Agency

1
Agency

• When should the consequences of agency be
  imposed? When does one step from some other
  relationship (e.g., creditor) to principal?
• Distinguish (1) what relationships are
  agencies? and (2) what is the scope of agency.
• Elements of agency (1) consent (2) power of
  control (3) acts for principal's benefit.
• Distinguish (1) non-agency (e.g., trust) (2)
  relationships that may or may not be agencies
  (e.g., Cargill)

2
Cargill
Cargill line elevators
Cargill
Grain
Others
Storage
Sales
Warren
farmers
Seed sales (Warren as agent)
3
Elements of agency

• Consent
• Is it relevant that Warren was not one of the
  "line" elevators that Cargill operated in its own
  name?
• Control
• Approval of mortgages, stock purchases, dividends
• Right of entry for checks and audits
• Criticism of finances, officers salaries and
  inventory
• Warren needed "strong paternal guidance"
• Financing all grain purchases and operating
  expenses
• Extent of non-Cargill business
• Benefit
• Interest on loan?
• Cargill as customer

4
Planning tradeoffs
Liability risk
Business benefits Legal costs
Business benefits
Planning/contracting alternative E.g.,
monitoring?lack of independent business
5
Agents power to bind the firm

• Authority
• Actual (Ps consent)gtExpress and implied
• Apparent (Ps pre-transaction act ? authority)
• Apparent vs. real implied Agent vs. third party
  perspective
• Inherent status?
• Estoppel tort-based
• Ratification post-transaction act? authority
• Restitution unjust enrichment

6
Essco
Kruske President
Gray Purch mgr
Harvard
Safron Diversified
Ceresia Purch agent
January 9 contract 350-500k chair foams 1990-1992
7
Progress Printing
Pitz
Griffin
Gapshis
Campaign worker
8
Morris
Principal (Dawn)
Agent (Rainbow)
Third party (Morris)
9
Morris Oil Undisclosed principal

• Was the transaction authorized?
• If so, should nondisclosure of Dawn be relevant?
• What if Dawn did not authorize the transaction?
• P may compel election
• Third party then must elect.
• Planning implications What should Dawn have done
  to limit liability?

10
Jackson
Provo
Sandy
11
Tort liability

• Scope of employment
• Frolic and detour (228)
• Intentional torts (228(1)(d))
• Liability for acts outside scope (Section 219)
• Federal law
• Independent contractor (Section 220)
• Abnormally dangerous exception

12
Agency vs. independent contractor
Independent contractor
Agency
Contract contract no vicarious liability
tort