Agency

Agency by Estoppel

A principal may act in such a way that a third person reasonably believes that someone is that the principal's agent.

Secret Profits (Reading v. Regem)

A servant is accountable to his master for profits he obtains because of his position, if the servant takes advantage of his position and violates his duty of good faith and honesty to make the profits for himself.

Express Authority

Actual authority contained within the agency agreement. Authorizing an agent to speak for the principal and relates to what the agency represents to a third party.

Authority

After establishing that an agency relationship exists, a third party wanting to hold the principal liable must demonstrate the scope of the agent's authority.

Facts Demonstrate Independent Contractor Relationship (Hoover v. Sun Oil)

Agency arises if a principal retains the right to control the details of the day-to-day operation of the agent's business.

Principal's Duty to Agent

Agency is defined as the fiduciary relationship that results from the manifestation of consent that one person shall act on behalf of and subject to the control of another person.

Gratuitous Agents

Agents who perform their services without gain. Agents who cannot be compelled to perform the duty they have undertaken. The principal may, nevertheless, be liable for the torts.

Agency Intent

An agency relationship can arise even if the parties did not intend to be agent and principal to each other, and may not arise even if the parties so intend if certain conditions are met.

Agency Arising from Use of a Vehicle (Gorton v. Doty)

An agency relationship results from one person's consent that another will act on his behalf and subject to his control, and the other person's consent to act.

Undisclosed Principal

An agent acting on behalf of an undisclosed principal is personally liable on the contract itself. The third party knows that the agent is acting as an agent, but does not know the identity of the principal. Undisclosed principal can be held liable for the actions of an agent with an authority that is reasonable for a person in the agent's position regardless of whether the agent has actual authority to do so.

Apparent Authority to Accept a Contract (Three Seventy Leasing v. Ampex)

An agent has apparent authority sufficient to bind the principal when the principal's acts would lead a reasonably prudent person to suppose that the agent had the authority he purports to exercise.

Fiduciary Duties During Agency

An agent is a fiduciary and he owes his principal the obligation of faithful service. The obligation requires the agent to notify the principal of all matters affecting the agency.

Duty of Loyalty/Conflict of Interest

An agent is charged with the fiduciary duty of loyalty, which includes the duty not to compete with his principal. Anything that an agent obtains as a result of his employment belongs to the principal, thus barring the retention of secret profits, advantages, and benefits absent the principal's consent.

Agent Personally Liable When Principal Not Disclosed (Atlantic Salmon v. Curran)

An agent is personally liable for his principal's debts if he fails to disclose to a third party that he is acting as an agent and his principal's identity.

Damages

An agent may be liable to a principal in tort for breach of fiduciary duty.

Disclosed Principal

An agent who purports to contract for a disclosed principal is not personally liable on the contract. In such a case, the agent negotiates the contract in the name of the principal, and the agent is not a party to the contract.

Agent's Liability on the Contract

An agent's liability on the contract depends on the status of his principal. It is the duty of the agent to inform the other party who the actual principal is or else the agent is liable.

Rescission

Any transaction that violates the agent's fiduciary duty is violated by the principal.

Implied Authority

Authority that comes from the words or conduct between the principal and the agent. The agent reasonably believes he has authority because of what the principal told the agent to do. Authority given to the agent as a result of the principal's conduct, such as the principal's earlier acquiescence to the agent's actions.

Apparent Authority

Authority that results when a principal manifests to a third party that an agent is authorized, and the third party reasonably relies on the manifestation. There must be some holding out by the principal causing a third party to reasonably believe the agent has authority.

Fiduciary Relationship

Every agent is a fiduciary. He owes a high standard of care to her principal, must avoid conflicts of interest, self-dealing, disloyal acts, etc.

Scope of Employment

For respondeat superior to apply, the employee must have committed the tortious act within the course and scope of employment. The employee must have been in engaged in work for the employer of a type that he was employed to perform, during work hours.

Store Owner's Negligent Surveillance May Lead to Estoppel (Hoddeson v. Koos Bros)

If a business proprietor by his failure to fulfill his obligations and duties enables one who is not his agent to act conspicuously as such and to transact the proprietor's business with a patron in his establishment, estoppel prevents the proprietor from defensively availing himself of the impostor's lack of authority in order to escape liability for the customer's consequential loss.

Control Test (Murphy v. Holiday Inns)

If a franchise contract so regulates the activities of the franchisee as to vest the franchisor with control within the definition of agency, the agency relationship arises even if the parties expressly deny it.

Implied Authority from Past Conduct (Mill Street Church v. Hogan)

Implied authority is actual authority that the principal intended the agent to possess and includes such powers as are practically necessary to carry out the deleted duties. The party alleging and resulting authority authority has the burden of proving the agency relationship.

Franchising Agreements and Agency

In such an agreement, the franchisor supplies the franchisee with a brand identification or business identity, and controls the distribution of its goods or services through a contract which regulates the activities of the franchisee in order to achieve standardization.

Actual Authority

May be expressly conferred on the agent, or reasonably implied by custom, usage, or the conduct of the principal to the agent.

Manifestation of Consent

Objective requirement. What matters is that the agency relationship depends on what the agent believed the principal intended. An agency relationship can arise even where the principal subjectively intended no such relationship.

Agent-type Independent Contractor

One who has agreed to act on behalf of another (the principal) but not subject to the principal's control over how the result is accomplished.

Issue is a Question of Fact (Humble Oil v. Martin)

One who maintains control over a business enterprise's operation, even if it entrusts the operation to one acting without meaningful discretion, is liable as a principal for the negligence of those entrusted with his business.

Non-agent Independent Contractor

One who operates independently and simply enters into arms-length transactions with others.

Liability for Torts of Independent Contractors: Contractor Engaged in Nusiance (Majestic Realty v. Toti)

Ordinarily, if a person engages a contractor, who conducts an independent business by means of his own employees, to do work not itself a nuisance, the person is not liable for the contractor's negligent acts in performing the contract.

Other Remedies

Other remedies include an accounting, or imposition of a constructive trust on the property the agent obtained in violation of his fiduciary duties.

Agency Duties During and After Termination

Post-termination competition with a former principal is permitted, but the former agent is barred from disclosure of trade secrets or other confidential information obtained during his employment.

Ratification Requires Intent and Knowledge (Botticello v. Stefanovicz)

Ratification requires affirmance by a person with full knowledge of the material terms of a prior act which did not bind him but which was done or professedly done on his account.

Inherent Agency Power

Recognizes that it is inevitable in the course of performing her duties, either by mistake, negligence, or misinterpretation of her instructions, an agent may harm a third party or deal with one in an unauthorized manner.

Acts That Are Reasonably Foreseeable (Ira Bushey v. U.S.)

Respondeat superior imposes liability on an employer for an employee's conduct if the employer created the risk that the conduct would occur.

Respondeat Superior Inapplicable

The doctrine of respondeat superior does not apply to independent contractors.

Agency Formation

The formation of an agency relationship depends on the existence of certain factual elements. There must be an agreement between the parties that the agent will undertake some act on behalf of the principal, with the understanding that the principal is to remain in control of the undertaking.

Proving Agency

The person asserting that there is an agency problem has the burden of proving it.

Master/Servant

This form of agency involves a servant who, under the control of her master, renders some sort of service. Control is an essential feature of this relationship.

Ratification

This occurs when the principal accepts the benefits or otherwise affirms the conduct of someone purporting to act for the principal, even though no actual agency agreement exists.

Independent Contractors

This situation arises when a principal retains someone to do a certain job or achieve a specific objective.

Battery Committed By Employee (Manning v. Grimsley)

To recover from an employer for an assault committed by its employee, the plaintiff must show that the employee's assault was in response to the plaintiff's conduct which was presently interfering with the employee's ability to perform his duties successfully.

Respondeat Superior

Under this doctrine, an employer is liable for all torts committed by an employee acting within the scope of her employment.

Agency Duty to Disclose Information (Rash v. J.V. Intermediate)

Unless otherwise agreed, an agent is subject to a duty to his principal to act for the benefit of the principal in all matters connect with his agency.

Acts of Agent in Ordinary Course of Business (Watteau v. Fenwick)

When a principal is undisclosed to a third party, the actions taken by an agent in furtherance of the principal's usual and ordinary business binds the principal. The principal is liable for all acts of the agent that are within the authority usually confided to an agent of that character, regardless of limitations put on that authority by the principal.

Estoppel

When a principal negligently or intentionally causes a third party to believe that his agent has authority to do an act that is actually beyond his authority, and the third party detrimentally relies on the principal's conduct, the principal is estopped from denying the agent's authority.

Action for Secret Profits

When an agent breaches a fiduciary duty to the principal and secretly profits from it, the principal recover the actual profits or property held by the agent.

Scope of Employment Factors

1) Authorization; 2) Time, place, and purpose of the act; 3) Whether the act was commonly performed by the employee; 4) Extent to which the employer's interest was involved; 5) Extent of departure from normal methods.

Remedies Available to Principal

1) Damages 2) Action for Secret Profits 3) Rescission 4) Other

Soliciting Former Employer's Clients (Town & Country v. Home Service, Inc.)

A business proprietor may not solicit his former employer's customers who are not openly engaged in business in advertised locations or whose availability as patrons cannot readily be ascertained, but whose trade and patronage have been secured by years of business efforts, advertising, and expenditure of time and money.

Creditor Exercising Control Over Debtor (Gay Jenson Farms v. Cargill)

A creditor assumes control of its debtor's business may become liable as principal for the debtor's acts in connection with the business.

Franchisor Liability in Tort (Miller v. McDonald's)

A franchisor can be held liable for its franchisee's negligence if the franchisor retains a right of control over the franchisee's business operations or holds the franchisee out as its agent.

Statutory Claims: Racial Discrimination (Arguello v. Conoco)

A master is not liable for his servants' intentional acts if the acts occurred beyond the servants' scope of employment.

Estoppel-to-Deny/Ostensible Agency

A person who has been given the appearance of being an agent for a principal, which would make anyone dealing with the agent reasonably believe he was an employee or agent. A third party receives representations from an "agent" which the promisor should reasonably or foreseeably expect the third party to believe the "agent" represents the principal.