I. Agency:
A. Who is an Agent/Agency Creation
Agency exists where
1. one person, (principal) consents that another (the agent) shall act on P’s behalf and subject to P’s control, and
2. Agent consents so to act
Restatement 1 – agency is a relationship that results from:
TEST = The manifestation of consent by Principal to Agent that Ageny shall act
On P’s behalf
Subject to P’s control
Agent must consent to so act
Gorton v Doty: (how agency arises)
Issue: Was the coach the agent of the appellat while and in driving her car? Yes there is an agency relationship
RULE: Agency arises where one undertakes to transact some business or manage some affair for another by authority and because of the latter, the relationship of principal and agent
It is not essential to the existence of authority that there be a contract between principal and agent or that the agent promise to act as such, nor is it essential to the relationship of P and A that they or either, receive compensation
There does not need to be an official written agency agreement but there does need to be consent by both parties
Jenson Farms v Cargrill
Issue: Whether Cargrill, by its course of dealing with Warren, became liable as a principal on contracts made by Warren with plaintiffs
RULE: Agency Requires:
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 so to act
There must just be an agreement to form an agency not a contract. Consent however is required
HOLDING:
Specific Provision for Creditors in the Restatement – Section 14 – point of this case is to show how a creditor can become a Principal liable for the Agency
A creditor who assumes control of his debtors business may become liable as principal for the acts of the debtor in connection with the business.
9 Factors indicating P’s (creditor) De Facto control over A (debtor’s business) – page 10 – 11
P’s constant recommendations to A by telephone
P’s right of first refusal on product
A’s inability to enter into mortgages, to purchase stock or to pay dividends without P’s approval
P’s right of entry onto A’s premises to carry on periodic checks and audits
P’s correspondence and criticism regarding A’s finances, officers salaries and inventory
P’s determination that A need strong guidance
Provision of drafts and forms to A upon which P name was imprinted
Financing of all A’s purchases of grain and operating expense
P’s power to discontinue the financing A’s operation
Must look at these all together and not separately. General rule i
me to rely. Must be reasonable reliance.
a. If the Jones goes out and tells a law student they will be the intern for the Supreme Court but she doesn’t know the Supreme Court at all then the Supreme Court does not have to accept this. But if Jones does know them and has this apparent authority the Supreme Court must accept this.
Mil Church v Hogan (Implied Authority from past Conduct Case)
Issue: Bill was hired by the church to paint the roof. The church tells Bill he might need to hire someone and if u need to hire someone you might want to hire X. Bill hires brother Sam and Sam gets hurt.
RULE:
Court Finds Apparent Authority – not actual authority but is the authority the agent is held out by the principal as possessing. It is a matter of appearances on which third parties come to rely
So if you’re a corporation and you hire a manager you are usually responsible for contracts they make. It must be something that a person would REASONABLY see as the manager having that power. If the manager makes a contract to kill someone then obviously the business isn’t responsible
