriment (must be detriment) on something agent does and principal knew or should have known and did nothing to stop 3rd’ erroneous belief. Ex: Giving the title of President to a janitor, creating impression that janitor has presidential power
iii.          Ratification Authority. (authority after the fact). Principal ratifies to agent after the fact, saying it was okay. Creates actual authority after the fact. By ratifying, principal is bound. Principal bound to 3rd if the agent purported to act on principal’s behalf and the principal, with knowledge of material facts, either:
(1)   (express ratification) affirms the agent’s conduct by treating agents conduct as authorized, or
(2) (implied ratification) engaged in conduct that is justifiable only if he such an intention