bus 250 chapter 28

Wanda wants to sell her house. She hires Galindo the real estate agent and will pay him $4,000 if he finds a buyer, ready, willing and able. Galindo wants to sell the house to his nephew, Ralph, and tells Wanda that the house will not sell at the list price, but she must come down about $20,000. Wanda ultimately agrees. What if true, is Wanda's best argument that she does not owe Galindo any money?

. Galindo's real estate license expired before the title to the house was transferred.

What if the custodian hit one of the schoolchildren for calling him a name? Is the school district liable

. No because he was not acting to serve the purpose of the school c. Yes but only if he was acting outside the scope of employment

Malcolm negotiates a contract for Louis. The contract notes that Louis will perform three boxing matches over the next six months for a purse of at least $150,000. The contract requires that Louis will fight Betty the Bruiser. Can Louis refuse to fight Betty without violating the contract?

. No, if Malcolm was an authorized agent of Loui

Gavin was a music agent for Harry. Harry thought that Gavin was skimming money from him and fired Gavin. Gavin then contacted Shirley and informed Shirley that Harry used the music from one of Shirley's songs without her knowledge or approval. Gavin told Shirley that he would be an expert witness for her in a copyright lawsuit against Harry. Shirley sued Harry and won. Can Harry win a lawsuit against Gavin?

. Yes, if Gavin shared confidential information with Shirley.

Jesse worked as a buyer for the Vegetable Co. Rachel offered to sell Jesse 10 tons of tomatoes for the account of Vegetable. Jesse accepted the offer. Later, Jesse discovered that Rachel was an agent for Sylvester Co. Who is liable on this contract??

A formal contract is not necessary to establish an agency agreement.

The German-American Vocational League was formed in New York during World War II to serve as a propaganda agency for the German Reich. Under U.S. law, all foreign agents were required to register. Neither the Vocational League nor its officers registered. When they were charged with violating U.S. law, they argued that they were not agents of the German government because they had no formal agency agreement. Their one written agreement with the German Reich said nothing about being a propaganda agency. Is a formal contract necessary to establish an agency relationship?

A formal contract is not necessary to establish an agency agreement.

Creating an Agency Relationship

A principal and an agent mutually consent that the agent will act on behalf of the principal and be subject to the principal's control, thereby creating a fiduciary relationship.

A Principal's Liability for Contracts

A principal is liable for the contracts of the agent if the agent has express, implied, or apparent authority.

nonphysical torts

A principal is liable only for the nonphysical torts of employee who is acting with express, implied or apparent authority.

intentional torts

A principal is not liable for the intentional torts of an employee unless the employee intended to serve some purpose of the employer; or the employer was negligent in hiring or supervising the employee.

Wanda was scheduled to fly from Houston to Miami on Cheap-Flight Airlines (CFA). As she arrived at the airport, Wanda discovered that CFA's plane had a "mechanical problem." CFA personnel told Wanda that they had booked her on Anti-Union Air (AUA). Wanda took the flight to Miami on AUA. However, Wanda was chagrined to learn that AUA workers did not have her luggage. Wanda sued both CFA and AUA for the loss of her luggage. What is the best defense for CFA?

AUA was not the agent of CFA.

Agent's Liability for Torts

Agents are always liable for their own torts.

Automatic Termination

An agency relationship automatically terminates if the principal or agent no longer can perform the required duties or if a change in circumstances renders the agency relationship pointless.

Elements not Required

An agency relationship can exist without either a written agreement, a formal agreement, or compensation.

An Agent's Liability for a Contract

An agent is not liable for any contract she makes on behalf of a fully disclosed principal. The principal is liable. In the case of a unidentified or undisclosed principal, both the agent and the principal are liable on the contract.

An Agent's Duties to the Principal

An agent owes these duties to the principal: duty of loyalty, duty to obey instructions, duty of care, and duty to provide information.

A Principal's Liability for Torts

An employer is liable for a tort committed by its employee acting within the scope of employment or acting with authority.

What is not a key factor and or condition of the principal-agent relationship?

Anonymity.

Apparent Authority

Apparent authority means that a principal is liable for the acts of an agent who is not, in fact, acting with authority if the principal's conduct causes a third party reasonably to believe that the agent is authorized.

power and Right to Terminate

Both the agent and the principal have the power to terminate an agency relationship, but they may not have the right. If the termination violates the agency agreement and causes harm to the other party, the wrongful party must pay damages.

Xavier is a famous child star and does commercials for Burger Chain. His current contract is for 18 months, requiring Xavier to perform in 10 commercials and a number of public appearances. One day at school, Xavier is photographed wearing a shirt that says, "Do not eat meat, save a cow!" The photo is printed in the National Oogler. The next day, Burger Chain cancels the contract with Xavier. Xavier's lawyers sue for breach of contract. Who will win?

Burger Chain, if Xavier was its agent.

What are legal obligations of agents as fiduciaries? (Choose the one statement below that is NOT part of the fiduciary duty of an agent to his principal.)

Candor in communications on behalf of the principal.

Christina works as a dog groomer for her employer, DogWorks. One afternoon a lady pays Christina $60 for a dog grooming and gives her a $25 tip. Since the woman paid in cash, Christina put the $85 in her purse and did not turn the money over to her employer. Since the woman always paid in cash, Christina had not written down her appointment (rather, she had put down another person's name and reported the person as a "no show" on the company records). What wrong(s) has Christina committed?

Christina committed the criminal act of theft. b. Christina has violated her duty of loyalty to her principal by taking the cash for herself and not reporting the $85 income. c. Christina has committed all of the above. d. Christina used the agency relationship to secretly benefit herself at the expense of her principal.

Check My Work Wanda works for "Holy Rollers" skating rink. Her work uniform says "Holy Rollers" is large gold letters on the front and back. One day, after work, while still wearing her shirt, she walks past a large pond a sees a religious service hosted by the "Holy Roller Church." A stranger, Clarissa, walks up to Wanda and gives her $2,000 to receive a blessing. Wanda tells the stranger to go jump into the pond, and then Wanda continues home. Later she informs church personnel that she made a donation of $2,000 and wants a receipt for tax purposes. The church has no record of her donation. What is true?

Clarissa cannot win a suit against Holy Roller Church.

What are the general duties of principals to agents?

Duty to reimburse and to cooperate

Implied Authority

Implied authority includes authority to do acts that are incidental to a transaction, usually accompany it, or are reasonably necessary to accomplish it.

Gary hired Rob to cut, split, load, and deliver three ricks of wood per week to Smokey's Bar-B-Q Restaurant for its food preparation. Rob was instructed to cut the wood from Gary's 50-acre woods. If an infestation of beetles in Gary's state results in passage of a law forbidding the transport of wood across county lines and Gary's woods is two counties away from Smokey's Restaurant, is Rob in breach of his fiduciary duty to Gary?

No because the agreement was oral and should have been in writing.

Wanda needs a job and is willing to work as a personal assistant to the movie star Bradley Jolie. Bradley is unsure of her abilities, and will not sign a contract until Wanda works, unpaid, for a month after which, if he likes her, Bradley will pay Wanda $20,000. Wanda agrees. After two weeks, the actor Tomkat Zoos tells Wanda that if she sends him (Tomkat) any scripts that Bradley gets, Tomkat will pay her $10,000. If Wanda sends a script to Tomkat, is she violating her duty to Bradley?

No, if Bradley did not pay her (gave no consideration for her services).

Wanda wants to sell her house. She hires Galindo the real estate agent. Galindo likes the house and wants to sell it to his nephew. Galindo tells Wanda that the house will not sell because the "market is soft." Wanda thinks that Galindo is lying and wants top-dollar. Galindo insists there are no buyers, except "Ralph" (whom Galindo claims is an out of town buyer). Wanda refuses to sell to Ralph and finds her own buyer. Can Galindo win a suit against Wanda for breach of duty to cooperate?

No, if their contract included a "compete" clause.

Betsy's elderly father gave her written authority her to sell the family house. Her father lived in Arizona and she lived in Minnesota. After about two months she found a buyer for the house and signed an acceptance of the offer on March 21. Later that same day she learned her father had died the day before (March 20). Other members of the family did not want the family house sold and claimed that the acceptance Betsy signed was void. The buyer of the house claims Betsy had the legal authority to sell the house and that the contract is binding. Who is right?

The contract is void and therefore Betsy does not have the right to sell the house

Express Authority

The principal grants express authority by words or conduct that, reasonably interpreted, cause the agent to believe that the principal desires her to act on the principal's account.

The Principal's Duties to the Agent

The principal has three duties to the agent: to compensate as provided by the agreement, to reimburse legitimate expenses, and to cooperate with the agent.

The Principal's Remedies in the Event of a Breach

The principal has three potential remedies when the agent breaches her duty: recovery of damages the breach has caused, recovery of any profits earned by the agent from the breach, and rescission of any transaction with the agent.

independent contractor

The principal is liable for the physical torts of an independent contractor only if the principal has been negligent in hiring or supervising him.

Which of the following is not a remedy available to a principal when the agent breaches a duty

The principal may require specific performance from the agent.

Wanda is willing to work as a personal assistant to the movie star Bradley Jolie. The job would require her to cook, clean, screen mail and phone calls, and to book personal appearances. Bradley is unsure of her abilities, and will not sign a contract until Wanda works, unpaid, for a month after which, if he likes her, Bradley will pay Wanda $20,000. Wanda agrees. The chemical giant, Artie &Fishel sends a letter asking Bradley to endorse their household cleanser, Germ Killer. Wanda calls A &F and offers to do a commercial for them, as she is the one who does the house cleaning. A &F agrees. What is Wanda's best argument that she did not violate her duty to Bradley?

Wanda did not disclose any confidential information

Wanda hired a private investigator, Debbie, to recover some heirlooms that she believed were stolen. Wanda gave Debbie some leads and Debbie found the jewelry at a yard sale. Wanda told Debbie to take the jewelry, and Debbie did. If Debbie is later arrested for theft of the jewelry (which turned out not to be Wanda's heirlooms) and fined $10,000, can Debbie gain a court order to compel Wanda to pay the fine?

Yes, if Debbie believed that she was not stealing.

Daisy was a manager of a local florist shop, Bloomers, part of a national chain. She knew nothing about flowers but had a great gardener, Chancey. Because of Chancey, sales were great. The corporate headquarters ordered her cut back on staff and fire Chancey. Daisy refused. Did Daisy violate her fiduciary duty to Bloomers?

Yes, unless Daisy believed it would be unethical to fire Chancey.

An elementary school custodian hit a child who wrote graffiti on the wall. Is the school district liable for this intentional tort by its employee?

b. B or C could be correct. c. Yes but only if he was acting outside the scope of employment

Alex worked for years for MegaCorp. During his employment with MegaCorp, he learned a great deal of confidential information and knew that if this information got into the hands of competitors or the general public, MegaCorp could suffer great business losses. Alex claims that he was wrongfully fired by MegaCorp and accordingly he believes he has no obligation to MegaCorp to keep any information he acquired with them as confidential. MegaCorp claims that Alex is under a continuing duty to keep confidential information secret, even though he is no longer with the company. Who is right?

b. MegaCorp