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

I.                   Agency:
a.     agency is the fiduciary relation, 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 [Rst. (2) Agency§1(1)
b.     What to look for:
                                                              i.      Agreement? (principal- manifestation; agent- control)
                                                             ii.      Control?
                                                           iii.      Capacity?
c.     Formation:
                                                              i.      By the acts of the parties
1.      holding a person out as an agent
2.      ratification: approval- accepting benefits, knowing all the specifics
                                                             ii.      By law
1.      statutes, estopppel
d.     Principal’s liability to 3rd parties in contract
                                                              i.      Authority (Hogan- church painter case)
1.      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
a.      Standard: agent reasonably believes, based on past or present conduct of the principal that the principal wishes him to act in a certain way or have certain authority.
b.      May be express or implied by the words, customs, or relations b/w the parties
c.      If agent acts within his scope of authority, he will not be held liable
2.      Apparent- authority the agent is held out by the principal as possessing, third parties rely on this apparent authority
a.      Principal acts in such a manner as to convey the impression to a third party that an agent has certain powers which he may or may not actually possess.
b.      An agent has apparent authority in relation to a third party if the words or conduct of the principle would lead a reasonable person in the third party’s position to believe the principle had authorized the agent to so act
c.      Standard: third party must prove
                                                                                                                                      i.      It was reasonable for him to believe the agent was authorized to act.
                                                                                                                                     ii.      Based on what the principal said or the impression the principal created.
                                                             ii.      Inherent- arises from the agency itself and without regard to either actual or apparent authority. May be viewed as authority arising by implication from the authority actually or apparently granted.
1.      In many instances actual authority is coextensive with inherent authority based on the nature of the agency (but not always).
2.      Inherent authority protects third parties dealing with agents by holding principles liable. It does not depend on any kind of authority but derives from the agency relationship itself.
3.      Application: inherent authority can subject a principle to tort or contract liability based on activity of the agent.
4.      Hint: inherent authority arises a lot of the time when someone is given a job title which indicates a lot of responsibility, or more responsibility than the title suggests; and the responsibilities that come with either the title or the responsibilities.
5.      Can occur in three ways
a.      Agent does something similar to what he is authorized to do, but in violation of orders
b.      Agent acts purely for his own purposes in entering into a transaction which would be authorized if he were actuated by proper motive
c.      Agent is authorized to

loyment (main issue= scope of emp?)
b.      Scope of employment; (small detour from scope, then principal liable; broad jump, then principal not liable)
                                                                                                                                      i.      Time, place, purpose of the act
                                                                                                                                     ii.      Similarity to acts which the servant is authorized to perform
                                                                                                                                   iii.      Whether the act is commonly performed by servants
                                                                                                                                  iv.      The extent of departure from normal methods
                                                                                                                                    v.      Whether the master would reasonably expect such act would be performed
2.      Independent contractor- person who contracts with another to do something for him but is not controlled by the other nor subject to the other’s right to control with respect to his physical conduct in the performance of the undertaking
Principal not liable for torts committed by an independent contractor in connection with his work because he does not have the right to control, or direct control over the independent contractor.