Agency and Partnerships Outline

AGENCY
 
CREATION OF AGENCY RELATIONSHIP
 
Gordon v. Doty
•agency is created when
1.    principal (P)
2.    manifests to another (A)
3.    that A will
4.    act on P’s behalf and
5.    subject to P’s control,
6.    and A consents to this.
(P must also consent)
 
•P liable for A’s acts
 
•driver presumed to be A of car’s owner
 
•trad’ly, P must benefit from A’s acts for A relationship to exist
 
MJ
•whether A relationship exists is determined by actual practices, not merely by reference to written K
•K is evidence, not dispositive
 
Cargill
•agency may be created by an agreement even if parties intend otherwise
•relationship created if P takes over management of A’s biz
 
•agent v. supplier: if person Ks to buy from 3d and convey to other, person is
-A of other if acting primarily for other’s benefit
-supplier if acting for own benefit and having independent biz
 
 
 
 
 
 
HAS AGENCY RELATIONSHIP BEEN CREATED?
 
ƒ: can or does P control manner and method of A’s performance?
ƒ: A having significant duties
ƒ: is A P’s primary contact w/ 3ds?
ƒ: P having control over manner and method of A’s acts
ƒ: could P be liable for A’s acts?
ƒ: did “P” direct “A” to implement P’s will?
ƒ: did A act on P’s behalf?
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ƒ: did P assume de facto control over A’s biz?
Ƒ: other ƒs p. 16
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TYPES OF AUTHORITY
 
 
•ACTUAL auth: auth that P expressly/impliedly gives to A
 
•IMPLIED auth: actual auth circumstantially proven which P actually intended A to possess; includes powers practically necessary to carry out A’s duties
 
 
 
 
•APPARENT auth: auth that P holds out A as having (matter of appearances)
-SPLIT: 3d may have to rely on P’s holding out to 3d
-must be created by acts of P, not merely by acts of A
 
 
•INHERENT auth: P designates A; this kind of A usually has certain powers
-3ds may expect A to have these powers
-P liable for A’s acts in accordance with these expectations even if acts forbidden by P
-even if P undisclosed
-UNLESS 3d knows or rsnbly should know that P forbid A to have these powers
 
 
•person alleging auth/agency relationship has burden to prove existence
 
•agent has only as much auth as P has expressly/impliedly given
 
RATIFICATION
 
•affirmance by person of prior act, which did not bind him, but was done (or professedly done) on that person’s account
•must have
-acceptance of results of act
-intent to ratify
-full knowledge of all material circumstances
 
•if P knows of A’s acts and fails to repudiate promptly, this could be an implied ratification
 
• silence can be ratification if rsnbl person would be expected say “I don’t consent”
-if P knows about 3d’s reliance on A’s authority and doesn’t speak, even stronger case for 3d
 
•P can’t ratify act that P doesn’t know about
 
ESTOPPEL
 
•if P negligently lets a person who is not his A conspicuously act as such, the appearance tending to make a rsnbl person think that the person is P’s A, P is estopped from denying agency relation.
 
• P estopped from denying apparent auth if
1.    P’s acts/omissions created appearance of auth in A,
2.    3d rsnbly relies on appearance
3.    to 3d’s detriment
4.    estoppel needed to stop injustice
 
A’S LIABILITY ON THE K
 
•unless otherwise agreed, an A making a K with another for a partially disclosed P is a party to the K
•A has duty to disclose; the other has no duty to seek out identity of the P
 
VICARIOUS LIABILITY (P LIABLE FOR A’S ACTS)
 
•em’ee/servant: if person has agreed to work for em’r/master, and em’r/master may control manner in which job is performed
 
•agent/independent contractor: person has agreed to act in behalf of P, but P has no control over manner in which job is performed
 
Humble p. 70
•distinguishing: see factors ——-à
 
 
 
 
 
 
 
Hoover v. Sun
•ASK: whether “greater” has right to control the details of the day-to-day operations of the “lesser”
•control or influence over results alone is not enough
 
Murphy v. Holiday Inns
•Franchises: if franchisor so regulates the activities of the franchisee as to vest the franchiser with control, there is an A relation even if parties deny it
 
 
 
 
Parker v. Dominos Pizza p 79 (car accident)
•”greater” provides service manual that’s a virtual bible for overseeing biz operation and controls every forseeable aspect of the biz: raises a question of fact as to whether “greater” has right to control
•even if K expressly disclaims agency
 
TORT LIABILITY AND APPARENT AGENCY
 
Billops
•apparent authority
 
 
 
 
 
 
 
 
 
SCOPE OF EMPLOYMENT
 
Brill v. Davajon p. 87 (taxi cab collision)
• P not responsible for A’s torts if A acting outside scope of employment when tort happens
 
 
 
 
Ira S. Bushey p. 89 (drunk sailor)
•P can’t disclaim responsibility for accidents fairly said to be characteristic of its activities
 
 
Manning p. 95 (baseball pitcher)
• π only wins assault v. actor’s em’r when actor assaulted π in order to stop π’s interference that frustrates ∆’s attempts to successfully perform duties for em’r. badly needs rewrite
 
Arguello p. 97 (discrim c/a v. gas stations)
•P responsible for discrimanatory acts of A
•π must show that P has daily control and control over personnel decisions to prove Agency when K language b/tw P and A expressly disclaims Agency
 
• even if outside scope, employer may be found to have ratified em’es acts if em’r 1) knew about act and 2) adopted, confirmed, or failed to repudiate the act
 
 
 
 
 
Majestic Realty
• Respondeat superior does not normally apply to independent contractors
•UNLESS
-person controls manner and means of the work done
-contractor is incompentent
-work is a nuisance per sé or abnormally dangerous
BUT….
 
Anderson v. Marathon
•Ps don’t have tort duty towards em’es of Ps independent contractors
 
 
Kleeman p. 113
•EXCEPTION: P may be liable for neg of independent contractor if the duty is nondelegable
 
 
 
 
 
 
 
 
FIDUCIARY OBLIGATIONS OF AGENTS
 
•if servant
-takes adv of his job
-violates duty of honesty and good faith
-to make profit,
-he owes that profit to his master
 
Singer
•A owes fiduciary duty to P–must act solely for the benefit of P, or else disclose acts for own benefit so P can decide whether or not to allow
 
DUTIES DURING AND AFTER TERMINATION OF AGENTS
 
Bancroft-Whitney p. 124
•cannot use positions of trust/confidence to further private interests
•must act affirmatively to protect interests and also refrain from doing anything that would injure or deprive of profit or advantage (at least in context of corp officer and corp.)
•officer must disclose preparations to compete only when it would be harmful to the corp if he did not.
 
Town and Country
• can’t solicit former em’rs customers whose availability as customers can’t be readily ascertained, but were instead secured by the former em’rs considerable effort and expense
 
Hosch p. 139
•former em’e cannot take trade secrets with him when he leaves
•insurance agency’s customer list is not a trade secret
 
 
 
 
 
 
 
 
PARTNERSHIPS
 
WHAT IS A PARTNERSHIP? AND WHO ARE THE PARTNERS?
 
Differences b/tw pships and corps.
-Taxes:
-Pship: partners themselves pay taxes
-Corps: are separate, taxable entities
-Management:
-Pship: collective
-Corps: centralized
-Longevity
-Pship: limited lifespan
-Corps: unlimited
-Liability
-Pship: personal liability for everything
-Corps: limited liability
-Ownership change
-Pship: can’t
-Corp: can
-Structure:
-Pship: flexible
-Corp: inflexible
 
Is there a partnership?
• partnership: association of 2+ ppl to carry on as co-owners a business for profit
•receipt of profits is prima facie (?)
 
 
 
 
 
 
 
 
 
 
 
 
•pships can be defined in an almost infinite number of ways
•rights and duties of pners are subject to any K between the partners
-including rights upon dissolution
 
 
 
 
•each partner is potentially liable for all the debts of the partnership
 
Martin
ASK: is alleged partner’s control merely to safeguard own interest in the venture (tends to show creditor), or for profit (tends to show partner)?
 
Kaufman Potato
•pship may be formed in a single venture
????
 
PARTNERSHIP BY ESTOPPEL
 
Young v. Jones
•if pship by estoppel exists then one pner can be liable for neg acts of the other
•if a person
-represents self
OR
-lets self be held out as
-partner in an existing pship,
(even if it’s not true)
-that person is liable to anyone who relies on this representation to give credit to the actual or apparent pship
 
FIDUCIARY OBLIGATIONS OF PARTNERS
 
•”I am my brothers keeper”
(partners have duty of finest loyalty to each other)
 
•if a partner gets an chance to benefit b/c of the partnership, or because acting as agent for other pner, must disclose and give chance to particpate in this opportunity to the other
-if chance is somehow related to the original pship bizness.
-UNLESS: chance arises after pship is dissolved
-one partner is the eyes/ears of the other
 
Singer
•it’s OK to K to promote or allow
-competition b/tw partners
-b/tw a pner and the pship.
(but cannot use existing pship resources to do so)
 
AFTER DISSOLUTION
 
• all partners must consent to acts that would make it impossible to continue the regular biz of the pship
-need not obtain consent of retired partners
•no fiduciary duty to former partners
 
GRABBING AND LEAVING
 
Meehan p. 195
• plans to leave/compete are OK as long as they don’t conflict with fiduciary duties
• CAN’T:
-lie about whether you’re gonna leave or compete
-solicit the pship’s clients w/o notifying pship about this
-fail to tell clients that they could either come along, or stay with the pship
-delay resolution of a client’s biz until the breakaway is complete so that you, rather than the pship, benefit
 
Gibbs p. 202
 
•pners must refrain from acting purely for private gain (fiduciary duty MOVE)
•pre-withdrawal recruitment is OK but
-only after notice is given of intent to withdraw
-secret recruiting isn’t OK
 
•can’t use confidential info for recruitment
 
 
EXPULSION OF PARTNERS
 
• involuntary explusion must be in good faith
-BAD FAITH: wrongful withholding of resources due the pner at time of expulsion
• K governs rules for expulsion otherwise
 
DO WE NEED TO KNOW DISSOCIATION RULES FROM P § 601? lots of different causes for involuntary expulsion but not discussed extensively in the cases
 
Bohatch p. 213
•OK to expel pner for purely biz rsns
•OK to expel to protect relationships within firm and with clients
•no “whistleblower” exception
 
PARTNERSHIP PROPERTY
 
Pner’s interests consist of
-rights in pship property: equal use or possession by partners for pship purposes
-interest in pship itself
-right to management of pship
•the pship itself owns all specific property
• the pner has an undivided interest/ pro rata share in the holdings and profits/losses
•only thing a pner can convey is their interest in the pship
 
MANAGEMENT RIGHTS
 
•all partners have equal rights in the management/conduct of pship bizness
(UNLESS modified by K)
•disputes? majority rules
(UNLESS modified by K)
 
•what either pner does with a 3d is binding on the pship (every pner is an agent)
UNLESS pner does not have that authority and 3d knows
 
Summers p. 231
•equal number of partners: if there’s a dispute over spending then a majority is required to consent to the spending
(could be further generalized)
 
Day v. Sidley
•essence of b/fidu duty: 1 partner benefits to the detriment of the pship
1.    pner must account for any benefit acquired in a way detrimental to pship
2.    2. pner can’t get for self a pship asset or use a pship opportunity for his own individual gain (UNLESS consent of other pners)
3.    can’t compete with pship in same biz
 
•old pship dissolved when any pner retires and a new one is former when the remaining pners continue practice
 
THE RIGHT TO DISSOLVE
 
• minor differences aren’t enough to authorize a court to dissolve a pship
• ct can dissolve: where
1.    fighting b/tw pners is so bad that all confidence and cooperation has been destroyed OR
2.    1 pner misbehaves and materially hinders the carrying on of the biz
3.    economic purpose of pship is likely to be rsnbly frustrated
 
•cannot dissolve to get benefits of pship solely for one’s self, unless other pner(s) fairly comped
 
•pship for term/undertaking dissolves after the term expires or undertaking is completed
 
•pship at will can be dissolved at any time
-must be in good faith
-cannot “push out” pner to get exclusive control of biz (must be fair compensation)
 
•if pner loans expecting that the loan will be paid back asap from profits, the pship is for a term rnsbly required to pay back the loan
DISTINGUISH: mere hope of turning a profit: no term (“until profit made”) created
 
CONSEQUENCES OF DISSOLUTION
 
•ct holds pship property, assesses value, partitions and distributes
•prop is sold and pners divvy up proceeds by their % interests
•pners themselves can bid on pship assets at judicial sale
 
•fidu duty extends to ppl who have dissolved pship and haven’t wound up pship affairs
 
 
 
wrongful dissolution
• other pners get b/K damages
• other pners can continue pship biz (and possess pship property) as long as they pay the wrongful dissolver the value of his interest in the pship