Agency

Question 1

Restatement 2nd of Agency, Section 1: 4 Elements

Answer 1

1. Manifestation of Consent (assent) by Principal.
   a) The Agent shall ACT on P’s behalf AND
   b) The Agent shall be subject to P’s CONTROL
2. Consent (assent) by the Agent so to act for the Principal.

Question 2

Teacher volunteers her car to her son’s coach to drive in Paris. Agency Relationship?

Answer 2

Gorton v. Doty

1. Yes
2. Doty (P) volunteered her car under the express condition the coach drive.
3. Coach (A) consented by driving the car.

Question 3

Restatement 2nd of Agency, Sections 15 & 16 (50-54)

Answer 3

It is not essential to the existence of authority that there be a K between P and A or that the agent promise to act as such.

Question 4

R2A, S. 16 (p. 53)

Answer 4

It is not essential to the relationship of P and A that they, or either, receive compensation (for the relationship to exist).

Question 5

R2A, S. 140: 4 Elements

Answer 5

1. Creditor
2. Who ASSUMES CONTROL
3. of his debtor’s business
4. RESULT: may become a PRINCIPAL w/ Liability for acts & transactions of debtor in connection w/ his business.

Question 6

R2A, S. 140: 2 Comments

Answer 6

1. “Merely EXERCISING VETO POWER by preventing purchases or sales above specified amounts does NOT thereby become a principal.”
2. Creditor becomes a principal when it EXERCISES DE FACTO CONTROL over conduct of debtor.

Question 7

R2A, S. 14K: 8 Elements

Answer 7

Agency v. Buyer-Supplier 
1. One who CONTRACTS 
2. To acquire PROPERTY 
3. From a THIRD PERSON, AND
4. Convey it to another, AND
5. CONTRACTOR agreed that he is to 
     a) ACT PRIMARILY FOR THE BENEFIT OF THE OTHER AND 
      b)  NOT FOR HIMSELF 
5. RESULT: is the AGENT of the other 
3rd Party (Apple IPhone) --> S (supplier/At&t) --> B (buyer/Brooke)

Question 8

R2A, S. 14K - Comment: 3 Factors indicating that one is a supplier and NOT an agent are:

Answer 8

1. Receives FIXED PRICE for property no matter what price paid by him.
2. Acts in OWN NAME and receives TITLE to property later transferred
3. Has an INDEPENDENT BUSINESS in buyi8ng and selling similar property

Question 9

a) Cargill, by its control and influence over Warren, became a principal with liability for the transactions entered into by its agent Warren
b) Cargill was an active participant in Warren’s operations RATHER than simply a financier
c) Cargill’s course of dealing with Warren was a paternalistic relationship in which Cargill made the key economic decisions and kept Warren in existence

Answer 9

Gay Jenson Farms Co. v. Cargill, Inc.

1. Holding: Cargill was a liable principal to Warren.

Question 10

What are the 6 Attribution Rules?

Answer 10

1. Actual - Express
2. Actual - Implied/Incidental
3. Apparent
4. Inherent
5. Estoppel
6. Ratification

Question 11

Joyce, the sole owner of 370 leasing co. (P), sued Ampex (D) for breach of K. D, through Kays, sent P a document with a signature block for both P and D to sign. P signed, D didn’t. Mueller, Ampex higher up over Kays, acknowledged there was an agreement in an intra-office memo.

a) P Arg: Offer to Sell
b) D’s Arg: Not offer to sell b/c Ampex did not sign  P’s Counter: Offer to Purchase later accepted by Ampex Rep.

Answer 11

370 Leasing Corp. v. Ampex Corp. –> Apparent Authority

Question 12

Bill Hogan hired his bro, Sam Hogan (P), to help paint the church. Sam fell and broke his arm and sued the church for workers comp. Sam had worked w/ Bill at the church prior times. A church elder told Bill he could hire another guy but he was hard to get ahold of and never discussed Sam.

a) Ruling 1 (Old Workers Comp. Board): For D, Sam not an employee of church
b) Ruling 2 (New Workers’ Comp. Board): For P, Sam is an employee of church

Answer 12

Mill Street Church v. Hogan –> Implied/Incidental Authority

Question 13

R2A, S. 7 - Actual Authority (3 Elements)

Answer 13

1. Power of A
2. To affect legal relations with P
3. Done in accordance with P’s manifestation of Consent to A

Question 14

R2A, S. 26 - Creation of Actual Authority (3 Elements)

Answer 14

1. Objective manifestation of P
2. A’s reasonable interpretation of that manifestation
3. A’s belief that she is authorized to act for P

Question 15

R2A, S. 35 - When Incidental/Implied Authority is Inferred (6 Elements)

Answer 15

1. Acts
2. Which are incidental,
3. Usually accompany, OR
4. are reasonably necessary
5. to accomplish a transaction.
6. Fills the gaps in express authority

Question 16

What fills in the gaps of express authority?

Answer 16

Incidental/Implied Authority

Question 17

R2A, S. 8 & 27 - Apparent Authority; Creation of Apparent Authority (3 Elements)

Answer 17

1. Objective manifestation from one party (apparent principal)
2. Which reaches a 3rd Party
3. Causing the 3rd Party to reasonably believe that another party (apparent agent) is authorized to act for the apparent principal

Question 18

R3A, S. 2.03 - Apparent Authority (5 Elements)

Answer 18

1. 3rd Party
2. Reasonably believes
3. Actor
4. has authority to act on behalf of P AND
5. that belief is traceable to P’s manifestations

Question 19

Apparent Authority: What counts as a “manifestation” by the Principal? (7 Things)

Answer 19

1. Direct communications from P –> by letter/word of mouth
2. Authorized statements of the agent
3. Documents or other indicia of authority given by the P to the A
4. Communications from 3rd Persons who have heard o the agent’s authority from authorized or permitted channels of communication
5. Appointing a person to a position like manage or treasurer
6. Communication to the public through signs or advertising
7. Continuously employing the agent

Question 20

R2A, S. 8(A), 161, `194, 195 - Inherent Authority: Principal Liability (5 Elements)

Answer 20

1. Principal liable for acts done on his account
2. that usually accompany or are incidental
3. to transactions agent authorized to conduct

Question 21

R3A Agency Approach to Inherent Authority –> 2.06 (2) Liability of Undisclosed Principal (5 Elements)

Answer 21

1. R3A declines to recognize inherent authority
2. But states rule for undisclosed principals that achieves the same result under 2.06:
   a) Undisclosed principal
   b) may NOT rely
   c) on instructions given an agent
   d) that qualify OR reduce the agent’s authority
   e) to less than the authority a 3rd Party would reasonably believe the agent to have under the same circumstances if the Principal had been disclosed.

Question 22

R2A S. 3(a) & 3(b) - Inherent Authority: Covers actions by General Agent or General Manager (General Agent v. Special Agent)

Answer 22

3(a): General Agent is an agent authorized to conduct a series of transaction involving CONTINUTITY Of service
3(b): Special Agent is an agent authorized to conduct a SINGLE transaction or a SERIES of transactions NOT involving continuity of service

Question 23

If apparent authority is established, then there is no need to establish what?

Answer 23

Inherent authority

Question 24

R3A, S. 1.03 - Manifestation

Answer 24

A person manifests assent or intention through WRITTEN or SPOKEN words or OTHER CONDUCT

Question 25

R2A, S. 82, 83, 91 - Ratification (3 Elements)

Answer 25

1. Retroactive approval of a previously unauthorized act. 2. Affirmance through words, conduct, OR silence indicating consent. 3. Requirement of INTENT & KNOWLEDGE of all material facts.

Question 26

R3A, Chp. 4 - Ratification Timing

Answer 26

1. Timing: Cannot follow events that would cause ratification to have adverse/inequitable effects on 3rd Party.

Question 27

R2A, S. 8B - Estoppel

Answer 27

1. Principal 2. allows another (who has NO authority) 3. to create appearance of authority AND 4. does NOT correct the misimpression a) Reasonable belief by 3rd party b) Change in position by 3rd Party (reliance)

Question 28

R3A S. 2.05 - Estoppel

Answer 28

1. Liable to 3rd Part ywho has made a detrimental change in position due to belief it was for another person's account. 2. Such person intentionally OR carelessly caused such belief. 3. With NOTICE of such belief, such person did NOT take reasonable steps to notify them of facts.

Question 29

Policy for Inherent Authority

Answer 29

Exists for the protection of persons harmed by or dealing with a servant or other agent. "B/c agents are fiduciaries acting generally in the principal's interests, and are trusted and controlled by him, it is fairer that the risk of loss caused by disobedience of agents should fall upon the principal rather than upon 3rd persons." - Nogales

Question 30

R2A, S. 321 - Liability of Agent for Partially Disclosed Principal

Answer 30

1. Person purporting to make a K 2. with a third party 3. for a partially disclosed principal 4. RESULT: is a party to the K

Question 31

R2A, S. 4 - Definition of Partially Disclosed Principal

Answer 31

1. Partially Disclosed Principal = 2. 3rd party had notice 3. that the agent MAY be acting for a principal BUT 4. has NO NOTICE of principal's identity

Question 32

If agent is acting on behalf of a disclosed principal, is the agent liable on the K?

Answer 32

No.

Question 33

R2A, S. 4 - Definition of Disclosed Principal

Answer 33

1. Disclosed Principal = 2. At the time the transaction was conducted by the agent, 3. the 3rd Party KNEW a) the agent was acting for a principal, AND b) the Principal's Identity

Question 34

If the agent is acting on behalf of an undisclosed principal, is the Agent liable on the K?

Answer 34

Yes.

Question 35

R2A, S. 4 - Definition of Undisclosed Principal

Answer 35

1. Undisclosed Principal = | 2. 3rd Party has NO notice that the agent is acting for a Principal

Question 36

R2A, S. 219 - Respondeat Superior Liability

Answer 36

1. Master is subject to liability 2. For torts of his Servants 3. Committed in the SCOPE OF EMPLOYMENT

Question 37

R2A, S. 2 - Definition of Master

Answer 37

Master 1. Principal 2. Who EMPLOYS an Agent 3. to perform service in HIS affairs AND 4. who CONTROLS or has the RIGHT TO CONTROL 5. the PHYSICAL CONDUCT of the other

Question 38

R2A, S. 2 - Definition of Servant

Answer 38

Servant 1. Agent 2. Employed by a master 3. to perform in HIS affairs whose PHYSICAL CONDUCT in the performance of the service 4. is CONTROLLED or is subject to the RIGHT to CONTROL by the master

Question 39

R2A, S. 2 - Definition of Independent Contractor

Answer 39

Independent Contractor 1. Person who contracts with another 2. to do something for him BUT 3. is NOT CONTROLLED by the other NOR subject to the other's right to control 4. with respect to his PHYSICAL CONDUCT 5. May or may not be an agent

Question 40

R2A, S. 220(2) - Relevant Factors of Control over Servant

Answer 40

1. Extent of control over details of work a) Right to TERMINATE relationship b) Engaged in distinct business or occupation c) Whether occupation is usually directed by EMPLOYER or INDEPENDENTLY CARRIED OUT d) Level of Skill e) who supplies the tools & place of work f) Length of time of employment g) Method of payment (hourly or per job) h) Is work part of regular business of employer? I) Do parties BELIEVE they are creating a master/servant relationship? j) Is the Principal in business?

Question 41

Licensing System used in business.

Answer 41

Franchise

Question 42

Party that grants franchise rights by K.

Answer 42

Franchisor

Question 43

Franchisor's 3 Obligations are?

Answer 43

License use of valuable NAME, LOGO, and "SYSTEM"

Question 44

Party that contracts for franchise rights?

Answer 44

Franchisee

Question 45

Franchisee's 3 Obligations are?

Answer 45

1. Payment of royalties 2. Payment of Advertising fees 3. Must operate within "system" --> set forth in K and/or in operating manual

Question 46

3 Sources of Franchise Law?

Answer 46

1. State K Law 2. State Franchise Regulation a) Requires DISCLOSURE of RISKS of franchise relationship 3. Agency Law a) Franchisor-franchisee relationship can give rise to liability claims against the franchisor for FRANCHISEE NEGLIGENCE based on agency principles.

Question 47

In Murphy v. Holiday Inns, why was there no agent/principal relationship?

Answer 47

Because Holiday Inns did NOT control Murphy's (the franchisee) DAY-TO-DAY BUSINESS OPERATION.