Section 1. Who Is an Agent?
Restatement §1 [2]: Agency is the fiduciary relation which results from the manifestation of consent by one person to another that the other shall act on behalf and subject to his control, and consent by the other so to act.
3 elements of Agency
a. consent by one person (Principal) to another
b. the other shall act on his behalf
c. subject to his control
Gorton v. Doty (Idaho 1937) p1
· Garst was football team coach and he was driving the car whose owner was Doty (appellant). During his driving, there was an accident. So Gorton (football player) was injured. Gorton sued Doty for recovering the fee which is related to hospital and physicians.
· Issue is whether the coach is the agent of Doty or not?
· Majority Rule ~ This Court has not held that the relationship of principal and agent must necessarily involve some matter of business, but only that where one undertakes to transact some business or manage some affairs for another by authority ß by this rule, the relationship of principal and agent rises.
· Dissenting Opinion: ß no relationship
o Rule ~ Agency means more than mere passive permission. It involves request, instruction or command.
o In this circumstances, it was nothing more or less than a kindly gesture on her part to be helpful to Garst.
· Analysis ~ 3 elements
o Consent ~ by Coach’s act that takes Doty’s key. no necessary for written documents.
o Act on Principal’s behalf ~ Coach was driving her car instead of her.
o Control ~ Coach used her car for driving to Football Game and returned it. (if his act fully and correctly related the conversation). ß this is very informal agency.
· Therefore, Football Coach is the agent of Doty and Doty is a liable.
· Hypo-Example:
o Fedex Corp. and Employee Driver ~ Driver should be an agent because 1. should be a contract between them, 2. Driver is acting on Fedex’s behalf, 3. Fedex is asking him to go some place by its truck. (inside the scope of employement)
o Fedex Corp. and Lawyer ~ Fedex asking a lawyer to come for making some business contracts. but the lawyer cannot be an agent of Fedex because Fedex cannot control the lawyer. In here, the lawyer is kinds of independent contractor. (the lawyer can take a taxi, but or anything whatever he wants).
· Further Questions in this case
o Why didn’t the coach sue the school of district even though he was an agent of school district and Doty at the same time? à Most of government like school of district have a suburb immunity so the school district will have exemption.
A Gay Jenson Farms Co. v. Cargill (Minn. 1981) p7
· Farmers Association brought this action against Cargill (Creditor) and Warren (Debtor) to recover losses sustained when Warren defaulted on the Ks made with Farmers for the sale of grain.
· Ks between Cargill and Warren:
o Cargill loaned money to Warren ($175,000 in 1964, $300,000 in 1967), and Cargill checked the annual finance report and was given the right of access to Warren’s books for inspection.
o In 1970, Cargill contracted with Warren and other elevators to act as its agent to seek growers, etc.
· Issue is whether Cargill, by its course of dealing with Warren, became liable as a principal on contracts made by Warren with Gay Jenson Farms Co.
· Rule ~ the agency may be proved by circumstantial evidence which shows a course of dealing between the two parties. check the 3 elements.
· Analysis ~ 3 elements
o By directing Warren to implement its recommendations, Cargill manifested its consent that Warren would be its agent.
o Warren acted on Cargill’s behalf in procuring grain for Cargill as the part of its normal operations which were totally financed by Cargill
o by Cargill’s interference with the internal affairs of Warren, which constituted de facto control of the elevator. (talking about 9 factors for controlling-over, p. 11)
· Creditor – Debtor relationship (Restatement (second) agency §14 O)
o A security holder who merely exercises a veto power over the business acts of his debtor by preventing purchases or sales above specified amounts does not thereby become a principal. ß in here, Cargill takes over the management of the debtor’s business. (Control)
o also, the reason for Cargill’s financing is to establish a source of market grain for its business. “We were staying in there because we wanted the grain.”
· Buyer – Suppliers relationship (Restatement (second) agency §14 K) – p. 11
· Therefore, the relationship of principal and agent is existed.
Section 2. Liability of Principal to Third Parties in Contract
A. The Agent’s Authority
Mill Street Church of Christ v. Hogan (Ky. 1990)
· Church hired Bill Hogan to paint the church building. Bill needed a helper and they agree to hire somebody for assistant. They thought that they could hire Gary Petty as an assistant, but Waggoner told Hogan that Petty was difficult to reach. In the previous other works, Bill Hogan hired his brother, Sam Hogan as an assistant so at this time, he hired Sam Hogan again. During the painting, Sam Hogan was injured.
· Issue ~ Sam Hogan is an employee of church by Bill Hogan’s authority or not. (by implied authority)
· Principal ~ Board of Church / Agent ~ Bill Hogan / Third Party ~ Sam Hogan
· Implied Authority v. Apparent Authority
o There is an express authority because board asked him to hire an assistance.
o Implied Authority ~ 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.
§ Reason
agent out as possessing of its existence. In this case, this was shown in the Shiboleth’s letter.
· Therefore, the settlement agreement by Shiboleth was enforceable.
Watteau v. Fenwick (Queen’s Bench, 1892)
v Kinds of Principals:
§ Disclosed Principal ~ agent become transparent transaction because third party can make contract with Principal. Only Principal is a liable to 3rd Party.
§ Partially disclosed Principal ~ almost same as undisclosed principal. did not mention the name but just say somebody try to buy some lands… like that. Based on facts and circumstances, the principal and agent is a liable to 3rd party.
§ Undisclosed Principal ~ agent is not transparent transaction. third party did not know the principal. Principal is a liable to 3rd party based on the facts and circumstances. Inherent Agency power [29, note]
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· Humble sold his beer business to D and remained there as a manager. In the agreement, Humble had no authority to buy any goods for the business except bottled ales and mineral waters. P gave some credit only to Humble before he sold his business to D for P’s goods (Cigar and Bovril) price. Since the owner has been changed, P wants to recover his discounted price.
· Defendant ~ Principal (undisclosed) / Humble ~ Agent (inherent) / Plaintiff ~ Third Party
· Issue ~ whether under the undisclosed principal, the agent can have all authority like principal even though there are some limited authorities?
· No actual authority or apparent authority in this case.(how can we judge the authority between agent and undisclosed principal?) relationship with partially undisclosed principal/apparent authority, etc. (check the hypo in Analysis p. 30) instead of that, there is an inherent agency power reasoning.
· Rule ~ the ordinary doctrine as to principal and agent applies that the principal is liable for all the acts of the agent which are within the authority usually confided to an agent of that character, notwithstanding limitations, as between the principal and the agent, put upon that authority. [restatement (second) of agency, §8A / §194 / §195] ß inherent agency power.
