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Business Organizations
University of Dayton School of Law
Chaffee, Eric C.

1. Agency
I. Who is an Agent?
            A. Definition
1. indicates the relationship between two parties, which exists where one person acts for another
2. the relationship which results form 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.
B. Test (Elements of agency)
1.   Capacity
            a. principal must have it, the agent can have less than that
b. any time an agent does not have the capacity to enter into the agreement than it is voidable.
2.      Mutual Consent (agreement)
3.      Writing (if required)
4.      Neither consideration nor a business relationship is necessary to form an agency.
C. Formation
1.   Agency by Act of Party
            a. Can be terminated in a number of ways:
                        1. you’re fired (one of the parties states nullification
                        2. the happening of a specific term
                        3. an agent’s breach of fiduciary duty
                        4. operation of law (death)
2.      Agency by Estoppel
a. The  principal holds out the person as being their agent; lets the person act as his agent and does nothing about it (acquiescence)
b. Hoddeson (furniture) case:
– the appearance of authority must be shown to have been created by the manifestations of the alleged principal, and not alone and solely by proof that there was a supposed agent.
– the principal must some how regard the agent in apparent authority in order for there to be any authority in the case.
                                    SO, what then was the rational for using an estoppel doctrine?
-the proprietor has a duty to pay attention for what is going on in their place of business.
-There are certain incidences where the court will find that there is no authority but the actions or non-actions of the principal will STILL hold it liable for the actions of the supposed agent.
3. Agency by Ratification
a. The principal either affirms the conduct or engages in conduct that would only be justifiable if the principal intended the affirm the conduct.
b. Receiving the benefit of the contract with knowledge of how it was obtained.
    -(Even if you get the benefits, if you did not know all of the facts then you cannot be held to the agreement/husband and wife half-interest farm case: Botticello)
II. Principal’s Liability to Third Parties in Contract
A.     Liability is based on Authority
B.     Types of Authority
1.      Actual: authority that the principal, expressly or implicitly, gave the agent
                                                                         a.      Express – the principal TELLS the agent, “you are my agent and this is what I want you to do.” “please act on my behalf and you are authorized to do X.”
                                                                        b.      Implied(inherent)– the agent reasonably believes that she is authorized by the principal to conduct certain activities

                                         Actual                                                             Apparent
(Implied)                                            (Express)                                                (reasonably believes)
C.     Agent is liable if principal is:
1.      Undisclosed, or
2.      partially disclosed
                                                                         a.      “It was not the plaintiff’s duty to seek out the identity of the defendant’s principal, it was the D’s obligation to fully reveal it…” Atlantic Salmon
                                                                        b.      What 2 things need to be disclosed in order to be a fully disclosed principal?    (will get the agent off the hook)
1. existence
2. identity
c. The agent must not only disclose that he is acting in a representative capacity, but also the identity of his principal.
1.   If an agent comes in and does not reveal who they are presenting or that they are even representing anyone than the principal is still liable but so is the agent. (undisclosed principal)
2.      Duty of Care and Full Disclosure
3. Agent is also liable if they breach their duty of loyalty