Agency Outline for Bennett

8/13/2019 Agency Outline for Bennett

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Agency (Bennett) Outline SS2011 N. Bridges

IntroductionI. Types of Business Entities

a. All of these entities agency relationship.

Entity Formation/Players

Statutory orCL

Recognizedy La! as"

For Ta#Purposes

$!nerLiaility

Sole

Proprietors%ip

One person Creature of CL ecogni!ed "y

indi#idualo$ner

O$ner

recogni!ed

%es

&eneralPartners%ip

2 or &ore pplco&etogether forpurpose of&a'ing aprofit

Creature of CL ecogni!ed asentity

ecogni!ed asaggregate ofits &e&"ers(taes flo$thru the entityto thepartners)

%eseneralpartners lia"lefor de"ts

LimitedPartners%ip

2 or &ore pplAt least 1 genpartner

At least 1li&itedparnter

Statutoryentity

ecogni!ed asentity

ecogni!ed asaggregate ofits &e&"ers

en partnerhas unli&itedlia"ility for

de"ts*o"ligations of entityLi&itedpartner haslia"ility li&itedto in#est&entin co

Corporation One or &oreperson+layers,shareholders-directors-

officers

Statutoryentity

ecogni!ed asentity

"l taationentity/corptaed asentity thenshareholders

taed

Shareholderlia"ility li&itedto in#est&entNo o$nerlia"ility

S'Corp or fe$erpersonsSingle class ofstoc'

Statutoryentity

ecogni!ed asentity

lo$ thruentity/taedat o$ner le#el

Lia"ilityli&ited toin#est&entNo o$nerlia"ility

LLC (LimitedLiaility Co)

One or &oreperson+layers,&e&"ers

Statutoryentity

3aed ato$ner le#el/flo$ thru

Lia"ilityli&ited toin#est&ent

LLP (LimitedLiaility

Partners%ip)

2 or &ore ppl+layers,

partners

Statutoryentity

3aed ato$ner le#el

No o$nerlia"ility

*gency+ ,efinition and Basic CategoriesI. *gency+ -%at is an *gent

a. *gency Relations%ip, iduciary relation $hich results fro& the &anifestation ofconsent "y one person (principal) to another that the other (agent) shall act on his"ehalf and su"4ect to his (principal5s) control- and consent "y the other to so act.est 2d. 61.

i. +rincipal7one for $ho& action is to "e ta'en.ii. Agent7one $ho is to act.

". essential elementsof agency relationship,


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Agency (Bennett) Outline SS2011 N. Bridgesi. 8anifestation (&anifestation of consent)

1. 9ritten or spo'en. Seeest :d 61.0:.ii. Control

1. ocus on authority (authority defines $hat actions the agent can ta'e),a. Actual

i. 8anifestations of principal lead agent to reasona"ly"elie#e he has authority to so act.

". ;&plied authority.c. Apparent

i. :rdpy5s perspecti#e, :rdpy &ust reasona"ly "elie#e "asedon principal5s &anifestations to the : rdpy that the agenthas authority to so act.

d. Authority "y estoppele. ;nherent authority

iii. Consent (acting on "ehalf of the principal).c. 3he fact that an agree&ent saysan agency relationship has "een created is not

controlling. No agency relationship $*o all : ele&ents. But $e do loo' to the ter&sof the < to see $hat the relationship is and if it5s an agency relationship.

d. ;f undisputed facts=uestion of agency relationship "eco&es a =uestion of la$.

e. 8anes #. Coats ,i. acts, 8anes contacted One Call and One Call "oo'ed a roo& for her atAl$ays ;nn (Coats). 8anes arri#ed at Al$ays and tripped on stairs. 8anessued Coats for in4uries and sued One Call for failure to $arn. 8anes says OneCall $as her agent and they therefore had a duty to $arn (duty of fulldisclosure).

ii. ;ssue, Agency relationship "*n 8anes and One Call>iii. ?olding, Ct una"le to identify agency relationship "*c lac'ing control ele&ent

(agent &ust ha#e a po$er to alter the legal relations "*n the principal and :rdpersons @ principal &ust ha#e rt to control the conduct of the agent).

1. All One Call did $as &a'e a reser#ation/8anes retained control offinances- and One Call did not charge 8anes for their ser#ices.

f. +al&er Cay*Cars$ell- ;nc. #. Condo&iniu&*Apart&ent ;nsurance Ser#ices- ;nc. ,i. acts, Cal ed +artners purchased an ins policy fro& ohn . Cars$ell Co (aninsurance agency). Cars$ell Co. then o"tained the policy fro& C*A;S- $hich$as issued "y Colonial +enn (an insurance carrier). Cars$ell Co. transferreda portion of its assets to +al&er Cay. 3hen Cal ed re=uested cancellationof the policy. +al&er Cay then refunded the unearned pre&iu& to Cal ed.C*A;S did not rei&"urse +al&er Cay for the refund. Nor did Colonial +enn.

ii. ;ssue, 9hether CA;S $as agent of Colonial +enn (principal)> ;f so- +al&er andCay could collect fro& Colonail +enn.

iii. ?olding, Ct said needed &ore in=uiry into facts.1. 8ain pts of this case,

a. One cannot satisfy a de"t o$ed another "y paying his or her

o$n agent.". ;ndependent Contractor can create agency relationship.c. 9ritten doc doesn5t control $hether or not agency relationship.

g. ?unter 8ining La"oratories- ;nc. #. 8anage&ent Assistance ,i. acts, < "*n ?unter ?u"co that ?u"co $ould sell and install co&puter

e=uip&ent to ?unter. ?unter deli#ered- "ut didn5t install. ?unter hired atars to co&plete installation- "ut they didn5t finish either. 8A; &anufacturedthese co&puter products and ?u"co and ata rs $ere licensed to distri"utethe products.

ii. ;ssue, Agency relationship "*n 8A; and ?u"co*ata rs.iii. ?olding, Agency relationship re=5s that principal control the agent5s

conductonly $hen a &anufacturer controls the day to day or operati#e


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Agency (Bennett) Outline SS2011 N. Bridgesdetails of a dealer5s "usiness is an agency relationship potentially created @agent &ust act solely for "enefit of principal. 3hese ele&ents not satisfiedhere/8A; had not po$er to control ?u"co*ata rs "usiness ependitures-rates or share in the profits.

II. T%e *gent as a Fiduciarya. ,uty of Loyalty (est. 2d 6:) (est :d 6.01).

i. ,uty to disclose, use reasona"le effort to pro#ide to the principal info thatthe principal $ould reasona"ly dee& as i&portant (8einhard).

ii. ,uty not to assert corporate opportunities, epectancy @ a"ility tounderta'e the opportunity @ opportunity "rought to officer in his capacity asofficer. (8einhard).

1. Not #alid consent unless disclosure of all facts.iii. ,uty to act solely for t%e enefit of t%e principal. (Shoc'ey).i#. ,uty not to compete. (+olloc').#. est :d 66 .01/ .0D.#i. est 2d 66 :/:E.

". ,uty of Carei. ,uty to in0estigate.ii. ,id t%e agent ecome fully informed of all t%e facts rele0ant to %is

tas1.c. ,uty of Candord. 8einhard #. Sal&on ,

i. acts, Sal&on o"tained lease to Bristol ?otel fro& erry (20 yr lease- norene$als). Sal&on then for&ed deal $* 8einhard to fund his constructionpro4ect. 3hen Sal&on enters into a 2nd lease 2* erry- "ut Sal&on didn5t tell8einhard a"t 2ndlease.

ii. ;ssue, id Sal&on o$e fiduciary duty to 8einhard>iii. ?olding, %es. uty of loyalty. +arnter and coFad#enturers o$e to each other

the duty of finest loyalty/this includes the duty to disclose and the duty notto assert a corporate opportunity.

1. Sal&on "reached this duty "*c he undertoo' a ne$ opportunity $*otelling 8einhard.

a. All : ele&ents of corporate opportunity (a"o#e) are &et here.e. +olloc' #. BerlinF9heeler ;nc ,

i. < said +olloc' (in recruiting "usiness) is e&ployee of B9 (e&ploy&entagency) and +olloc' agrees to "ring $* her any present 4o" candidates and

4o" openings. +olloc' placed Legger and recei#ed a chec' for doing so "utne#er infor&ed B9 of the place&ent. +olloc' sued for "reach of < (to collectother co&&issions and to collect da&ages for not recei#ing ti&ely notice ofter&ination).

ii. B9 &a'es : argu&ents,1. Con#ersion, failed.

2. NonFco&pete clause, didn5t 'ic' in til after ter&inationfailed.

:. uty of loyalty. 9in for B9.iii. uty of loyalty, re=5s agent to act in "est interest of principal- and co&peting

$* principal #iolates this dutyduty of loyalty includes duty to not co&pete.

a. ;f "reach of fiduciary dutyAgent &ust disgorge "enefit @principal not re=5d to continue honoring re&ainder of


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Agency (Bennett) Outline SS2011 N. Bridgesii. ule, Agency relationship i&plies duty of ut&ost loyalty (duty to act for

"enefit of principal- duty not to ta'e ad#antage of position as agent);f agentpro&otes his o$n interest- he has #iolated duty of loyalty and the agencyrelationship @ ;f the agent is to recei#e any "enefit fro& a transaction- he&ust fully disclose any interest in the transaction to the principal and recei#eprincipal5s consent to proceed (est :d 6.0D). ;f agent "reaches duty ofloyalty and acts to "enefit hi&self- he &ust disgorge the "enefits orrei&"urse the principal and the principal is no longer re=5d to honor pre#iousagree&ent. ;f co&pensation arrange&ent is not apportioned- then agent isnot entitled to co&pensation if "reaches dutyG if co&pensation arrange&entapportioned (paid o#er ti&e) agent entitled to co&pensation up until "reach(est 2d 6HD).

iii. ?olding, ?ere- Shoc'ey clearly "reached duty of loyaltynot entitled to anyco&pensation fro& the sales.

III. &eneral 0s. Special *gentsa. est 2d 6:,

i. &eneral agentis an agent authori!ed to conduct a series of transactionsin#ol#ing continuity of ser#ice.

ii. Special agentis an agent authori!ed to conduct a single transaction or a

series of transactions not in#ol#ing continuity of ser#ice.". Special agent has li&ited lia"ility (li&ited to actions ta'en $*in single transaction).9hereas $* general agent there are "roader po$ers and so&e i&plied po$ers ("*cof continuity of ser#ice).

c. o$en Blair Ilec Co. #. lushing Operating Corp. ,i. acts, lushing agreed to purchase a "uilding and lease it to 3G lease

pro#ided 3 $* JH for i&pro#e&ents. 3 hired +ls as contractors- "utcouldn5t pay the pls "*c they already surpassed their JH li&it.

ii. ;ssue, Can +ls reco#er fro& lushing>

iii. ule, Special agentnot in#ol#ing continuity of ser#ice.1. is that a special agent for an undisclosed principal(:rdpy has

not idea of principal5s eistence (Seeest 2d 6H)) has no po$er to "ind

his principal "y


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Agency (Bennett) Outline SS2011 N. Bridgesi. acts, +rincipal 7 Seller. Agent 7 Bro'er. Su"agent 7 Listing Ser#ice.

+rincipal did not hire su"agentSeller did not hire listing ser#ice.

Bro'er (agent) listed property on listing ser#iceagent hired su"agent.1stperson sho$ed interest in property and &ade offer to "uy. Seller found2ndperson interested in "uying. 1stperson accepted original offer. No$ ha#eseller $* 2


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Agency (Bennett) Outline SS2011 N. Bridges+l. 8artin $as Laountaine5s pri&ary log hauler- "ut fre=uently hauled logsfor other indi#iduals. 8artin o$ned the straps and truc' and fuel anddeter&ined $hich route to ta'e. 8artin $as paid "y the load and set his o$nrate. 8artin painted Laountaine logo on his truc'- "ut did so $*oLaountaine5s per&ission or 'no$ledge.

ii. ;ssue, 9hether 8artin $as ;C to Laountaine- or e&ployee. ;f so- isLaountaine still lia"le under one of the eceptions to the that a principalis not lia"le for the negligence of an ;C>

iii. &R+ Principal not liale for negligence of an IC.

1. 3o distinguish e&ployees fro& ;C5s10 factor test,1) Itent of control &aster &ay eercise o#er details of the $or'.2) 9hether one e&ployed is engaged in a distinct occupation.:) 9hether $or' is usu done $*o super#ision.H) S'ill re=5d (uns'illed la"or usu done "y e&ployee)(s'illed la"or

usu done "y ;C).) 9hether the e&ployer or the $or'&an supplies the

instru&entalities*tools*place.D) Length of ti&e person is e&ployed.) 8ethod of pay&ent.

) 9hether $or' is a part of the regular "usiness of the e&ployer.E) 9hether pys "elie#e relation of &aster and ser#ant has "eenfor&ed.

10) 9hether the principal is or is not in "usiness.i#. E#ceptions to t%e &R,

1) < re=5s the perfor&ance of intrinsically dangerous $or' (&eaning- ris'of danger cannot "e re&o#ed).

2) +rincipal is "y la$ or < charged $* perfor&ing the specific duty (nottriggered 4ust "*c contractor ahs rt to inspect or super#ise).

:) Act $ill create a nuisance (in4urious to health- indecent- offensi#e-o"structs property).

H) Act $ill pro"a"le cause in4ury unless due precaution is ta'en (principal

re=5d to foresee possi"ility).) Act is illegal (re=5s 'no$ledge and sanctioning of illegality).#. ?ere- 10 factor test $eighs in fa#or of 8artin as ;C,

1) 8artin alone controlled the loading and dri#ing. ?e also decided $hatroute to ta'e. Icept for "eing told $here to pic' up and $here todeli#er the logs- all of the details $ere left to 8artin5s discretion.

2) 8artin $or'ed as a selfFe&ployed truc' dri#er hauling logs for co5s andindi#iduals. 8artin ne#er got Laountaine5s per&ission to place thelogo on his truc'- and Laountaine testified that- as soon as he sa$ it-he told 8artin to re&o#e the logo.

:) Neither 9ood nor Laountaine $as in the "usiness of hauling logs- andthey relied on others li'e 8artin to do this $or'. After the accident

another co $as hired to pic' up the logs.H) 8artin had a co&&ercial dri#er5s license and ahd "een in the career ofdri#ing truc's and hauling things. Actions as an interstate truc' dri#er$ere regulated "y the ed 8otor Carrier Safety egulations.

) 8artin o$ed "oth the se&iFtractor and trailer straps- paid for fuel-and insurance.

D) 8artin $as free to haul logs for any py he $ished. 8artin5s hrs $erenot regular and his ser#ice for Laountaine $as not continuous.

) 8artin paid "y the load. Laountaine paid 8artin thru a series ofchec's.

) Laountaine $as not in the "usiness of hauling logs- although that $asa nec part of his "usiness. ?e did not earn a profit fro& the

No &agic ofele&ents re=5d.Balancing test.


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Agency (Bennett) Outline SS2011 N. Bridgestransportation of logs. 8artin $as engaged in the "usiness of haulinglogs.

E) 8artin5s testi&ony indicated that he "el5d that he $as an ;C.Laountaine did not assu&e control o#er 8artin.

10) Laountaine $as a "usiness engaged in the procuring andselling of 3i&"er Logs.

#i. ?ere- none of the eceptions to the applyLaountaine not lia"le for8artin5s negligence,

1) 3he < "*n Lafountaine and 8artin did not re=uire the perfor&ance ofintrinsically dangerous $or'. Nothing intrinsically dangerous a"thauling hea#y loads. ?ad 8artin properly stopped at the traffic signaland appropriately &aintained his "ra'es- the accident $ould not ha#eoccurred. 3herefore- Laountaine is not lia"le under this eception.

2) Ia&ining the < "*n 9ood and Laountaine- there is no indication thatLaountaine intended to assu&e a specific duty as to Christopher-tra#elers on the pu"lic road$ay- or e#en a general duty of care re thehauling of logs. 3he agree&ent does not define any duty of care or&ention the assu&ption of any specific duty "y Laountaine.

3herefore- the 8oores ha#e failed to sho$ that this eception to the

of nonFlia"ility applies.:) 3o haul logs- "y itself- did not create a nuisance. 3he designated e#iddid not est that the act of hauling logs $as of the type that $ill createa nuisance. 3herefore- this eception to ;C lia"ility does not apply.

H) I#id did not est that Laountaine had any 'no$ledge of any alleged&echanical pro"le&s $* 8artin5s se&iFtractor or trailer- his dri#ingrecord- or any alleged nonFco&pliance $* interstate truc'ing la$s andregulations. No sho$ing that Laountaine could ha#e reas5ly foreseenthat 8artin $ould negligently diso"ey a traffic signal. 3his eceptiondoes not apply.

) Act of hauling logs is not illegal. I#id did not est that Laountaine hadany 'no$ledge of 8artin5s alleged failure to co&ply $* licensing

regulations or that Laountaine participated in or directed this failureto co&ply. Any failure of 8artin to properly co&ply $* licensingregulations ahs not "een est5d to "e the proi&ate cause of theaccident. 3his eception does not apply.

d. Nelson #. Country$ide ?o&e Loans- ;nc. ,i. acts, ef 3rantor secured loan for pls and e&ployed ef Lee- e&ployed "y

M3- to prepare the closing docs. ocs reflected higher interest rate.ii. ;ssue, Lee clai&s since the pl5s c*a5s relate to her alleged conduct as an

e&ployee of M3- respondeat superior shifts any lia"ility fro& her indi#iduallyto her e&ployer.

iii. ?olding, irst- pls see' tort- not


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Agency (Bennett) Outline SS2011 N. Bridgesiii. ?olding, ?ospitals hold the&sel#es out to the pu"lic as offering and rendering

=uality health care ser#ices. Ano&aly $ould attend the hospital5s escapefro& lia"ility $here the =uality of care so deli#ered $as "elo$ &ini&allyaccepta"le standards. 9here a hosp holds itself out to the pu"lic aspro#iding a gi#en ser#ice- in this instance- e&ergency ser#ices- and $herethe hospital enters into a contractual arrange&ent $* one or &ore physiciansto direct and pro#ide the ser#ice- and $here the patient engages the ser#icesof the hosp $*o regard to the identity of a particular physician and $here as a&atter of fact the patient is relying upon the hospital to deli#er the desiredhealth care and treat&ent- the doctrine of respondeat superior applies andthe hospital is #icariously lia"le for da&ages proi&ately resulting fro& theneglect- if any- of such physicians.

III. Limitations on t%e Independent Contractor E#ceptiona. 4egligent Selection

i. +ar' North eneral ?ospital #. ?ic'&an ,1. acts, ?ic'&an sued r. 3ippit for &ed &al 4oined +ar' North ?osp

as a def "*c hosp $as negligent in granting 3ippit hosp pri#ileges.2. ;ssue, ;ssue ?osp raises on appeal, hosp is not lia"le for the granting or

continuing surgical pri#ileges to a doc $here a patient has chosen thephysician and the hosp is not other$ise lia"le.

:. ?olding, hosp o$es a duty to its patients to eercise reasona"le care inthe selection of its &ed staff and in granting speciali!ed pri#ileges("ased on doctrine of negligent selection). 9here there is a duty ofcare o$ed "y a hosp to one of its patients and the hosp negligently"reaches that duty- the hosp &ay "e held lia"le. +ar' North had aduty to ?ic'&an to eercise reas care in the selection of its &ed staff.;t also had the duty to periodically &onitor and re#ie$ theirco&petency

H. ule, octrine of negligent selection/pl &ust pro#e entrust&ent "yprincipal- principal &ust 'no$ or should5#e 'no$n of agent5srec'lessness- negligence "y agent- proi&ate causation.

a. O$e a duty of care in the selection of agent.". Also applies to e&ployee acting outside scope of e&ploy&ent.

. T%e Borro!ed Ser0ant ,octrinei. Nepstad #. La&"ert ,

1. acts, Nepstad in4ured $hen crane touched high #oltage po$er line.Nepstad e&ployee of Arnold Co.I&ployee of Arnold Co gi#ing instructions to crane operator (+as&a-e&ployed "y Crane Co (o$ned "y La&"ert)).

2. ;ssue, 9hether +as&a $as a loaned ser#ant in the e&ploy of theArnold Co.

:. ule re Loaned Ser#ant +rincipal/2 possi"le testsa. 9hose "usiness test, $hich e&ployer5s "usiness $as "eing done

or furthered> Ans$er7responsi"le e&ployer. 3his test hard toapply- usually ha#e to rely on Control 3est.". Control test, +laces the responsi"ility for the ser#ant5s negligent

upon the e&ployer ha#ing the right to controlhis actions at theti&e the negligent act occurred (a"sence of actual controldoesn5t alter result of this test).

i. Authority to designate only the result to "e reached is notsufficient under the control test. 3here &ust "e theauthority to eercise detailed authoritati#e control o#erthe &anner in $hich the $or' is to "e done.

H. ?olding, +as&a $as under the detailed authority of Arnold Co "*ce&ployee of Arnold gi#ing crane operating instructions (these signals


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Agency (Bennett) Outline SS2011 N. Bridges7 co&&and). La&"ert not lia"le for in4ury.

c. 4on',elegale ,utyi. 9ilson #. ood ?u&or ,

1. acts, ood ?u&or used to o$n and &aintain ice crea& truc's ande&ployed dri#ers to sell products (at this ti&e ? also had etensi#esafety progra& re safety of children).? su"se=uently purported to est its #endors as ;C5s (#endor5spurchased turc's fro& ? and sold treats and price ;C deter&ined/?didn5t super#ise day to day acti#ities.9illia&s e&ployed as ;C- par'ed his truc' and played &usic on "usystreet. 9ilson crossing street got hit "y another car.

2. ule, is that e&ployer not lia"le for ;C5s tortiuos conductBM3eceptions $here e&ployer is in the "est position to identify and

&ini&i!e the ris's in the contractors acti#ities;f a$are of specific ris'

to :rdpys @ in position to &ini&i!e the ris'sha#e a duty to &ini&i!ethe ris' and are lia"le if you fail to do so.

a. Can5t delegate such a ris' to your ;C5s.:. ?olding, Sellign ice crea& not inherently dangerous- "ut ? 'ne$ or

had special reason to 'no$ of the peculiar ris's to children inherent in

the street sales of ice crea& and too' a"solutely no precautions to$arn its #endors to other$ise &ini&i!e those ris's/a finding suff toi&pose lia"ility on ? (used to ha#e safety progra&).

I2. Scope of Employmenta. In &eneral

i. iocco #. Car#er ,1. acts, Case $* truc' dri#er e&p5ee $* 'ids on truc'. One 'id in4ured.2. ;ssue, ;s his e&p5er lia"le. Or is e&p5ee lia"le>:. ?olding, Start $* presu&ption that e&p5ee $as in course of

e&ploy&entG "ut presu&ption disappears $hen the surrounding circ5sare such that its recognition is unreasona"le- and then do&inantpurpose &ust "e pro#ed ("y e&p5ee) to "e the perfor&ance of the

&aster5s "usiness.?ere- ser#ant5s purpose to return to the garage $as insuff to "ring hi&"ac' $*in the a&"it of his duty/neither the tour nor the stop $asincidental to his ser#ice. +l cli&"ed on truc' $hile it $as in front ofpool roo&- still engaged upon an errand unrelated to the "usiness.

H. MLI, Only s&all de#iations are per&itted.ii. 8elinFSchilling #. ;&& ,

1. acts, ;&&7&aintenance &an at school and had truc' "*c he $asre=5d to $or' at H different schools. ;&& ta'ing "rea' at schoolappro#ed place- on $ay "ac'- accident $* pl.

2. ;ssue, +l argues ;&& $as not acting $*in scope of e&ploy&ent:. MLI,


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Agency (Bennett) Outline SS2011 N. Bridgesi#. ;f force is intentionally used "y the ser#ant ag other- the

use of force is not unepected "y the &aster.c. oreseea"ility test, I&ployer not lia"le if the conduct of e&p5ee

is not related to the e&ploy&ent of the indi#idual and notincidental to the e&ploy&ent.

i. ?a#e to foresee that there is a ris'- a ris' that is relatedto the e&ploy&ent in general.

d. ?olding, ;&& $as $*in e&ploy&ent. Brea' $as foreseea"le.H. Ba'er #. St. rancis ?osp.,

a. acts, Ba'er5s 'id at ?osp Child CareG a#is is e&p5ee of ChildCare. a#is intentionally struc' child5s head 2 ag corner of

shelf"rain in4ury ($ouldn5t stop crying).". ;ssue, Ba'ers sued hosp under respondeat superior.c. MLI/espondeat Superior Lia"ility for "attery,

i. 3o hold an e&p5er lia"le for tort of e&p5ee- tortious act&ust "e co&&itted in course of e&ploy&ent and $*inscope of e&p5ee5s authority.

ii. , Assault on :rdpy not $*in scope of e&ploy&ent.iii. Iception, I&ployer &ay "e lia"le for tort of e&p5ee

$here the act is incidental to and done in furtherance ofthe "usiness of the e&p5er e#en though ser#ant acted inecess of the authority or $illfully co&&itted the $rongs.

d. estate&ent 2d, 3hat the ser#ant in an outrageous &anner outof all proportion to the necessities of his &aster5s "usiness ise#id indicating that the ser#ant has departed fro& the scope ofe&ploy&ent in perfor&ing the act.

e. ?olding, So&e type of stress induced te&p loss of ctrl o#erone5s "eha#ior argua"ly in#ol#e an e&o response to actions"eing ta'en for the e&p5er if her &oti#ation and purpose indoing so $as to =uiet the crying "a"y. e&anded.

. Intentional Torts

i. 9hen are intentional torts $*in the scope of e&ploy&ent>>> 9hen the tort isa direct outgro$th of the e&p5er5s instructions or the e&p5ee5s duties.ii. odi #. Southern Ne$ Ingland school of La$ ,

1. acts, +l $ent to SNISL under i&pression they5d "e accredited uponhis graudation "ased on state&ents*letters fro& dean.

2. 8isrepresentation clai& re=5s, A false state&ent of &aterial fact &adeto induce the pl to act and reas5ly relied upon "y hi& to his detri&ent.

a. A state&ent- though couched in ter&s of opinion &ay constitutea state&ent of fact if it &ay reas5ly "e understood "y the readeror listener as i&plying the eistence of facts that 4ustify thestate&ent.

". Note, raud*&isrepresentation re=5s facts pleaded $* great

particularity.:. ?olding, +l entitled to disco#ery. e&anded.iii. i+ietro #. Lighthouse 8inistries- et al,

1. acts, +l has affair $* pastor- Ir#ing. +l filed this suit ag defs and Ir#inalleging that defs had "een negligent in their hiring of Ir#in "*c they'ne$ or should ha#e 'no$n that he $ould ta'e seual ad#antage offe&ale &e&"ers of the church (+l clai&s she suffered se#ere andde"ilitating e&otional distress- e&"arrass&ent- &ental anguish-stress- and loss of reputation).

2. ;ssue,:. ?olding,

a. Ir#in5s seual relationship not $*in scope of e&ploy&ent as


11/31

Agency (Bennett) Outline SS2011 N. Bridgespastor.

". +l clai&s defs negligently hired Ir#ing.i. Clai& of negligent retention re=5s pl to est, 1)

e&ploy&ent relationshipG 2) e&ployee5s inco&petenceG :)e&ployer5s 'no$ledge of such inco&petenceG H)e&ployee5s act or o&ission causing pl5s in4uriesG )e&ployer5s negligence in hiring as the proi&ate cause ofpl5s in4uries.

ii. +l argues defs 'ne$ of er#in5s pre#ious seual acti#ities.Ct disagreed- no genuine issue of &aterial fact.

c. Puniti0e ,amagesi. est 2d 3orts, +uniti#e da&ages can properly "e a$arded ag a &aster or

other prin "*c of an act "y agent iff,1. +rin auth5d the doing and the &anner of the act- or2. 3he agent $as unfit and the prin $as rec'less in e&ploying or

retaining hi&-:. Agent $as e&ployed in &anagerial capacity and $as acting in scope of

e&ploy&ent (loo' at degree of discretion e&ployee possesses in&a'ing decisions)- or

H. +rin ratified or appro#ed the act.

Bases of *ut%ority;. Authority, $hether the agent has the po$er to "ind the prin (the po$er to alter the

relationship and "ind a :rdpy).;;. : types of authority,

a. Ipress,i. 8anifestation fro& prin to agent ($ords- conduct- $riting- course of dealing).ii. Ipress authority rarely co#ers e#erything an agent is supposed to do.

". ;&plied,i. Li&ited to ordinary and usual &anner of proceeding.ii. ;&plied fro& the $ords used- custo&- and relations of the pys.

iii. +rotects reas epectations of the agent.i#. Necessary to achie#ing principal5s o"4ecti#es "ased on agent5s reasunderstanding.

c. Apparent,i. +o$er to affect the legal relations of another "y transaction $* :rdpy- as

agent of another- arising fro& and in accordance $* the other5s&anifestations to such :rdpersons.

ii. ;f apparent authority:rdpy has sa&e rts as if prin had epressly auth5dagent to act.

iii. Nor&ally results fro& prior relationship "*n prin and agent.III. E#press *ut%ority

a. est :d, An agent acts $* actual authority $hen- at the ti&e of ta'ing action that

has legal conse=uences for the principal- the agent reasona"ly "elie#es- inaccordance $* the principal5s &anifestations to the agent- that the principal $ishesthe agent to act.

". 8aenhoudt #. Ban' ,i. acts, Case $* 85s niece and atty $anted "an' to recogni!e +OA. But- "an'5s

policy not to recogni!e +OAs and refused to &a'e the re=uested transactionsii. ;ssue, Niece filed petition clai&ing "an'5s $illfull and $anton refusal to honor

the +OA. Ban' responded $* &otion for S clai&ing


12/31

Agency (Bennett) Outline SS2011 N. Bridgesprincipal. An un=ualified refusal to honor a +OA is contrary to


13/31

Agency (Bennett) Outline SS2011 N. Bridgessign.

H. atification occurs $hen one- ha#ing full 'no$ledge of all the &aterialfacts- confir&s- appro#es- or sanctions- "y affir&ati#e act orac=uiescence- the originally unauthori!ed act of another- there"ycreating an agency relationship and "inding the principal "y the act ofhis agent as though the act had "een done $* prior authority.

a. No ratification here.I2. Implied *ut%ority

a. ort odge Crea&ery Co #. Co&&ercial State Ban' ,i. acts, Ia appellant contracted $* e9all for his ser#ices as far& &anager.ii. ;ssue, +ls see'ing da&ages fro& def on theory of con#ersion, $rongfully

allo$ed pl5s e&ployee- e9all- to endorse chec's paya"le to appellants anddeposit the proceeds in his nonFtrust far& &anage&ent acct.

iii. easoning, Con#ersion7$hen instru&ent is paid on a forged instru&ent.1. Agent5s auth to sign for another &ay "e est5d "y epress- i&plied- or

apparent authority.2. ;&plied authority, all incidental authority as is necessary- usual- and

proper to effectuate the &ain authority epressly conferred @ac=uiescence "y the principal @ authority $ill not "e narro$ed "yli&itations not co&&unicated to persons $* $ho& the agent deals.

i#. ?olding, e9all poss5d i&plied authority to endorse the chec's. 9rittenagree&ent "*n e9all and ea appellant epressly pro#ided that e9all $asto assu&e co&plete and undi#ided charge of the property- accepting fullresponsi"ility for its care and operation.

". est :d/Acts Necessary or ;ncidental to Achie#ing the +rincipal5s O"4ecti#es,i. +rincipal5s &anifestation to the agent epresses the principal5s $ish that

so&ething "e done- it is natural to assu&e that the principal $ishes- as anincidental &atter- that the agent &ust ta'e the steps nec to perfor&ing andthat the agen tproced in the usual and ordinary $ay- unless the principaldirects other$ise.

c. Beradsley #. ar&land ,i. acts, Case $here e&p5ee truc' dri#er too' 9 $* hi& on trip one night.ii. ;ssue, 9hether e&p5ee had actual*apparent auth to in#ite Beardsley to tra#el

$* hi&.iii. ?olding,

1. est 2d 62H2, A &aster is not su"4ect to lia"ility for the conduct of aser#ant to$ards a person har&ed as a result of accepting fro& theser#ant an in#itation- not "inding upon the &aster- to enter or re&ainupon the &aster5s pre&ises or #ehicle- although the conduct $hichi&&ediately causes the har& is $*in the scope of the ser#ant5se&ploy&ent.

2. I&ployer5s #icarious lia"ility for the e&ploye5s negligence depends on$hether the e&ployee5s in#itation to the guest is authori!ed- and

hence- "inding on the e&ployer.:. An e&ployee has epress actual authority to "ind his e&ployer $henthat e&ployer has orally or in $riting- specifically granted thee&ployee the po$er to "ind the e&ployer.

a. I&p5ee did not recei#e per&ission to ta'e Beardsley on trip.H. An e&ployee has i&plied actual authority $here the course of dealings

"*n the pys and the circu&stances surrounding the case est thee&ployee5s po$er to "ind the e&ployer (?e &ust reas5ly "el he hasauthority "ased on his e&ployer5s conduct- custo&s- or their 4ointcourse of dealing).

a. Custo&ary use of ar&land pic'Fups "y ar&land e&ployeesand their fa&ilies and ar&land5s lac' of an eplicit $ritten


14/31

Agency (Bennett) Outline SS2011 N. Bridgespolicy proscri"ing nonFe&ployee passengers.

. Apparent authority is created $hen the principal holds out the agent aspossessing the authority to "ind the principal or $hen the principalallo$s the agent to clai& such authority.

a. She 'ne$ that he had as'ed per&ission to "ring their son. She'ne$ ic' had not sought ar&land5s per&ission on thate#ening.

2. *pparent *ut%ority and Estoppela. est 2d/Apparent Authority,

i. Apparent authority is the po$er to affect the legal relations of another person"y transactions $* :rdpersons- professedly as agent for the other- arisingfro& and in accordance $* the other5s &anifestations to such : rdpersons.

1. Co&&ent,a. 8anifestation "y a person to a :rdperson that another is his

agent.". 3he :rdperson has the sa&e rts $* reference to the principal as

$here the agent is authori!ed .c. Apparent authority eists only $* re to those $ho "el and ha#e

reason to "el that there is authG there can "e no apparentauthority created "y an undisclosed principal.

". est :d/Agency "y Istoppel,i. A person $ho has not &ade a &anifestation that an actor has authority as an

agent and $ho is not other$ise lia"le as a py to a transaction purportedlydone "y the actor on that person5s account is su"4ect to lia"ility to a :rdpy$ho 4ustifia"ly is induced to &a'e a detri&ental change in position "*c thetransaction is "el5d to "e on the person5s account if the person intentionallyor carelessly cause such "elief or ha#ing notice of such "elief and that it&ight induce other to change their positions- the person did not ta'e reassteps to notify the& of the facts.

2I. T%e E8ual ,ignity Rulea. ;f agent enters into < $* :rdpy- that has to "e in $riting- then agent5s authority &ust

also "e in $riting.". Church #. odger ray- Ltd ,

i. ;ssue, 9hether the &anaging agent of pl landlord5s predecessor in int- $hopurportedly eecuted a stor lease etension agree&ent "y infor&al letter-$as an agentG and if so- $hether the e#id of his authority to eecute theetension agree&ent satisfies the statute.

ii. Statute, a lease for a period longer than a yr &ust "e in $riting andsu"scri"ed "y the py to "e charged or "y his la$ful agent thereunto auth5d"y $riting.

iii. ef argues, statute does not apply $hen the putati#e agent is also ane&ployee of the corpG if the instru&ent is eecuted "y an officer or e&ployeeon "ehalf of the corp- the act of eecution is not that of an agent "ut the act

of the corp itself.i#. ?olding, ef5s reasoning is unsound. An issue under a statute of frauds &aynot "e resol#ed "y reference to rules of agency affecting corporations. ;f it$ere other$ise- then the statute of frauds $ould "e largely o"#iated as tocorporations and to that etent rendered a #irtual nullity. Statute of fraudsare applica"le letter to e&ployeeFagent falls far short of satisfying thestatute.

2II. Ratification and *doptiona. atification &eans principal accepts acts of agent.

i. etroacti#e.ii. ull 'no$ledge of &aterial facts @ &anifestation of assent (to

anyone)assu&ption of acceptance*consent.


15/31

Agency (Bennett) Outline SS2011 N. Bridgesiii. +resupposes the eistence of a person on "ehalf of $ho& the < &ay ha#e

"een &ade at the ti&e.i#. +rin cannot ratify part of the < and not the rest of the


16/31

Agency (Bennett) Outline SS2011 N. Bridgesas stated in 6 :.0(1) and (:)G or(2) the principalRs death- cessation of eistence- or suspension ofpo$ers as stated in 6 :.0(2) and (H)G or(:) the principalRs loss of capacity- as stated in 6 :.0(1) and (:)G or(H) an agree&ent "et$een the agent and the principal or theoccurrence of circu&stances on the "asis of $hich the agent shouldreasona"ly conclude that the principal no longer $ould assent to theagentRs ta'ing action on the principalRs "ehalf- as stated in 6 :.0EG or() a &anifestation of re#ocation "y the principal to the agent- or ofrenunciation "y the agent to the principal- as stated in 6 :.10(1)G or(D) the occurrence of circu&stances specified "y statute.

". 3o ter&inate apparent authority,i. 8anifestation fro& prin to :rdpy that agency ter&inated.

1. "*c apparent agency is created "y &anifestation "y prin to :rdpy then"ased on :rdpy5s reas "eliefs.

2. Apparent auth end $hen no longer reas for :rdpy to "el agent has authto act $* authority.

c. 3ele#ision I#ents 8ar'eting #. A&con ,i. MLI, ust "*c agency relationship created in $riting- doesn5t &ean it has to

"e ter&inated in $riting. Not perfor&ing an act does not ter&inate anagency relationship. Need &anifestation of ter&ination (see a"o#e).d. Mnion 8iniere #. +arday Corp ,

i. acts, +arday hired to &anage Bic'nell. +arday entered into stoc' purchaseagree&ent of Bic'nell $* :rd py. Bic'nell5s shareholders $ere dissastisfied $*the purchase agree&ent. Bic'nell ter&inates +arday. +arday says notter&inated "*c < re=5s D0 days notice.

ii. MLI, 3er&s of < go#ern ter&ination (if applica"le)- unless there5s a "reachof duty of loyalty- then prin no longer re=5d to uphold


17/31

Agency (Bennett) Outline SS2011 N. Bridges2. Agent has an int in the act $hich he is auth5d to ta'e.:. oes not incl co&pensation.H. 8ust deri#e the int fro& the su"4ect itself.. 3he po$er &ust for& part of the


18/31

Agency (Bennett) Outline SS2011 N. Bridgesconstructi#e 'no$ledge.

d. Lane #. Oustalet ,i. Lanes contacted O$en of Alfonso ealty and found Oustalet5s house they

$ished to purchase. +ys agreed to ha#e Alfonso act in dual agency andeecuted sales

iii. ule, As a dual agent- he &ust proceed $* heightened sense of duty andconduct to assure that he ser#es "oth &aster5s int5s fully. A proper analysisre=5s recogni!iton that in a dual agency 2 distinct agencies are #ested in theagent $* separate duties and responsi"ilities as to ea prin.

i#. ?olding, NO "right line rule for all cases as to $hether 'no$ledge held "y thedual agent is to "e i&puted to either or "oth principals. eal estate agency"reached its duty to the "uyers in si&ply assu&ing that the atty $ouldpro#ide the ter&ite inspection report to the&.

T%e Relations%ip Bet!een Principal: *gent: and T%ird PartiesI. ,uties of *gent to Principal

a. As a fiduciary- all agents o$e to principals,i. uty of loyalty (re=5s that agent &ay not put o$n int or int of :rdpy "efore intor prin unless other$ise agreed (full disclosure @ consent).

1. uty to disclose.ii. uty of care (agent &ust act $* s'ill $hich is standard in the locality in the

'ind of $or' $hich he is e&ployed to perfor&).. ,uty of Care

i. 8aurer #. Cer'#eni'FAnderson 3ra#el- ;nc. ,1. ;ssue, id CA ha#e a duty to 8olly to infor& her of the potential ris's>2. acts indicating prin*agent relationship,

a. 8olly as'ed CA to "oo' party train.". 8olly paid CA.

c. CA "oo'ed the trip.:. oes duty of care re= CA to disclose 'no$ledge of prior deaths>a. C3 said CA had a duty to disclose dangers reasonably known.". B*c CA acting as special agent of 8olly- they o$e fiduciary

duties- including duty to disclose.c. Once agent has 'no$ledge of pro"le&- there is a duty to

in#estigate.c. ,uty of Loyalty

i. uty of loyalty i&plicated,1. Agent reco#ers pay&ent for& :rdpy in conn $* sa&e transaction "*n

prin and :rdpy.a. Secret profit.

". est 2d, uty of agent to act in principal5s "est int unlessother$ise agreed and full disclosure of all &aterial facts.

2. +rohi"its co&petition "*n prin and agent $hen agent acts on "ehalf ofad#erse py.

a. Agent &ight act as ad#erse py in transaction in#ol#ing prin.:. +rohi"its a"use "y agent of his position to earn side profits not auth5d

"y prin.ii. Secret Commissions

1. est 2d 6:, Mnless other$ise agreed- an agent $ho &a'es a profit inconn $* transactions conducted "y hi& on "ehalf of the prin is under aduty to gi#e such profit to the prin.


19/31

Agency (Bennett) Outline SS2011 N. Bridges2. est :d 6.02, An agent has a duty not to ac=uire a &aterial "enefit

fro& a :rd py in conne $* transactions conducted or other actionsta'en on "ehalf of the prin or other$ise thru agent5s use of the agent5sposition.

:. Bad faith not re=5d.a. egardless of nature of side pay&ent- it "reaches duty.

H. Agent $ill ha#e duty to pay that a&t to prine#en if he acted perfectlyfair to the principal.

. ussin #. Shoc'ey ,a. Agent has duty to act solely for "enefit of principal. ;f he acts to

"enefit hi&self- he &ust disgorge any of the "enefits recei#ed orrei&"urse loss caused to the principal. 3he only ti&e agent canact for his o$n "enefit is if all &aterial facts are disclosed andprincipal $ai#es any rt to the "enefit. Once duty is "reached-principal no longer has duty to uphold the pre#ious agree&ent.

". Shoc'ey not entitled to any co&pensation.i. ;f co&pensation arrange&ent is not apportioned- then

agent not entitled to co&pensation if he "reaches afiduciary duty.

ii. ;f co&pensation agree&ent is apportioned (paid o#erti&e)- agent is entitled to co&pensation up until point of"reach of fiduciary duty.

iii. *ppropriating Customers1. ;ssue, 9as So'olo$s'i using a custo&er list (fro& pre#ious e&ployer)

to co&pete at the tie& he $as $or'ing for the pre#ious e&ployer> No.;f no longer an agent- aren5t fiduciary duties ter&inated>

2. ?olding, %es. An e&p5ee that is an agent for his e&p5er o$ed thee&p5er a duty to act solely for the "enefit of the e&p5er during theter& of e&ploy&ent. ?o$e#er- after the e&ploy&ent relationship iso#er- e&p5ee is free to engage in co&petition (unless nonFco&peteagree&ent).

i0. Self',ealing1. acts, Bro'er hired to sell pls5 aptG pls $ant to "uy apt net to theirs

and epand- "ut they are unsuccessfulG so they decide to sellG "ro'er"uys apt fro& plsG then neigh"or decides to sell. +ls are &ad. +ls sue"ro'er for "reach of fiduciary duty.

2. ?olding, No "reach of duty of loyalty here "*c pls contracted a$ayprin*agent relationship $hen they signed < $* "uyers ("ro'er). AfterS&iths contracted $* pls- defs $ere e&ployed only to assist pls infinding another apttherefore- any fiduciary duties etended only tothat specific e&ploy&ent. Agent only hired to find "uyer of aptoncethat < signed- fiduciary duties no longer in play.

:. ule, Loo' at point in ti&e of alleged "reach$as the a p*a

relationship> ;s agent still acting on "ehalf of principal.II. ,uties of Principal to *genta. est :d .1:, uty to


20/31

Agency (Bennett) Outline SS2011 N. Bridgesthen secured isher account. 3hen Bla!er suffered financial difficulty andfired o"ert. o"erts suinig Bla!er for co&&ission on post ter&ination saleso"erts o"tained for the co. o"erts clai&s he is entitled to co&&issions forall su"se=uent sales to accounts that it initially procured for Bla!er onaccounts o#er $hich it $as granted eclusi#e representation.

ii. ;ssue, 9hen is an agent entitled to co&&issions &ade "y his principal or "yanother agent>

iii. ?olding, Ct says it depends on the intention of the pys (all facts and circ5sneed to "e considered). But if < is silent agent is entitled to co&&ission onsale- $hether or not he closed the sale- only $here it can "e sho$n that hisefforts $ere the procuring cause.

1. +rocure&ent defined narro$ly/$here agent does not participate inthe negotiation of < $* custo&er- he is not the procuring cause- e#enthough the agent &ay ha#e originally introduced the custo&er to theprincipal.

2. ;f eclusi#e agency- principal cannot e&ploy other agents to act inagent5s role.

III. Liaility of *gent to rdPartya. 9hen can a :rdpy reco#er fro& an agent>

i. Agent is an agent of undisclosed principal.1. isclosed prin, :rdpy 'no$s agent is acting on "ehalf of prin and 'no$s

prin5s identity.a. Agent not lia"le.

2. Mndisclosed prin, :rdpy has no 'no$ledge that agent is acting on"ehalf of prin.

a. Agent lia"le.:. +artially disclosed prin, :rdpy 'no$s agent is acting on "ehalf of prin

"ut doesn5t 'no$ identity of prin.a. Agent lia"le if other py has not reas &eans of ascertaining prin

(presu&ption). But agent not lia"le if agent gi#es suchco&pelte info concerning prin5s identity that he can "e readilydistinguished.

ii. Agent has "reached i&plied $arranty of authority.1. est :d D.10, A person $ho purports to &a'e < $* :rdpy on "ehalf of

another $hen they lac' the auth to do so gi#es i&plied $arranty ofauth to :rdpy and agent is su"4 to lia"ility to :rdpy for da&agesMNLISS prin purported to ratify the act- agent specifies no $arrant ofauth is gi#en- :rdpy 'no$s agent actin $*o actual authority.

iii. 3orts.1. est :d .01, An agent is su"4 to lia"ility to :rdpy har&ed "y agent5s

tortious conduct. Mnless applica"le statute pro#ides other$ise- anactor re&ains su"4 to lia"ility although the actor acts as an agent or ane&ployee- $* actual or apparent auth- or $*in the scope of

e&ploy&ent.i#. Agents "reach of fiduciary duty to prin does not create c*a "y :rdpy to agent.?o$e#er- if agent is perfor&ing on "ehalf of prin to :rdpy- that does create ac*a.

". ;ngra& #. Lupo ,i. acts, Atty re=uested transcript fro& ct reporter. Atty paid J:00 initially. Ct

reporter finishes and sends transcript. Ct reporter re=uests rest of pay&entfro& atty. Atty said client is responsi"le for re&ainder of pay&ent.

ii. ;ssue, enerally $e 'no$ that a :rdpy can "ind the principal- no &atter $hat(disclosed or undisclosed). But $hen can a :rdpy "ind an agent> Can ctreporter (:rdpy) "ind agent (atty) here>

iii. ule, : instances $here agent $ill "e lia"le to :rdpy/


21/31

Agency (Bennett) Outline SS2011 N. Bridges1. Mndisclosed principal.2. Breach of i&plied $arranty of authority.:. 3ort lia"ility.

i#. ?olding, Ct ac'no$ledges special relationship "*n atty and ct reporter. Attyacts in his relationship $* ct personnel as an ;C. Ct reporter loo's to atty fordirection. Atty in turn loo' sot client for costs of transcript.

c. Senor #. Bangor 8ills- ;nc. ,i. acts, Shortage on yarn. B8 needs yarn. B8 o"tains yarn for& 9S

(secondary &ar'et)(9S purchases fro& secondary &ar'et fro& #arioussellers). 9S does not act eclusi#ely for B8. B8 est5d an account to $hich itga#e 9S access. 9S "ought yarn- yarn deli#ered to 9S- chec' "ounced.

ii. ;ssue, Seller co&es after B8. B8 defends, they did not authori!e that sale.iii. ule, An undisclosed prin $ho entrusts an agent $* the &anage&ent of his

"usiness is su"4ect to lia"ility to :rdpersons $* $ho& the agent enters intotransactions usual in such "usinesses and on the principal5s account-although contrary to the directions of the principal.

1. ;n such cases- lia"ility is i&posed upon the undisclosed prin "*c he hasplaced the agent in such apparent relationship to an o"ser#a"leenterprise as is li'ely to induce reliance upon hi& as a responsi"leproprietor. But there is no rational or e=uita"le "asis for such adoctrine unless the person dealing $* the agent finds hi& in charge ofa "usiness in this sense of a functioning enterprise $* o"ser#a"leassets.

i#. ?olding, Ct said 9S $as not acting $* actual authority/and if agent is acting$*o actual auth prin not "ound "y agent5s acts. 3he purchase in this case&ade on Shet!line5s credit at a price prohi"ited "y Bangor $as not $*in theter&s of the agency.

d. edi loors #. Sonen"erg ,i. acts, Sonen"erg ordered carpet to "e installed "y edi loors. edi loors

did not recei#e full pay&ent and sued "oth Sonen"erg and the apt co&pleo$ner. edi loors did not learn of true o$ner5s identity until a dispute aroseconcerning the pay&ent of so&e of its later in#oices.

ii. ule, An agent $ho &a'es a < $*o identifying his prin "eco&es personallylia"le on the


22/31

Agency (Bennett) Outline SS2011 N. Bridgesi. Ia partner 7 an agent of the p5ship.ii. Act of partner "inds the p5shipG unless the partner had no authority to act for

the p5ship in the particular &atter and the person $* $ho& the partner $asdealing 'ne$ or had recei#ed notification that the partner lac'ed authority.

c. ef5n of p5ship, Association of 2@ people to carry one as coFo$ners a "usiness for aprofit.

i. CoFo$ners, decicion&a'ing*ctrl rts.ii. Carry on, relationship that is ongoing.iii. +rofit, coFo$ners share profits.

1. I=ual rt to distri"ution unless agreed other$ise.i#. Note, don5t loo' to intent of pys to deter&ine if p5ship eists.#. 3o for& a p5ship- 4ust ha#e to &eet def5n a"o#e.#i. +5ship agree&ent go#erns.#ii. enerally- no restriction on $ho can ser#e as partner (eception for

professional positions).#iii. 3a, pass thru entity- single taation.i. 8anage&ent, e=ual rt to &anage&ent unless agreed other$ise.

d. Intity #s. Aggregate theory,i. Aggregate, ?a#e to sue p5ship and indi#idual partners.ii. Intity, loo's at p5ship as entity and not as aggregate of its partners.

e. +5ship "y estoppeli. ;f a person holds hi&self out to "e a partner. ;f you ha#e reason to deny and

don5t- still lia"le.ii. M+A 6:0, ;f a person- "y $ords*conduct- purports to "e a partner- or

consents to "eing represented "y another as a partner- the purported partneris lia"le to a person to $ho& the representation is &ade- if that person-relying on the representation- enters into a transaction $* the actual orpurported p5ship.

f. 3ransferees and creditors of partnersi. M+A 601, A partner is not a coFo$ner of p5ship property and has no int in

p5ship prop $hich can "e transferred either #oluntarily or in#oluntarily.ii. M+A 602, the only transfera"le int of partner in the p5ship is the parnter5s

share of profits and losses of the p5ship and the partner5s rt to recei#edistri"utions.

1. Can transfer econo&ic rts.2. ;f partner transfers such int5s- he5s still partner.

iii. M+A 60H, $hat can creditor do>1. Ct &ay put charging order on transfer of econo&ic rt.

g. 8artin #. +eyton ,i. acts,


23/31

Agency (Bennett) Outline SS2011 N. Bridgesii. ?olding, Although the ct found that the pys acted as if a#is had so&e 'ind

of o$nership int- it found that they did not act as if a p5ship eisted.i. 8cArthur #. Stein ,

i. acts, +otter and Bee"e approached Stein $* the idea of epanding Stein5s"usiness. 3he pys entered into an agree&ent/ne$ entity (&idland oofingand utters). Bee"e secured a line of credit fro& 8cArthur- for& $hich Steinhad "een pre#5ly denied (8cArthur didn5t 'no$ of Stein5s association $* ne$entity). Bee"e and +otter left and unpaid "alance re&ained to 8cArthur.

ii. ;ssue, ;s Stein a partner of the ne$ entity>iii. ule, Ile&ents for deter&ination of eistence of a p5ship/

1. +y &ust clearly &anifest intent to associate as a p5ship.a. Not intent to "e a partner- "ut intent to create a certain

relationship.2. Ia py &ust contri"ute so&ething that pro&otes the enterprise.:. Ia py &ust ha#e a rt of &utual ctrl.H. +ys &ust agree to share profits.

i#. ?olding, Stein is partner.1. ro& his actions- e#ident that Stein intended to "e a partner.2. Contri"uted "usiness na&e- phone - "usiness leadssuch

contri"ution pro&oti#e of the entity.:. ?ad rt to eer =uality ctrl o#er the $or' perfor&ed "y the entity.H. ?e shared in profits.

4. Serapion #. 8artine! ,i. acts, La$ fir& case. +l ca&e in as associate- then rose to sr. partner $*

pro&ise of partner in : yrs$hen she stood her ground- the partnersdissol#ed the p5ship.

ii. ;ssue, She sued alleging #iolation of la$. Only pro"le& is- can5t "e ane&ployee and partner si&ultaneously under la$. She argues that e#enthough she has title of partner- she $asn5t acting as one or "eing treated asone.

iii. ule, : factors to deter&ine proprietary status/1. O$nership (in#est&ent and lia"ility for de"ts).2. e&uneration (co&pensation and $hether "ased on fir&5s profits).:. 8anage&ent (rt to engage in policy &a'ing- #oting- and the a"ility to

assign $or').i#. ?olding, She $as partner.

1. She shared in fir&s losses. She $as on eecuti#e co&&ittee (day today operations of fir&). She had a #ote. ust "*c she doesn5t thin'she5s e=ual doesn5t &ean anything accd to ct5s analysis.

'. ;&pastato #. iirola&o ,i. acts, 8o& too' child to see r. C. r. C $asn5t there- so r. 8 ea&ined

hi&. r. 8 &isdiagnosed the child. Child su"se=uently died. Both dr5s $or'in sa&e "uilding.

ii. ;ssue, 8o& sues r. 8 and r. C on "asis of p5ship. ;f p5ship eists- "oth are4ointly and se#erally lia"le.iii. ?olding, No p5ship here.

1. 8 did not "ear the "urden of any losses C5s practice &ight suffer. 8$as 4ust recei#ing co&pensation- no &anage&ent*ctrl ele&ent.

II. T%e ;oint 2enturea. oint #enture, +5ship $* a single purpose for li&ited period of ti&eG single

transaction.". Ile&ents,

i. oint int in prop.ii. Ipress or i&plied agree&ent to share profits.iii. Cooperation in pro4ect.


24/31

Agency (Bennett) Outline SS2011 N. Bridgesi#. Contri"utions need not "e e=ual.

c. 3est, $hether pys intended to est such a relationship.III. T%e 5P*

a. M+A,i. Aggregate theory.

". M+A,i. Aggregate theory.ii. 8ore co&plete list of duties.iii. +art ner re=5d to "e disinterested trustee.

I2. Liaility of partnersa. Quc'er&an #. Antenucci,

i. acts, 2 doctors7partners- ha#e a &ed practice. +l $ent to practice torecei#e &ed treat&entG "oth treated the pl during her pregnancy. 8ed &aloccurred. Only +ena guilty of &ed &al. +l sued Antenucci and +ena.

ii. ;ssue, Can pl rightfully sue r. A>iii. ule, M+A 6:0/A p5ship is lia"le for loss or in4ury caused to a person- or for

a penalty incurred- as a result of a $rongful act or o&ission- or otheractiona"le conduct of a partner acting in the ordinary course of "usiness of

the p5ship or $* authority of the p5ship. 6:0D, Icept as other$ise

pro#ided- all partners are lia"le 4ointly and se#erally for all o"ligations of thep5ship unless other$ise agreed "y clai&ant or pro#ided "y la$.i#. ?olding, I#en though A not on su&&ons- still lia"le for reasons a"o#e. Ct

says it5s 4ust a technicality that A $asn5t on petition.". Chase Ban' of AQ ,

i. acts, Ban' o"tains a 4udg&ent ag the p5ship (: partners in the p5ship). So-

$e5#e est5d p5ship lia"ility4oint and se#eral lia"ility of partners. Ban' goesafter Acosta (one partner) "*c he has &ost &oney.

ii. ;ssue, Acosta argues that Ban' has to go after the p5ship first- and then- ifunsuccessful- then you can go after indi#idual partners.

iii. ?olding, Ct disagreed $* Acosta, pl need not concurrently proceed ag allpartnersG if partners are "oth 4ointly and se#erally lia"le- they &ay "e sued in

succescessi#e actions for the sa&e clai&.i#. 3his case contradicts M+A 6:0,1. :0(a), p5ship &ay "e sued in na&e of p5ship.2. :0("), action &ay "e "rought ag p5ship- and if not inconsistent $*

:0D- any or all of the partners in the sa&e action of separate actions.:. :0(c), 4udg&ent ag p5ship is not "y itself a 4udg&ent ag a partnerG

such a 4udg&ent &ay not "e satisfied fro& a partner5s assets unlessthere is also a 4udg&ent ag the partner.

H. :0(d), 4udg&ent crecitor of partner &ay not le#y eecution ag theassets of the partner to satisfy a 4udg&ent "ased on a clai& ag thep5ship unless partner is personally lia"le under :0D- AN 4udg&ent"ased on sa&e clai& ag p5ship and 4udg&ent returned unsatisfied.

c. Berry #. Ostro& ,i. acts, Ban' co&ing after p5ship for satisfaction on loan. Berry (partner)-Ostro& (partner)- and : other partners agree to pay J0' to satisfy the loan.But Ostro& doesn5t pay. Berry pays Ostro&5s share- then files suit ag Ostro&alleging he didn5t pay his pro rata share.

ii. ;ssue, Ostro& responds that Berry should5#e done an accounting first.iii. Accounting/is to see ho$ &uch ea partner o$es or ho$ &uch ea partner is

entitled to.1. Msed to "e nec $hen a partner $anted to sue another partner.

i#. ule, 9hen a transaction is distinct fro& the p5ship- no accounting is nec.#. ?olding, +ay&ent of the loan $as not so intert$ined $* the p5ship

transactions that accounting $as nec.


25/31


Rig%ts and ,uties of PartnersI. Relations /n Partners

a. Schy&ans'i #. Co#ent! ,i. acts, C and S for&ed p5ship to "uild fishing lodge. isagree&ent a&ong

partnersp5ship dissol#ed. 3r ct said S contri"uted J1::' and C contri"utedJ:E' and 0' noncash.

ii. ;ssue,iii. ule, +ersonal ser#ices of a partner &ay constitute a capital contri"ution tothe p5ship $here an epress or i&plied agree&ent to such effect.

1. Capital does not al$ays ha#e to "e J.2. Capital is cash or other J contri"uted to initiate the p5ship.:. ;n the a"sence of an agree&entrenu&eration for partner5s ser#ices

perfor&ed in the course of the p5ship affairs is prohi"ited "y statute.H. M+A H01(h), A partner is not entitled to re&uneration for ser#ices

perfor&ed for the p5ship- ecept for reas co&pensation for ser#icesrendered in $inding up the "usiness of the p5ship.#s.M+A 1(f),

a. Only applies to sur#i#ing partner in $inding up p5ship.". 3his pro#ision shouldn5t apply here. Ct &isapplies this 6.

i#. ?olding, Case &ust "e re&anded for add5l findings- and e#identiaryproceedings to deter&ined $hether an epress or i&plied agree&ent eistedto treat C5s personal ser#ices as p5ship capital- and*or to specificallyre&unerate hi& for such ser#ices and if so- the #alue of such ser#ices "asedon the e#identiary record herein. 3here is a&ple e#id contained in C5stesti&ony to support the ct5s findings that the p5ship $as dissol#ed due to theconstant disagree&ent "*n the pys rather than to the alleged i&properconduct on the part of C. Mnder such circ5s- $e cannot conc that the ct5sfailure to find &isconduct on the part of C and to a$ard the C5s da&ages $asclearly erroneous.

". 8ehl #. 8ehl,i. acts, Brothers (I and 8) o$ned and operated fa& far&. 0F0 split.

Brother 8 suffered a stro'e85s children "egan perfor&ing ser#ices for thep5ship in his place. +5ship dissol#ed "y letter fro& 8 to I.

ii. ;ssue, 9ere pay&ents to children p5ship epenses> Iugene argues no "*cthey should "e deducted fro& 8arlo$e5s capital "*c they $ere 4ust $or'ing in8arlo$e5s place.

iii. ?olding, %es. +ay&ents to children $ere p5ship epenses. I agreed to the

children recei#ing funds for their ser#icesi&plied agree&ent.i#. Net I argues he is entitled to re&uneration under M+A 1(f) "*c he is

$inding up p5ship affairs $hile 8 sits and does nothing. Ct disagrees "*c 1(f)re=5s sur#i#ing partner and here no one died.

c. ac' C.


26/31

Agency (Bennett) Outline SS2011 N. Bridges(&eaning it is a de"t of the corp- and that partner shall "e paid "ac'for the loans "efore any distri"ution is &ade to any other partners).

i#. ?olding, No epress agree&ent that this $as contingent pay&ent o"ligation.II. Partner


27/31

Agency (Bennett) Outline SS2011 N. Bridgesitself for : yrs. ;n Oct BN recei#ed offer fro& another co on the prop 8eridianhad lease to itself. BN as'ed 8eridian to release the prop clai&ing #iolationof duty of loyalty (selfFdealing).

ii. ;ssue, 8eridian argues their actiosn $ere auth5d "*c of clause (a"o#e) inagree&ent for its o$n account.P

iii. ?olding, Ct says &anage&ent agree&ent5s authori!ation for 8eridian to dealfor its o$n account does not eli& the fiduciary duties gen5ly i&posed on anagent "y the nature of the relationship.

1. Agree&ent stated could self deal- "ut re=5&ent of disclosure andconsent still eist.

2. +lus- not reas to ta'e such actions gi#en the change in circ5s (that8eridian already had notice of ter&ination).

d. N ;n#est&ents Ltd +5ship #. +eople5s irst Co&&unity Ban' ,i. acts, +artnership agree&ent said no partner can act "inding co to &ore than

D0' dollars. +artner o"tained loan for ED0'. partnership defaults onpay&ents. Ban' see's to disclose

ii. ;ssue, +artnership says partner had no auth to enter into that loan ' (iteceeded the li&it). Ban'5s response, apparent authority/he5s a

partnerhas auth to "ind the p5shipG and no one said he didn5t ha#e such

authority. +artner argues that it5s in the p5ship agree&ent is suff notice to"an'.iii. M+A 6:01, Ia partner is an agent of the p5ship.for apparently carrying on

in the ordinary course of the p5ship "usiness or "usiness of the 'ind carriedon "y the p5ship "inds the p5ship- unless the partner had no auth to act forthe p5ship in the particular &atter and the person $* $ho& the partner $asdealing 'ne$ or had recei#ed a notification that the partner lac'ed authority.

i#. ?olding, Ban' doesn5t ha#e responsi"ility to as' for proof of authority. Noreason here for "an' to thin' there5s a pro"le& $* authority.

e. Na"isco #. Stroud ,i. acts, Stroud and ree&an $ere partner and ordered "read fro& Na"isco.

Stroud said $e5re not ordering any &ore "ead (getting ready to shut do$n

the "usiness). ree&an ordered &ore "read fro& Na"isco. +5ship didn5t payfor the "read ree&an ordered. Stroud said not paying "*c ree&an didn5tha#e authority to place the order/he $as acting outside scope of authority.

ii. ;ssue, 9as Na"isco put on notice that Stroud didn5t $ant to "uy any &ore"read>

iii. ?olding, %es- Stroud said they didn5t $ant any &ore "read. But ct saidree&an had authority to "uy the "read "*c he had e=ual rts to &anage&entof p5ship "usiness and "uying "read $as an ordinary &atter connected $* thep5ship "usiness.

i#. M+A 6H01(4), difference arising as to a &atter in the ordinary course of"usiness of a p5ship &ay "e decided "y a &a4ority of the partners. An actoutside the ordinary course of "usiness of a p5ship and an a&end&ent to the

p5ship agree&ent &ay "e underta'en only $* the consent of all partners.1. So if Stroud $ants to &a'e a difference in ordinary course of "usiness-he5d need 0@T- and he5s only 0T. At the end of the day- still lia"le.

2. Partners%ip Propertya. M+A 62(1), +artner is coFo$ner $* partners of partnership prop holding as a tenant

in the p5ship.". M+A 601, +artner is not a coFo$ner of p5ship prop and has no int in p5ship prop

$hich can "e transferred- either #oluntarily or in#oluntarily.c. M+A 602, 3he only transfera"le int of partner in p5ship is the partner5s share of

the profits and losses of the p5ship and the partner5s rt to recei#e distri"utions. 3heint is personal property.

d. ;C #. ?ish ,


28/31

Agency (Bennett) Outline SS2011 N. Bridgesi. acts, Auto e&pire. H dealerships ea o$ned "y different 'id. One 'id in

financial trou"le&ortgage fro& "an''id defaulted on &ortgage. Ban'said 'id could transfer to it int5s in the other dealerships.

ii. ?olding, Ct ulti&ately said &ortgage not #alid "*c he didn5t ha#e an int in theprop "*c no deed transferring an int to hi&. +5ship prop re&ains p5shipproperty. ust filing for dissolution doesn5t #est rts to prop in the&e&"ers.not until $inding up is co&plete.

,issolution: -inding 5p: Termination;. issolution under 5P*,

a. M+A 6:1, issolution is causedi. By ter&ination of definite ter&.ii. Ipress $ill of any partner $hen no definite ter& is specified.iii. 9ill of all partners $ho ha#e not assigned their int5s "efore or after the

ter&ination of any specified ter& or underta'ing.i#. By epulsion of any partner in accordance $*o such po$er in agree&ent.#. ;n contra#ention of the agree&ent "*n the partners- $here circ5s do not

per&it dissolution under any other pro#ision- "y the epress $ill of anypartner at any ti&e.

". 6:2, issolution "y decree of ct,i. +artner declared lunatic.ii. +artner incapa"le of fulfilling A partner is dissociated for& p5ship upon,1. +5ship ha#ing notice of partner5s epress $ill to $*dra$ as partner at

later date.2. An e#en agreed to in the p5ship as causing dissociation.:. +artner5s epulsion pursuant to the p5ship agree&ent.H. +artner5s epulsion "y unani&ous #ote of all partners if

a. ;t is unla$ful to carry on the p5ship $* that partner.". 3ransfer of all or su"stantial all of that partner5s transfera"le int

in the p5shipc. +5ship that is a partner has "een dissol#ed.

. By 4udicial deter&inationD. ;f partner is indi#idual

a. eath.". Appointe&ent of guardian.

c. udicial deter&ination that indi#idual is incapa"le.. +artner is de"tor in "an'ruptcy or partner eecutes an assign&ent for

"enefit of creditors.ii. Iffect of dissociation> See M+A 6D0:,

1. Mpon dissociation partner5s rt to participate in &anage&ent of p5shipter&inates.

2. +artner5s duty of loyalty ter&inates:. +artners duty of loyalty and duty of care continue only $* regard to

&atters arising an e#ents occurring "efore the partner5s dissociation-unless partner participates in $inding up.

iii. M+A 601/+urchase of issociated partner5s int,


29/31

Agency (Bennett) Outline SS2011 N. Bridgesa. ;f partner is dissociated fro& p5ship $*o resulting in dissolution-

p5ship shall cause dissociated partner5s int in p5ship to "epurchased for "uyout price

i. Buyout price 7 a&t that $ould ha#e "een distri"uta"le todissociating partner on date of dissociation.

;;;. Mnderstand difference "*n dissolution and dissociation.;K. air$ay e#elop&ent #. 3itle ;ns Co ,

a. acts, 9e initially ha#e 1 (: partners)/they file for 3itle ;nsurance. 3hen 2partners fro& 1 transfer their &e&"ership inerest to 2 ne$ partners (2).Mtility co co&es in "*c there5s an ease&ent under their property and it5s notecepted "*c title insurance only applies to 1- not 2.

". MLI, Mnder M+A partner can transfer $*o dissol#ing p5ship if they don5t transfer&anage&ent rts- "ut if a partner transfer all p5ship rts- including &anage&ent rts(econo&ic rts @ &anage&ent rts)- then the p5ship dissol#es upon the change in&e&"ership.

i. M+A 7 Aggregate 3heory.c. ?olding, 2 &anagers ga#e up e#erything including &anage&ent rts. Ct said p5ship

dissol#ed upon the transfer of int5s.K. Shoe&a'er ,

a. acts, p5ship dispute "*n 2 "ros and their $i#es. After appellant and his 9 ga#enotice that they $ere $*dra$ing for& the p5ship- the partners failed to agree on the"uyout price of their int5s. 3he re&aining partners counterclai&ed for "reach of


30/31


LLCs;. LLC O$ners 7 &e&"ers.;;. 8e&"er5s int in LLC 7 &e&"ership int*unit*&e&"ership percentage.

a. Co&prised of "undle of rts.". ichoto&y "*n distri"utional int (transfera"le/only econo&ic rts- $on5t transfer

&ange&etn rts) and &anage&ent int.

c. LLC int is personal property.d. 8e&"ers5 rts do not entitle &e&"er LLC property.;;;. 2 $ays of &anaging LLC,

a. 8e&"er &anaged.". 8anager &anaged.c. 8anager doesn5t ha#e to "e a &e&"er.

;K. ights of creditor,a. Creditor cannot reach LLC property.". Creditor can o"tain charging order ag &e&"er5s &e&"ership int.

i. Charging order only apples to &e&"er5s distri"utional interest.K. O'laho&a LLC Act,Not a straight adoption of I. But $e5re trying to 'eep up $* I to

so&e etent.

K;. 3a,a. 3aa"le entity.". lo$ thru ta entity (and taed at &e&"er le#el). Not su"4 to d"l taation.

K;;. or&ation,a. Articles of organi!ation ha#e to "e filed $* sec of state.". Create epress authority "y saying &anager &anaged (O< doesn5t re=uire this).c. +erpetual ter&>d. Na&e>e. +rin place of "usiness>

K;;;. LLC act is a collection of default rulesG Can usu "e opted out of in Operating Agree&ent.;U. Operating Agree&ent,

a. Contains 2 types of info,

i. ;nternal &atters (8tg info- Koting rts)". 8e&"er relations (Sale of &e&"ership int- 9hat it ta'es to ta'e action..)U. e"ts*o"ligations only de"ts of co.

a. 8e&"er*&anager Only lia"le only to etent that Articles of Organi!ation pro#ides @&e&"er*&anager consents.

U;. Koting,a. Mnifor& Act, e=ual rt to &anage the co.". ;n Oa. %es.". Mnifor& act, ea &e&"er is an agent of the LLC for purpose of "usiness act of

&e&"er "inds the co unless &e&"er has no auth to act and the :rdpy 'ne$ or hadnotice that &e&"er didn5t ha#e authority.

c. So- &e&"ers ha#e fiduciary duties.i. 8ay not eli& duty of loyalty.


31/31

Agency (Bennett) Outline SS2011 N. Bridges1. Can id categories of acti#ities that don5t #iolate if not &anifestly

unreas.2. 8ay not eli& good faith*fair dealing.:. 8ay not unreas5ly reduce duty of care.H. 8ay not unreas restrict rt to info.

UK. Assign&ent of &e&"ership int,a. Can assign distri"uta"le int.". Can5t assign &e&"er rts.

i. Buying int then only transferee. 3ransferee &ay "eco&e &e&"er if OA sopro#ides or all other &e&"ers consent.

LLPs;. Li&ited lia"ility partnership.;;. ;f p5ship elects to "eco&e a LL+.

a. ile state&ent of =ualification $* sec of state.i. Na&eii. Addressiii. St&ti#. Add to na&e LL+.

;;;. 3his &eans partners not lia"le for o"ligations $hile p5ship is LL+.a. ?o$e#er,i. O"ligations that eisted "efore "eco&ing LL+ re&ain.ii. Intity assets still su"4ect to creditor clai&s ag LL+ entity.iii. +artner still lia"le for his actions.i#. Mnless other$ise stated in Agree&ent.

Documents

Agency Outline for Bennett