Agency Law

R2A §219 (1) When Master is Liable for Torts of his servants

"A master is subject to liability for the torts of his servants committed while acting in the scope of their employment." Restatement (Second) § 219(1) Think vicarious liability

R2A § 194

"Acts of General Agents-A general agent for an undisclosed principal authorized to conduct transactions subjects his principal to liability for acts done on his account, if usual or necessary in such transactions, although forbidden by the principal to do them."

R2A § 195

"Acts of Manager Appearing to be Owner"- An undisclosed principal who entrusts an agent with the management of his business is subject to liability to third persons with whom the agent enters into transactions usual in such businesses and on the principal's account, although contrary to the directions of the principal."

Cheaper Cost avoider in agency law

"The very purpose of delegated authority is to avoid constant recourse by third persons to the principal, which would be a corollary of denying the agent any latitude beyond his exact instructions. Once a third person has assured himself widely of the character of the agent's mandate, the very purpose of the relation demands the possibility of the principal's being bound through the agent's minor deviations."

Watteau v. Fenwick

-This is a case of an undisclosed principal with a secret instruction. -Humble is not the owner but an agent -Inherent Authority (RA2§8A) -Watteau Rule: The principal is liable for all the acts which are within the authority usually confided to an agent of that character (for undisclosed principals) Policy/Mischief: If rule was different situation could arise where an order is placed and nobody has to pay for it. It is a lot cheaper for the principal to warn about limitation than to require the third party to research whether or not agent is authorized to make such decisions.

Agency exists where

1) One person (the principal) consents that another (the agent) shall act on P's behalf and subject to P's control AND A consents to act

R2A §159 (wrt apparent authority)

A disclosed or partially disclosed principal is subject to liability upon contracts made by an agent acting within his apparent authority if made in proper form and with the understanding that the principal is a party.

Restatement §377 Contractual Duties

A person who makes a contract with another to perform services as an agent for him is subject to a duty to act in accordance with his promise.

R2A § 144

A principal is subject to liability upon contracts made by an agent acting within his authority if made in proper form and with the understanding that the principal is a party.

R2A § 2(2) Servant

A servant is an agent performing services in the master's affairs whose physical conduct is controlled or is subject to the right of control by the master Side Note: the master does not have to actually exercise control over what the agent does; he or she merely needs to have the right to control the agent's physical performance of the assigned task

Types of Authority

Actual—simple, express. Apparent—Ampex Case Inherent—Watteau case Implied-Mills

R2A § 1

Agency- the fiduciary relation which results from: the manifestation of consent by P to A that shall act on P's behalf and subject to P's control AND A's consent to act.

R2A 2(3) independent contractor

An independent contractor is a person who agrees to carry out some task but is not subject to the principal's control in doing so Side Note: In other words, where a principal sets forth the desired result but does not have the right to tell the agent how to achieve that result, the agent is an independent contractor

R2A § 8

Apparent Authority-the power to affect the legal relations of another person by transactions with third persons, professedly as an agent for the other, arising from and in accordance with the other's manifestations to such third persons.

R2A § 27/ apparent authority to do an act is created

Apparent authority to do an act is created as to a third person by written or spoken words or any other conduct of the principal which, reasonably interpreted, causes the third person to believe that the principal consents to have the act done on his behalf by the person purporting to act for him.

Policy of why franchisors should be held liable for torts of franchisee or franchisee employee

Appearances --Franchisor should be liable because if creates the appearance of responsibility -Deep pocket --Any supplier with a deep pocket and any connection to the accident should be held liable; this helps spread the risk of loss (like insurance) -Residual interest --Franchisor should be liable because it has a relatively large interest in the successful operation of the franchisee -Risk prevention --Liability should arise from control or right to control the harmful activity (note: often those with residual interest will bargain for control).

R2A § 7

Authority- the power of the agent to affect the legal relations of the pricipal by acts done in accordance with the pricipal's manifestions of consent to him

Restatement § 388

Duty to Account for profits arising out of employment

implied authority-non restatement aspects

If something is reasonably necessary or incidental to carrying out the specific objective of the express agreement that the agent had with the principal, then it can be called implied actual authority. Also act of putting agent in such a position leads agent to reasonably believe he has authority.

R2A § 220(2) determining whether one acting for another is a servant or an independent contractor

In determining whether one acting for another is a servant or an independent contractor, the following matters of fact, among others, are considered (a) the extent of control which, by the agreement, the master may exercise over the details of the work; (b) whether or not the one employed is engaged in a distinct occupation or business; (c) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision; (d) the skill required in the particular occupation; (e) whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work; (f) the length of time for which the person is employed; (g) the method of payment, whether by the time or by the job; (h) whether or not the work is a part of the regular business of the employer; (i) whether or not the parties believe they are creating the relation of master and servant; and (j) whether the principal is or is not in business

R2A § 8A

Inherent Authority- the power of an agent which is derived not from actual authority, apparent authority or esstoppel, but solely form the agency relation and exists for the protection of persons harmed by or dealing with a servant or other agent.

370 v. Ampex

Issue: Whether Kays had apparent authority to accept Joyce's offer on behalf of Ampex? Was there an acceptance? Rule: An agent has apparent authority sufficient to bind the principal when the principal acts in such a manner as would lead a reasonably prudent person to suppose that the agent had the authority he purports to exercise...Furthermore, absent knowledge on the part of third parties to the contrary, an agent has the apparent authority to do those things which are usual and proper to the conduct of the business which he is employed to conduct. Ampex is the cheapest cost avoider—because Kay acted without authority Ampex should bear risk since they know internal limitation and Joyce doesn't—asymmetrical information. Could have easily put a disclaimer on signature line saying "authorize personnel etc." Also could easily train or discipline Kays ex-post—none of these remedies available to 370.

Mill Street Church v. Hogan

Mill Street Church v. Hogan (Issue: Did Bill have the authority to hire Sam on behalf of the Church? What is the relationship of Sam Hogan and the Church?) Holding: Implied authority "includes such powers as are reasonably necessary to carry out the duties." Ex. If something is necessary or incidental to carrying out the specific objective of the express agreement that the agent had with the principal, then it can be called implied actual authority. 2. Comes from past business relations too—Did agent believe based on present/past conduct that he had authority? 3. Policy: If you don't want A to do what is necessary or incidental then TELL THEM! P is the cheapest cost provider of information here.

Exceptions Where P Liable Even if Outside Scope of Employment

Principal retains control over the aspect of the work in which the tort occurs Principal engages an incompetent contractor Non-delegable duty Activity contracted for is a "nuisance per se"

Restatement §387 Duty of Loyalty

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 §379 Duty of Care and Skill

Unless otherwise agreed, a paid agent is subject to a duty to the principal to act with a standard care and with the skill which is standard in the locality for the kind of work which he in employed to perform and in addition, to exercise any special skill that he has

Restatement § 396 Using Confidential Information after Termination of agency

Unless otherwise agreed, after the termination of the agency, the agent: o (a) has no duty not to compete with the principal; o (b)has a duty to the principal not to use or disclose to third persons confidential information, on his own account or on account of others, in competition w/the principal or to his injury, trade secrets, written lists of names, or other similar confidential matters given to him only for the principal's use or acquired by the agent in violation of duty. The agent is entitled to use general information concerning the method of business of the principal and the names of the customers retained in his memory, if not acquired in violation of his duty as agent

Restatement § 393 Competition as to Subject Matter of Agency:

Unless otherwise agreed, an agent is subject to a duty not to compete w/the principal concerning the subject matter of his agency.

Restatement § 389 Acting as adverse party without principal's consent:

Unless otherwise agreed, an agent is subject to a duty not to deal w/his principal as an adverse party in a transaction connected w/his agency w/out principal's knowledge.

Restatement § 395 Using or disclosing Confidential Information:

Unless otherwise agreed, an agent is subject to a duty to the principal not to use or to communicate information confidentially given him by the principal or acquired during the course of or on account of his agency or in violation of his duties as agent, in competition w/or to the injury of the principal, on his own account or on behalf of another, although such info does not relate to the transaction in which he is then employed, unless the info is a matter of general knowledge.

R2A § 35- Implied Authority

When incidental authority is inferred-unless otherwise agreed, authority to conduct a transaction includes authority to do acts which are incidental to it, usually accompany it, or are reasonably necessary to accomplish it. (think Mills v. Hogan)

R2A § 2(1)

a master is a principal who employs an agent to perform service in his affairs and who controls or has the right to control the physical conduct of the other in the performance of the service

implied apparent authority

act of putting agent in such a position leads third party to reasonably believe agent has authority.

Implied Authority

b. Implied authority—implied authority comes from the words or conduct between the principal and the agent. It is often labeled to signify how it has arisen. i. Incidental to express authority ii. Implied from conduct iii. Implied from custom and usage iv. Implied from past conduct f. Mill Street Church v. Hogan 370 v. Ampex/ apparent "a kind of authority arising solely from the designation by the principal of a kind of agent who ordinarily possesses certain powers" Mills v. Hogan: Holding: Implied authority "includes such powers as are reasonably necessary to carry out the duties." 2. Comes from past business relations too—Did agent believe based on present/past conduct that he had authority?

types of principals

i. Disclosed-agent that principal discloses identity of to a third party (ex. I am an insurance agent working for Chub) ii. Partially Disclosed-tell the third party I am working for someone but don't say who iii. Undisclosed- don't tell third party there is a principal