Corporations Outline
UNL Law, Professor Harner
I. The Agency Relationship
A. Who is an Agent?
– Restatement s. 1(1); a manifestation of consent by one person (the P) that
another person (the agent) act
– on the P/s behalf and
– subject to the P/s control
– the agent’s consent to so act; Gorton v. Doty
– must have an agreement – BUT NOT necessary that there be a contract!
– a creditor becomes a P at that point at wh. it assumes de facto control over the conduct of the debtor
– Gay Jenson Farms v. Cargill
– General Agent; authorized to conduct a series of trnsctns. involving a conti-
nuity of service
– Special Agent; authorized to conduct a single transaction or series of trnsctns.
NOT involving continuity of service.
B. Liability of Principal to 3rd Parties in Contract
– Restmnt. s. 144; a P is subject to L upon K/s made by an agent acting within his
authority if made in proper form and w/ the undstndng. that the P is a party.
1. Actual Authority; Mill Street Church of Christ v. Hogan
Express;P tells A to do X; A does X; P is bound
Implied; If, in order to do X, A must take some other steps, P is
bound.
– these focus on the P-A relationship.
– Church = P; Hogan = Agent. Church does NOT tell Bill he cld. hire Sam, but doesn’t say he can’t.
– When talking about implied actual authority, they talk about the Church and
Bill. Focus is on wh. Bill (the agent) believed he cld. or cld. not do. If the
Church had told him NOT to hire Sam, then NO implied actual authority.
– Ct. also looks at apparent authority (though not necessary for the result here) and
therefore looks at wh. Sam believes.
– What if the Church HAD told Bill NOT to hire Sam. Cld. still get apparent
authority based on past conduct. If Sam doesn’t know that the Church only hires
members, then we hold the Church liable. Notice that Bill cld. be liable for
breach of fiduciary duty. Church cld. sue Bill.
2. Apparent Authority or Implied Authority
– P hods A out as agent, A takes unauthorized step customary to
role, P is bound.
– these focus on the P-T relationship
– Restate
my agent.” Focus on the rsnble. belief of the 3rd pty..
– How protect oneself? Better train employees to know what can/can’t do.
– Put in writing to avoid apparent authority. 3rd pty. needs to see it!When looking at K liability, look at the authority the agent has.
– Inherent authority
– Use when ct. feels that some 3rd pty. has been victimized. When the wld.-be principal cld. easier avoid the loss. Cost
avoider analysis of Watteau.
4. Ratification
– A acts without authority (of any kind) and no grounds for estoppel
– P will ONLY be bound if P ratifies the K
– Restatement s. 82
