Professional Documents
Culture Documents
Agency
- Definition –
o an agent is any person who is authorized to act on behalf of another
(known as the principal)
o Restatement (Second) – agency relationship is a consensual relationship
between a principal and an agent
- developed as part of common law
- Creation (from the Restatement (Second) of Agency §§1, 15
o Principal consents to have the agent act on the principal’s behalf and under
the principal’s control
o The agent consents so to act
o No K required
- Control
o Key element to principal/agent relationship
o For court to recognize P/A relation ship agent needs to have control to act
for principal
o From Basile v. H&R Block – where tax service recommended high
interest rate loan. There was no P/A relationship b/c the D did not have the
control to negotiate or enter the K for the loan.
- Duties
o Agent has a duty of loyalty to the principal
o Agent must act solely for the benefit of the principal in all matters
connected with the agency. Restatement (Second) of Agency §387
o When are agents disloyal?
When their acts are inconsistent with promoting the best interest of
their employer at a time when they were on its payroll.
Employee competes directly with her employer either on her own
or as an agent for a rival company
Misappropriates her employer’s profits, property or business
opportunities
Breaches her employer’s confidences
When you promote the interests of one principal to the detriment
of another principal you have committed the tort of disloyalty.
Food Lion Inc. v. Capital Cities/ABC, Inc.
• you need a requisite intent to act against the interests of
their second employer for the benefit of the main employer
• simply working two jobs and inadequately performing
during the second job b/c you are tired is not a breach of
loyalty
o ends the day the agency relationship ends
may compete against the former employer as soon as relationship
is over
- Principals of Attribution
o Principals can be held liable for the tortious actions of their agents
o Can be required to fulfill Ks into which their agents entered
- four sets of rules
o Express
actual express authority
• Principal has actually said to the agent go and do something
on my behalf
• I tell someone to go buy a car for me
Implied authority
• Almost always included when an actual authority is given
• Run my business (actual authority)
o Implied
Can hire/fire people
Purchase goods on credit
• Can get into problems when the agent is clothed with this
implied authority and goes out and makes Ks w/ 3rd parties.
3rd party believes they are in relationship with principal
• From Castillo v. Case Farms of Ohio where corporation
hired another corporation to recruit migrant farm workers.
Court held that since they had apparent authority to hire
workers they had implied authority to tell them about the
conditions
o Apparent Authority
Communication of some form by principal to 3rd party
• “my agent will contact you”
If principal is aware that the person is running around telling
people he is my agent I will have acquiesced to forming the P/A
relationship
creation
• manifestation must emanate from the principal (or
purported principal) and must be received by third party
• scope of the agent’s apparent authority depends on the third
person’s reliable interpretation of that manifestation
o Inherent Agency power
Even if you didn’t have direct communication between P and A or
P did not acquiesced to it
Create an equity anyway b/c we do not want 3rd party to be harmed
- Respondent Superior
o Employer will be liable for the tort of the employee
Assuming the tort was committed under the scope of employment
CORPORATIONS