Agency

Question 1

Definition of Agency

Answer 1

Agency is the fiduciary relation which results from 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 to so act.

• No contract or compensation is required, nor is the term “agency”.

Question 2

Requirements for Agency

Answer 2

1. Agent acts for principal (fiduciary)
2. Subject to principals controls (control)

Question 3

3 Types of Agencies

Answer 3

1. Master
2. Independent Contractor agent
3. Independent contractor non-agent

Question 4

Master Agency

Answer 4

has right to control agent’s physical conduct

Question 5

Independent Contractor Agency

Answer 5

Agrees to act for principal control over objectives agency
No physical control - no tort liability

Question 6

Independent Contractor Non-Agent

Answer 6

Agent doesn’t agree to act for principal and subject to principal’s general control over objective of agency

Question 7

Type of liability imposed through Agency

Answer 7

Strct Liability

Question 8

What we looked at to determine agency

Answer 8

If the principal has control (example: providing instructions to use)

• exception: commerical leasing of vehicles not subject to strict liability

Question 9

Business Associations Relationships

Answer 9

1. Principal - Agent
   
   • Agency Relationship
2. Agent - Creditor
   
   • Tort
3. Creditor - Principal
   
   • Vicarious Claim

Question 10

Doctrine of Respondeat Superior - Master Servant Agency

When is principal liable for agents tort?

Answer 10

1. Have to have agency relationship
2. Have to have master servant relationship
   
   • Master is a principal who has the power to control the physical conduct of the agency
     
     • Control under master servant agency is different from control under agency because master requires physical control
3. Have to be acting in scope of agency

Question 11

Master-Servant Relationship Factors

Answer 11

• Who does the hiring and firing
• Business hours
• How the employees dress
• Job functions - Who does what and how they are going to be supervised.
• SCOPE OF EMPLOYMENT: A master is responsible for the torts of his employees that are committed in the scope of their employment.
• A master-servant relationship does not exist when an independent contractor controls the day-to-day operations of the entity that is responsible for damages suffered by a plaintiff.

Question 12

Principal’s is Liabile for Contracts when there is… (CL and Restatements)

Answer 12

• Agency + authority

Question 13

Authority Definition + types of authority

Answer 13

Definition: To hold principal liable for agent

1. Actual Authority
2. Implied Actual Authority
3. Constructive Authority

Question 14

Actual Authority

Answer 14

• Principal manifests to agent power to act
• Can exist without principal expressing the existence of actual authority

Question 15

Implied Actual Authority

Answer 15

• Some manifestation by the principal which reasonably interpreted causes the agent to believe the agent is authorized
  
  • Does not matter what the principal intended, only whether agent thought agent was authorized to enter into K
• Test: whether the agent reasonably believed, based on the principal’s actions that he had the authority to do a particular act.

Question 16

Constructive Authority

Answer 16

Qhere agent knew they had no authority

Two Types:

1. Apparent Authority
   
   • Holding Out
     
     • Principal Holds Out (communicated) to the 3rd Party that leads the 3rd part to believe the agent is an authorized agent
2. Inherent Authority
   
   • If there has been no holding out, but principal did something to clothe the agent with authority

Question 17

Agency by Estoppel

Answer 17

• Someone who is not an authorized agent, but principle is held liable because Principle is someway liable for way the person was acting like an imposter for an agent
• Absent proof of an agency relationship, a party may still have a duty of care for the other party to ensure that the other party is not disadvantaged in dealing with the party.

Question 18

Liability of Agent - for an agent to avoid liability:

Answer 18

1. Agent must make absolutely clear they are entering into the K on behalf of the principle
2. Must be full disclosure of ID and capacity of principle to enter into K
3. Must be a real person in eyes of the law (including a corp)

Question 19

Agency from Franchise

Answer 19

A franchise agreement that goes beyond the stage of setting standards, and allocates to the franchisor the right to exercise control over the daily operations of the franchise, an agency relationship exists.

Question 20

How to draft a Franchise Agreement

Answer 20

CAN HAVE:

1. Right of termination with notice
2. Standards set by the franchisor
3. Inspections by the franchisor (should be no more than monthly).
4. Advice

CAN’T HAVE:

1. Telling them what to do day to day
2. Profit and Loss sharing
3. Employment decisions (who and when to hire & fire)
4. Hours of Operation

Question 21

Modern Rule Governing Franchise Liability

Answer 21

Modern Instrumentality Rule:

• The modern rule looks at whether the franchise had control of the instrumentality that gave rise to the tort claim.

Question 22

Recommendation and Termination Power

Answer 22

A franchisor can make recommendations, and have a right to termination you will not be held to be a principal and you will be insulated from tort liability.

Question 23

REVIEW ON EMPLOYER LIABILITY - Course and Scope of Employment

Answer 23

• TRADITIONAL RULE: The traditional rule for master servant liability is whether the tortfeasor’s action was in the scope of his employment, if so liability will attach to the principal.
• MODERN RULE: The modern rule is that if the tort was committed with a desire to serve the master, if so, the principal will be held liable.
• IRA S. BUSHEY TEST: Was the damage that happened foreseeable in the course of employment, did the event occur on the site of employment?
• INHERENTLY DANGEROUS ACTIVITIES: The principal will be held liable for negligent actions of the agent.
• ULTRA-HAZARDOUS ACTIVITIES: The principal will be held strictly liable for damages.

Question 24

Fiduciary Relationship between Agent and Principal

Answer 24

• Restatement (Second) of Agency § 387: Unless otherwise agreed, an agent is subject to a duty to his principal to act solely for the benefit of the principal in all matters connected with his agency.
• Restatement (Second) of Agency § 13: The employee has a duty to deal openly with the employer and to fully disclose to the employer information about matters affecting the company’s business.

Question 25

Trade Secret Doctrine

Answer 25

• Information provided to you for use during as employment remains the property of the former employer; the information must have been secret and not circulated to people who had no need to see them.
• Restatement of Agency Second Section 396 allows agents no longer in the employer’s service to use general information concerning the method of business and names of customers that are retained in his memory.