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Business Associations/Corporations
University of Kansas School of Law
Hecker Jr., Edwin W.

Business Associations Outline
Dean Hecker
Fall 2002
Introduction to Agency – § 1, 13,14, and 15
A. AGENCY – Deal with set of legal relations when two people agree that one will act on behalf of the other – § 1
i. The relationship results from the manifestation of assent by on person to another that the other shall act on his behalf and subject to his control and consent by the other to so act
1. Manifestation of assent is objective in nature
2. A fiduciary relationship is not limited exclusively to persons.
a. Includes – businesses and includes all employers and employee relationships
B. PURPOSE – to enable a person to accomplish results through the services of others. One who act through another is considered by law of agency as action for oneself
C. Principal: The one for who the act is to be done
D. Agent: The one who is the to act
E. The Master—Servant Relationship: is a type of principal-agent relationship (See Restatement § 220)
1. Master – a principal who employs an agent to perform services in his affairs and one who has the right to control the physical conduct of the other in performance of the service § 2
2. Servant/ Employee – an agent employed by a master to perform service in his affairs who’s physical conduct in the affairs is controlled by the master. A group of person for whom or whose physical conduct the master is responsible to third persons § 2
3. The key – CONTROL OF PHYSICAL CONDUCT – Principal control agent
4. All masters are principals, but not all principals are masters. Likewise, all servants are agents, but not all agents are servants.
F. INDEPENDENT CONTRACTOR – a person who contracts with another to do something for him, but is not controlled by the other or subject to the other’s right to control with respect to physical conduct.
i. Can be a servant agent, not servant agent or non-agent § 2.2
1. EXAMPLE – lawyer, stockbroker, real estate agent, In house counsel of association are servants of corporations
G. THERFORE – if people get together to work there are 3 types of relationships
1. Principle agent
a. Master – Servant
i. control of physical conduct
1. Everything you think of when you hear employee
b. Principal – Independent Contracto

pected given the nature of the employment (i.e. a bouncer, or security guard)
vi. Converse of Rule – p. 1
EXAMPLE – Girl who shot drunks at drive-in was acting within the scope of her employment since gun was owned by drive-in, and she was furthering the drive-in’s business by stopping the drunks from scaring off other customer, therefore, the owner of the drive-in was vicariously liable for the shooting.
i. Exception to converse of General Rule p. 1
1. Authorization of tort –
a. If a principal authorizes agent’s act or ratifies (meaning after the fact acceptance of the conduct) it after the fact, then he may be held liable (Rest. § 219)
i. Exception – if principal losses capacity there is no liability (Rest. § 219)
1. EXAMPLE – Hiring a “hitman” to kill someone – faultless liability or Hire someone to put a pie in
Professor’s face.