Business Organizations Outline
Completion of Factor Chart
i. (1) Each partner is an agent for business purposes
i. (1) Each GP is an agent of the LP for purposes of its activities. Lim Ptr must be appointed to be agent.
i. (1)(a)Member managed, members are agents.
ii. (2)(a) Manager managed, members aren’t agents, managers are.
Agency defined by Restatement (2nd) of Agency § 1 (p. 12):
i. 1) 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 by the other to so act.
ii. 2) The one for whom action is to be taken is the principal.
iii. 3) The one who is to act is the agent.
Need to determine manifestation of consent of parties, control by principal, and on behalf of principal.
i. Control does mean you do what you are supposed to.
Carrier v. McLlarky
i. Facts: Plumber tries to get warranty for customer.
ii. Very little control.
iii. Agency existed but he is not liable b/c he made reasonable attempt with diligenc, skill, and competence.
iv. Rule: Under ordinary circumstances, the promise to act as an agent is interpreted as being a promise only to make reasonable efforts to accomplish the directed result. P. 11
v. You aren’t an agent b/c you offer to help (Violette v. Shoup)
Burden of proof is on person who is asserting agency relationship.
Clapp v. JMK Skewer, Inc.
i. Facts: Internal controls imposed by landlord who also receives economic benefit. Person with food poisoning seeks to join landlord of restaurant.
ii. Agency, Agent must act exclusively for principal. Non agency b/c restaurant was acting on its own behalf.
Hunter Minding (Agency or Sale)
i. Issue: Is the distributor the agent of the manufacturer?
ii. Ultimate decision doesn’t come down to control but whether party claiming agency was acting for own benefit or benefit of principal (manufacturer).
iii. Distributor set own prices
i. Exception to this rule is INDEPENDENT CONTRACT EXCEPTION
1. Cory Bros. (p. 39)
a. Independent Contractors do not act under the control of Principal. but do act as your Principal’s agent (on behalf of and with consent)
b. K between agent (independent contractor) and principal covers only fee. Nothing over and above.
Duty of Care from Principal to Agent
i. Replaced substantially by workers compensation statutes
1. Set forth precise standard and set of liabilities.
Obligations of the Agent
i. Fiduciary Obligations—imposed on directors and officers of corporation and same obligations put on agents
ii. 2 major areas
1. Duty of Care—How you act
a. Not a warranty…must provide a reasonable effort to achieve result (Seen in Carrier Case)
b. If you happen to be an expert, you are held to expert standard based on your expertise.
c. Duty of Care CANNOT be contracted away by agent aka non-waivable
d. Duty of care in the entity concept might not be the same