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****MY ENTIRE LECTURE ON THE LAW OF AGENCY PTS. 1 & 2***

 
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PostPosted: Sat Feb 20, 2016 3:05 pm    Post subject: ****MY ENTIRE LECTURE ON THE LAW OF AGENCY PTS. 1 & 2*** Reply with quote

PLEASE BE AWARE: GRAMMATICAL ERRORS ARE HERE AND I KNOW IT. SPELLING ERRORS ARE HERE AND I KNOW IT.
THESE ARE A REPRODCUTION OF MY NOTES AND PUT ON LINE FOR THEIR CONTENT NOT FOR THEIR CORRECT ENGLISH GRAMMAR OR SPELLING.
PLEASE ALSO BE AWARE THE CASE NUMBERS MAY NOT CORRELATE WITH THE NUMBERS IN YOUR EDITION OF PROFESSOR CHEESEMAN�S TEXTBOOK. YOU CAN ALWAYS LOOK UP THE CORRECT NUBMERS IN YOUR TEXTBOOK.

AGENCY LECTURE


NATURE OF AGENCY

Agency fiduciary legal relationship where one person represents another in dealing with third persons.

1. PARTIES:

Relationship based upon express or implied agreement that one person (THE AGENT) authorized to act under the control of and for another (THE PRINCIPAL) in making agreements with third persons.

OTHER USES OF TERM "AGENCY":

Common usage with other meanings, e.g: exclusive agency to sell certain products, not a true agency but usually based upon franchise agreement with a manufacturer. Example: Dealer is said to possess automobile agency, but not the agent of manufacturer but merely given the right to sell certain products in a given geographical area.

Case XXXX: Torres v. Reardon
Facts: Torres was a self-employed gardener who was employed by the Reardons to trim a 70- foot tree. The Reardon�s neighbor, Boice, went outside with the intention of holding a rope attached to a branch, in order to keep it away from his house. According to Torres, Boice pulled on the branch when he was not expecting it, and Torres fell from the tree, landing on his back. Torres was rendered a paraplegic. Torres sued the Reardons alleging that he was an employee and that they had failed to provide him with workmen�s compensation insurance. The Reardons claimed he was an independent contractor. The trial court found for the Reardons and Torres appealed.
Issue: Was Torres an employee or an independent contractor?
Decision: The court found that Torres was an independent contractor.
Reason: The court found that Torres clearly operated an independent established business, Jose Torres Gardening Service. He supplied all of his own equipment, he was hired by the job as opposed to the day, the work done was not work ordinarily done by the Reardons in the course of their business, and he hired his own employees, one of whom was with him that day. Because of these reasons, the court held that Torres was not an employee, but an independent contractor.

29.1 Creation of an Agency P. 470 Renaldo, Inc., dba Baker StreetI owns and operates a nightclub in Georgia. On the evening in question plaintiff Ginn became "silly drunk" at the nightclub and was asked by several patrons and the manager to leave the Premises. The police were called and Ginn left. When Ginn realized that his jacket was still in the night club he attempted to reenter the premlses. He was met by the manager, who refused him admittance. When Ginn persisted, an unidentified patron, without the approval of magager pushed Ginn, who lost hls balance and fell backward. To break his fall, Ginn put his hand against the door jamb. The unldentlfied Patron slammed the door on Ginn's hand and held it shut for several minutes. Ginn, who suffered severe injuries to his right hand, sued the nightclub for damages. Was the unidentified patron an agent of the nightclub^? {.Gmn v. Renaldo, Inc., 359 S.E.2d 390 (Ga. App. 1987)]

Creation of an Agency
29.1 No, the unidentified patron was not an agent of the nightclub. The relation of principal and agent arises wherever one person-expressly or by implication-authorizes another to act for him. The court found no proof of agency by express agreement or by implication from the circumstances of the case. A review of the record persuaded the court that the unidentified person who caused Ginn's injuries was merely an individual patron of the nightclub who was acting on his own. There was no evidence that the nightclub manager requested the patron to assist him in dealing with Ginn or that the manager ratified the patron's actions. Because there was no agency, the nightclub is not liable for the actions of the patron who injured Ginn. The appellate court affirmed the trial court's grant of a directed verdict in favor of defendant nightclub. Ginn v. Renaldo, Inc., 359 S.E. 2d 390 (Ga. App. 1987).


AGENCY DISTINGUISHED FROM SIMILAR RELATIONSHIPS:

Since agency involves responsibility of principal for acts of the agent, needs be distinguished from other similar relationships:

ORDINARY EMPLOYEE: [�1332] Not hired to represent employer in dealing with third persons.

INDEPENDENT CONTRACTOR:

Person who contracts to do something according to his own methods not subject to control of the employer except as to results.
(A) Independent contractor as agent: May become an agent if starts making management decisions or controls the operations of the work.

STATUS NOT DETERMINED BY AGREEMENT: The actual fact of control rather than express agreement of parties is controlling factor.

REAL ESTATE BROKERS: Many cases merely a middleman who seeks to locate a buyer or seller for his client. Not a true agent because he has no authority to make a contract with third persons that will be binding upon his client.

BAILEE: Bailment exists when personal property delivered to another under agreement to return property or deliver it to third person. Bailee not an agent as no authority to contract on behalf of owner-bailor.

29.2 P. 470 Independent Contractor Mercedes Connolly and her husband purchased airline tickets and a tour package for a tour to South Africa from Judy Samuelson, a travel agent doing business as International Tours of Manhattan. Samuelson sold tickets for a variety of airline companies and tour operators including African Adventurers, that was the tour operator for Connolly's tour. Connolly injured her left ankle and foot on September 27, 1984, while the tour group was on a walking tour to see hippopotami in a river at the Sabi Sabi Game Reserve. Connolly fell while while trying to cross a six-inch deep stream. She sued Samuelson for damages. Is Samuelson liable?
[Connolly v. Samuelson, 671 F.Supp. 1312 (D.Kan. 1987)]

NOTE: AGENCY DIDN�T INFORM HER OF PROPER FOOTWARE

29.2. No, Samuelson is not liable to Mercedes Connolly. The court held that African Adventures was an independent contractor and that Samuelson acted as a broker in selling Connolly the tour package. The court held that travel agents have no duty to advise tourists that a walking tour was part of the itinerary, to advise tourists of proper footwear, to know the walking conditions of the destination of the tour, or to provide tourists with a safe and secure tour. Connolly v. Samuelson, 671 F. Supp. 1312 (D. Kan. 1987).


30.4 P. 484 Independent Contractor The Butler Telephone Company contracted with the Sandidge Construction Company (Sandidge) to lay 18 miles of telephone cable in a rural area Butler reserved the right to inspect the work tor compliance with the terms of the contract. Butler did not control how Sandidge performed the work. Johnnie Carl Pugh, an employee of Sandidge, was killed on the job when the sides to an excavation in which he was working caved in on top of him. Evidence disclosed that the excavation was not properly shored or sloped and that it violated general safety standards. Pugh's parents and estate brought a wrongful death action against Butler. Is Butler liable? Pugh v Butler Telephone Company, Inc., 512 So.2d 1317 (Ala. 1987)];

30.4 No, Butler Telephone Company, Inc. is not liable for Pugh's death. Whether a relationship is that of an independent contractor or master/servant depends on whether the entity for whom the work is being performed has reserved the right of control over the means by which the work is done. Here Butler only retained the right to inspect the work for compliance with the terms of the contract. The court found no evidence that Butler exercised any control or retained any right of control over the manner in which Sandidge performed any of its work on the project. The court held that Sandidge was an independent contractor and that Butler was not liable for the negligence of Sandidge. The court affirmed a grant of summary judgment in favor of Butler.
An independent contractor is liable for injuries caused by its own negligence. Thus, if it is established that Sandidge was negligent in not shoring up or sloping the walls of the excavation or otherwise violated general safety standards that caused Pugh's death, it will be liable for damages to Pugh's parents and estate. Pugh v. Butler Telephone Company, Inc., 512 So. 2d 1317 (Ala. 1987).


POWER OF ATTORNEY

29.4 Page 270

In 1968, as a result of marital problems, Howard R. Bankerd "left for the west" and Virginia Bankerd, his wife, continued to reside in their jointly owned home. Before his departure, Howard executed a power of attorney to Arthur V. King, which authorized King to "convey, grant, bargain, and/or sell" Howard's interest in the property. For the ensuing decade, Howard lived in various locations in Nevada, Colorado, and Washington but rarely contacted King. Howard made no payments on the mortgage, for taxes, or for maintenance or upkeep of the home. In September 1977, Virginia, who was nearing retirement, requested King to exercise his power of attorney and transfer Howard's interest in the home to her. Kings attempts to locate Howard were unsuccessful. He believed that Howard, who would then be 69 years of age, might be dead. King gifted Howard's interest in the property to Virginia, who sold the property for $62,500. In 1981, Howard returned and filed suit against King, alleging breach of trust and fiduciary duty. Is King liable? [King v. Bankerd, 492 A.2d 608 (MD 1988)]

29.4. Yes, King is liable to Bankerd for gifting the property to Mrs. Bankerd. A power of attorney creates a principal agent relationship. Broadly defined, a power of attorney is a written document by which one party as principal appoints another as agent (attorney in fact) and confers upon the latter the authority to perform specified acts on behalf of the principal. The power of attorney delineates the extent of the agent�s authority and is strictly construed by the court.

NOTE: DUTY OF LOYALTY
The court held that the general power of attorney in this case which authorized the agent to sell and convey the property on such terms as the attorney in fact deems proper, did not, however, authorize the agent to make a gift of the property. This violated the agent�s duty of loyalty that he owed to the principal. The Appellate Court affirmed the trial court�s grant of summary judgment in favor of Bankerd that awarded $13,555 in damages against King. King v. Bankerd, 492 A.2d 608 (Md. 1988).


CREATION OF AN AGENCY:

Can be created by:

AGREEMENT
CONDUCT OF THE PARTIES
ESTOPPEL
RATIFICATION; OR
OPERATION OF LAW.

CAPACITY OF THE PARTIES

CAPACITY OF PRINCIPAL:

Anyone with legal capacity to make contracts.

CAPACITY OF THE AGENT

Anyone who understands legal importance of contracts, even a minor, may serve as an agent.

2. CREATION OF AGENCY BY AGREEMENT:

Most agencies created by contractual agreement: Principal expressly authorizes agent to act.
a. ORAL AUTHORIZATION:
In most situations, oral authorization and agreement
can create an agency.

B. "EQUAL DIGNITIES" RULE:

Agent engaged to make contracts required to be in
writing under the SOF, employment and authorization of agent must be in writing.

C. CONSIDERATION:

Not necessary for either party to create an agency.

AGENCY CREATED BY CONDUCT OF PARTIES, OR IMPLIED AGENCY:

Actual agency created by inferences or deductions made from the words/conduct of principal and the agent.

Case 29.1: Bosse v. Brinker Restaurant Corporation, d.b.a. Chili�s Grill and Bar P. 461 CREATION OF AN AGENCY BY IMPLICATION YES/NO

Facts: Brendan Bosse and Griffin were a part of a group of four teenagers eating at Chili�s restaurant in Dedham, Massachusetts. Chili�s is owner: Brinker Restaurant Corporation (collectively �Chili�s�). The cost of the meal was $56. The teenagers decided not to pay. They went out of the building, got in their car, and drove away.
A patron of the restaurant saw all of the above. He followed them in his (SUV). The teenagers saw him following. High-speed chase ensued through Dedham side streets. The patron used his cell phone to call the Chili�s manager. Manager called 911; reported the incident and the location of the car chase. Teenagers� car collided with a cement wall, and Bosse and Griffin were seriously injured. The Chili�s patron drove past crash scene and never identified.
Bosse and Griffin sued Chili�s for compensatory damages for their injuries. The plaintiffs argued: patron was an agent of Chili�s, and therefore Chili�s was liable to the plaintiffs, based on the doctrine of respondeat superior, which holds a principal liable for the acts of its agents. Chili�s filed a motion for summary judgment, arguing that the patron was not its agent.
Issue: Was the restaurant patron who engaged in the high-speed car chase an agent of Chili�s?
Decision: The superior court held that the restaurant patron who engaged in the high-speed chase in which the plaintiffs were injured was not the agent of Chili�s restaurant. The superior court granted summary judgment to Chili�s.
Reason: The plaintiffs sue under the theory of respondeat superior; Contending: Chili�s patron converted to a Chili�s servant; conducted the chase as an agent of restaurant; and restaurant should be liable for the consequences of his negligent or reckless pursuit. Agency relationship requires three elements. Most obviously, Chili�s must have consented to the action of patron on its behalf. Second, Chili�s must have retained control, or the right of control, over the physical conduct of the patron in the performance of the pursuit. Third, the conduct of the agent must serve the benefit or further the interest of the principal.
The evidence is insufficient to create a genuine issue whether Chili�s appointed or authorized the patron to act as a posse to conduct the chase. They never spoke w/him or authorized him.

2010


CREATION OF AGENCY BY ESTOPPEL: {APPARENT AUTHORITY)

Created when principal, by words, actions, or lack thereof, causes third person to REASONABLY believe agency relationship exists or an agent has authority to act where no actual authority exists.

APPARENT AGENCY

29.5. Robert Bolus was engaged in various businesses in which he sold and repaired trucks. In 1976, he decided to build a truck repair facility in Bartonsville, Pennsylvania. Bolus contacted United Penn Bank (Bank) to obtain financing for the project and was referred to Emmanuel Ziobro, an assistant vice president. Ziobro orally agreed that Bank would provide funding for the project. He did not tell Bolus that he only had express authority to make loans of up to $10,000. After extending $210,000 in loans to Bolus, Bank refused to provide further financing. When Bolus defaulted on the loan, Bank pressed judgment against Bolus. Bank sought to recover Bolus's assets in payment for the loan. Bolus sued Bank for damages for breach of contract. Who wins? [Bolus v. United Penn Bank, 525 A.2d 1215 (Pa. Super. 1987)]

29.5. Bolus wins the lawsuit and may recover damages against United Penn Bank. A jury may find that an alleged agent had either actual or apparent authority to bind the principal. Here, Ziobro did not have actual authority to commit the bank to the loan because his loan limit was expressly set at $10,000. However, Ziobro had apparent authority to commit the bank to financing Bolus� project. Apparent authority is authority that the principal has by words or conduct held the alleged agent out as having. Ziobro was employed as a loan officer of the bank, Bolus was referred to Ziobro when he contacted the bank about the possibility of financing the Bartonsville project, and the limit on Ziobros� authority to make loans was not communicated to Bolus. Thus, the bank clothed Ziobros with apparent authority to commit the bank to financing Bolus� project. The Appellate Court affirmed a jury verdict in favor of Bolus. Bolus v. United Penn Bank, 525 A.2d 1215 (Pa.Super. 1987).

xxxx Apparent Agency

Gene Mohr and Loyd each own 50% of Tri-County Farm Equipment Company.
Tri-County has its depository bank account at First National Bank. Loyd also personally owns an oil business known as (Earthworm). Earthworm banks @ Stanley Bank. Neither Mohr nor Tri-County have any ownersh[p interest in Earthworm. Mohr did not indicate to Stanley that Loyd had any authority to sign checks personally on behalf of Tri-County.
1982, Loyd took eight checks payable to Tri-County; endorsed and deposited them into Earthworm's account at Stanley. Mohr brought action for conversion against Stanley to recover amount of the checks. The bank�s defense: Loyd had apparent authority to deposit checks in his personal business account. Did Loyd possess apparent authority? [Mohr v. State Bank of Stanley, 734 P.2d 1071 (Kan. 1987)]

Apparent Agency

NO. Apparent authority based on intentional actions/words of principal towards 3rd. parties reasonably induces or permits a belief that an agency relationship exists. Court: no action or words on the part of Mohr that would have led the Stanley to believe Lloyd had authority to deposit Tri-County's checks into Earthworm's account. Because Lloyd did not possess apparent authority, the State Bank of Stanley is liable for conversion for the deposited checks. The court awarded $422,650 in damages to Mohr. Mohr v. State Bank of Stanley, 734 P. 2d 1071 (Kan. 1987).

AGENCY CREATED BY RATIFICATION:

Principal accepts benefits from acts of a purported agent, even when unauthorized, agency may be created by ratification.

FIDUCIARY DUTY ALSO p. 483
30.1 Ratification After Francis Pusateri retired, he met with Gilbert J. Johnson, a stockbroker with E. F. Hutton & Co., Inc., and informed Johnson that he wished to invest in tax-free bonds and money market accounts. Pusateri opened an investment account with E. F. Hutton and checked the box stating his objective was "tax-free income and moderate growth." During the course of a year, Johnson churned Pusateri's funds in volatile securities and options. Johnson kept telling Pusateri that his account was making money, and the monthly statement from E. F. Hutton did not indicate otherwise. The manager at E. F. Hutton was aware of Johnson's activities but did nothing to prevent them. When Johnson left E. F. Hutton, Pusateri's account�which had been called the "laughing stock" of the office�had shrunk from $196,000 to $96,880. Pusateri sued E. F. Hutton for damages. Is E. F. Hutton liable? [Pusateri v. E. F. Hutton & Co., Inc., 225 C.R. 526 (Cal. App. 1986)]

30.1. Yes, E.F. Hutton is liable for the fraudulent activities of its employee, Johnson. A principal can be held liable for an agent's tortious conduct even if such conduct falls outside the scope of the agent's employment if the principal ratifies such conduct. The court held that because the manager of E.F. Hutton had knowledge of Johnson's activities and took no action to prevent this conduct, E.F. Hutton ratified the agent's tortious acts. The court held E.F. Hutton liable to Pusateri for $120,000 compensatory damages and $160,000 punitive damages. Punitive damages can be awarded against a principal for an act of an agent if the employer ratifies his tortious activity. Pusateri v. E.F. Hutton & Co., Inc., 225 C.R. 526 (Cal. App. 1986).





A. RATIFICATION OF UNAUTHORIZED ACTS:

(1) Principal may ratify the unauthorized acts of his agent, and filing a law suit based thereon is a ratification.

B. PURPORTED AGENCY CONTRACT:

Ratification of unauthorized contract requires contract purports to be one made by agent on behalf of the principal.

IMPLIED RATIFICATION:

When principal, with full knowledge of the material facts surrounding agent's unauthorized act, accepts and retains the benefits.

IMPUTED KNOWLEDGE

29.6 P. 470 Imputed Knowledge On March 31, 1981, Iota Management Corporation (Iota) entered into a contract to purchase the Bel Air West Motor Hotel in the City of St. Louis from Boulevard Investment Company (Boulevard). The agreement contained the following warranty: "Seller has no actual notice of any substantial defect in the structure of the Hotel or in any of its plumbing, heating, air-conditioning, electrical, or utility systems." When the buyer inspected the premises, no leaks in the pipes were visible. Iota purchased the hotel for $2 million. When Iota removed some of the walls and ceilings during remodeling, it found evidence of prior repairs to leaking pipes and ducts, as well as devices for catching water (e.g., milk cartons, cookie sheets, and buckets). The estimate to repair these leaks was $500,000. Evidence at trial showed that Cecil Lillibridge, who was Boulevard's maintenance supervisor from 1975 until the sale of the hotel in 1981, had actual knowledge of these problems and had repaired some of the pipes. Iota sued Boulevard to rescind the contract. Is Boulevard liable? [Iota Management Corporation v. Boulevard Investment Company, 731 S.W.2d 399 (Mo. App. 1987)]


29.6. Yes, Boulevard Investment Company (Boulevard) is liable to Iota Management Corporation (Iota) for breach of contract. The knowledge of an agent of a corporate principal regarding matters within the agent's scope of employment and authority is imputed to the principal. The court held that Cecil Lillibridge, who was Boulevard's maintenance supervisor, had acquired knowledge of the condition of the pipes through his work at the hotel, clearly within the scope of his employment and authority. The court held that this knowledge was imputed to the corporate principal, Boulevard. The appellate court affirmed the trial court's decision which permitted Iota to rescind the contract. Iota Management Corporation v. Boulevard Investment Company, 731 S.W. 2d 399 (Mo. App. 1987).


WITHDRAWAL BEFORE RATIFICATION:

There is no binding agency before affirmance by the principal, agent or third party can withdraw from the transaction any time prior to ratification. Since the agent acted without authority, principal may repudiate the act.

AGENCY BY OPERATION OF LAW:

Agency implied by operation of law is one created by statute, necessity, or public policy.

EXAMPLE: Nonresident motorist statutes appointing secretary of state as agent for the nonresident for service of process in an action arising from the operation of a motor vehicle w/in the state arise by operation of law.

EXAMPLE: Principal so incapacitated by injuries he cannot act for himself, agency is implied by law.

EXAMPLE: Agency by operation of law occurs where a merchant furnishes necessities to a wife and charges them to her husband's account.

TERMINATION OF AGENCY

MAY BE BY ACTS PARTIES OR BY OPERATION OF LAW.

ACT OF THE PARTIES a. Mutual agreement: Created by mutual agreement; may be terminated in the same manner.

30.2 P. 483 TERMINATION OF AGENCY (ALSO FIDUCIARY DUTY)
(Boettcher) OWNER OF OFFICE BLDG.

Wilfred, an independent leasing agent, contacted Boettcher on behalf of Landmark WHO WAS interested BECOMING A TENTANT AND leasing office space

Wilfred RERESENTS Boettcher as a special agent in transaction.

In January 1983: Landmark executed a 68-month lease W/Boettcher. Boettcher paid Wilfred a commission.

SHORTLY THEREAFTER: Landmark began negotiating w/ Boettcher 4 additional lease space. Landmark also contacted Wilfred to inquire about availability of lease space in other buildings. Wilfred found lease space in another office building, Landmark vacated its premises at Boettcher building; defaulted on lease agreement. Boettcher sued Wilfred alleging Wilfred violated fiduciary duty to Boettcher. Who wins?

30.2. Wilfred wins: not liable to Boettcher for breach of fiduciary duty. When agent employed for performance of a particular task, the agency terminates on completion of the task, absent an agreement to the contrary. Thereafter, Agent free to act in ways that might otherwise be adverse to his former principal. Agency relationship between Wilfred and Boettcher terminated upon execution of the Landmark lease in January 1983. Wilfred was free to represent Landmark in seeking other lease space even though this was adverse to the interests of his prior principal, Boettcher. Wilfred did not owe and therefore did not violate any fiduciary duty to Boettcher.

B/OWNER BLDG. WILFRED INDEP. LEASING AGENT CONTACTED B. REPRESENTING LADNMARK. W. ALSO REP. B. SPECIAL AGENT REP. IN 68 MONTH LEASE. LANDMARK THEN NEGOTIATED W/B DIRECTLY FOR ADDED SPACE.


EXPIRATION OF CONTRACT:

Agency created for specific time or specified purpose terminated upon expiration of time or completion of purpose.

REVOCATION OF AUTHORITY:

Principal may at any time revoke authority of the agent, with or w/o cause, by giving reasonable notice.

INDEFINITE TIME:

If agency created for indefinite time, may be revoked at any time by either party, without liability, upon the giving of reasonable notice.

DEFINITE CONTRACT PERIOD:

May Still be revoked by either party. However, revocation w/o cause may result in damages for breach of contract.

REVOCATION BY THE AGENT:

Agent may also renounce power, with or w/o cause, by giving reasonable notice to principal. However, may be liable for damages if revoked w/o cause when contract was for definite
period or specific purpose.

REVOCATION BY OPTION:

Option may provide either party may terminate by giving specified notice or paying set amount to the other.

TERMINATION BY OPERATION OF LAW DEATH OF THE PRINCIPAL:

Most states.

MINORITY RULE: Not terminated until agent notified of principal's death. [Cal. Civ. Code �2356]

EFFECT ON AGENTS AUTHORITY:

Most states, third persons can rely on an agent's authority until third person received notice of principal's death.

EXCEPTION:

Attorney-client relationship, if expressed desire of client was for attorney to take case to conclusion, death of the client does not terminate the agency. [Jones v. Miller, 203 F.2d 131 (3d Cir 1953)]

DEATH OF AGENT:

Authority terminates immediately.

MENTAL INCOMPETENCY:

Either principal or agent generally terminates the agency.

NOTE: Some states: Third person w/ knowledge of principal's mental incompetency but deals in good faith w/ the agent protected if an injustice would result.

JUDICIALLY DECLARED INSANITY:

Agency terminated because all persons are then presumed to know of the insanity.

BANKRUPTCY:

Of principal terminates if agent has received notice.

EXCEPTION: Agent involved in uncompleted transactions which agent believes principal desires completed, agency not terminated until transaction is completed.

EXCEPTION: Bankruptcy of principal does not terminate the authority of the agent to deal with the goods actually in the agent's possession.

IMPOSSIBILITY:

Terminates when it becomes objectively impossible to perform. EXAMPLES:
1. Change in law makes performance illegal or criminal;
2. Destruction of subject matter of the agency; and
3. Death or insanity of the third person in the transaction.

WAR:

Outbreak of war places principal and agent in position of alien enemies, agency is terminated, or at least suspended until peace is restored.

CHANGE IN BUSINESS CONDITIONS:

Unusual and unanticipated change in value or of business conditions of such a nature that agent could reasonably infer principal would not desire transaction to be completed, may terminate the agency.

EXAMPLE: Broker engaged to sell land at certain price, but due to oil discovery, land greatly increases in value.

NOTICE REQUIRED TO TERMINATE

NOTICE TO AGENT:

Authority continues until notice of any change or termination.

NOTICE TO THIRD PERSONS:

Authority of agent, actual or apparent, continues until such time as third person receives notice from the principal or some other source that the agent's authority has terminated.

IRREVOCABLE AGENCY

Agency coupled with an interest (one given as security for a debt or obligation) in the subject matter of the agency is irrevocable and the agency cannot be terminated unilaterally by the principal, nor by death, insanity, or bankruptcy. EXAMPLE: Agent advances money to principal for purchase of business with a condition that agent be employed as manager until money advanced has been repaid. This is "power coupled with an interest" in the subject matter and cannot be revoked until the debt is paid.

RELATIONSHIP BETWEEN PRINCIPAL AND AGENT

DUTIES OF THE AGENT

A fiduciary owing a duty of trust, good faith and candor to the principal as well as a duty to use reasonable care, diligence and skill in his work.

XXXXXReasonable Care and Skill Norman R. Barton and his wife decided to vacation in Florida in November 1984. In March 1984, they contacted Wonderful World of Travel, Inc., a travel agency licensed by the state of Ohio, to make the arrangements. They requested a room with a view of the ocean, a kitchenette so they would be saved the expense of dining out, free parking, and a free spa. In August, with the Barton's approval, the travel agency made reservations at the Beau Rivage motel in Bal Harbour, Florida. The travel agency did not confirm the reservations prior to the Bartons' departure in November. When the Bartons arrived at the motel, they found it closed, chained, and guarded. The only other hotel or motel in the area was a Sheraton, which was almost triple the room cost of the Beau Rivage. The Sheraton overlooked the ocean, but it did not have a kitchenette, free parking, or free spa privileges. The Bartons stayed at the Sheraton. They sued the travel agent upon their return. Is the travel agent liable for the increased costs incurred by the Bartons? [Barton v. Wonderful World of Travel, Inc., 502 N.E.2d 715 (Ohio Mun. 1986)]

Reasonable Care and Skill

21.7. Yes, the travel agent is liable to the Bartons for the increased cost of their trip to Florida. The court held that a travel agent owes a duty to his customer to not only use reasonable care in making travel reservations, but also in confirming them prior to the date of the trip. This does not mean that the travel agent is a guarantor against all ill that might befall his customers, but he is responsible for failure to exercise reasonable care in checking the reservation and confirming them as the time of the trip approaches. Here, there was a three month period between the date of reservation and the date of departure. The court found that the travel agent was negligent in failing to confirm the Bartons' reservations during this period, and held the agent liable for the increased cost of the Bartons' trip. Barton v. Wonderful World of Travel, Inc., 502 N.E. 2d 715 (Ohio Mun. 1986).

X REFERENCE PATSURIS CASE ABOVE

DUTY OF GOOD CONDUCT:

Must conduct in such manner to keep the principal or business free from discredit or disrepute. EXAMPLE: Waitress serving as a "call girl" would violate this duty.

DUTY TO GIVE INFORMATION:

Must keep principal informed of all facts concerning the business, so principal can protect his interests.

XREFERENCE 30.2 ABOVE

DUTY TO KEEP AND RENDER ACCOUNTS:

Must account for all property and money of principal coming into agent's possession.

DUTY TO ACT ONLY AS AUTHORIZED:

Must act only in accord with lawful instructions and authority given by principal.

DUTY NOT TO ATTEMPT THE IMPOSSIBLE OR THE IMPRACTICABLE:

Should not subject principal to risk or expense if it reasonably appears to be either impossible or impracticable to accomplish the objects of the principal and the agent is
unable to communicate with the principal.

DUTY TO OBEY:

Must obey all reasonable and lawful directions given by principal; disobedience is cause for terminating the agency.

THE AGENT MUST BE LOYAL AND FAITHFUL TO THE PRINCIPAL.

SECRET PROFITS OR ADVANTAGES:

Cannot obtain any secret profit or advantage from the agency relationship, and principal may recover any items, proceeds, or profits so acquired plus any damages thereby caused, often including punitive awards.

PERSONAL INTEREST:

Cannot enter into any agency transaction in which he has a personal interest, irrespective of the fairness of the transaction or the adequacy of the price, without making full disclosure and obtaining the consent of the principal.

COMPETING:

Must not compete with principal in subject matter of the agency.

CONFLICT OF INTEREST:

30.3 P. 483 Duty of Loyalty Peter Shields was the president and member of the board of directors of Production Finishing Corporation (Production Finishing) from 1974 through August 1981. The company provided steel polishing services. It did most, if not all, of the polishing work in the Detroit area except for that of the Ford Motor Company (Ford). (Ford did its own polishing.) Shields discussed this matter with Ford on behalf of Production Finishing on several occasions. When Shields learned that Ford was discontinuing its polishing operation, he incorporated Flat Rock Metal and submitted a confidential proposal to Ford that provided that he would buy Ford's equipment and provide polishing services to Ford. It was not until he resigned from Production Finishing that he informed the board of directors that he was pursuing the Ford business himself. Production Finishing sued Shields. Did Shields breach his fiduciary duty of loyalty to Production Finishing? [Production Finishing Corporation v. Shields, 405 N.W.2d 171 (Mich. App. 1987)]

Duty of Loyalty

30.3 Yes, Shields breached his fiduciary duty of loyalty to his principal, Production Finishing, by usurping a corporate business opportunity. Shields, as president and a member of the board of directors of Production Finishing, was an agent of the corporation. A corporate officer or director is an agent of the corporation and under a fiduciary duty not to divert a corporate business opportunity for his own personal gain. If an agent acquires any pecuniary advantage to himself from third parties by breaching his fiduciary duties, he is accountable to his employer for the profit made. The court held that Shields breached his fiduciary duty of loyalty and honesty to his principal by diverting the Ford contract to himself. The Court of Appeals affirmed the trial court's granting of summary judgment in favor of Production Finishing and remanded the case for a determination of damages. Production Finishing Corporation v. Shields, 405 N.W. 2d 171 (Mich. App. 1987).



Must not represent anyone whose interest conflicts with that of the principal.

Agent has duty to act only in principal's name and not to appear as owner of the principal's property nor to commingle it with that of the agent. EXAMPLE: Attorney must not put money collected for a client in the attorney's own personal bank account.



DUTY AFTER TERMINATION:

Duty to cease to act as agent for the principal.

DUTIES OF THE PRINCIPAL

DUTY TO PERFORM THE CONTRACT:

DUTY NOT TO INTERFERE WITH THE AGENTS WORK:

Cannot unreasonably interfere. EXAMPLE: Agent given an exclusive sales territory, principal may not invade the territory and make sales. BUT NOTE: Some courts: while principal cannot interfere with exclusive agent by appointing another agent to compete, the principal personally may
compete. [Stahlman v. National Lead Co., 318 F.2d 388 (5th Cir. 1963)]

DUTY TO GIVE THE AGENT INFORMATION:

To inform agent of all risks and dangers in connection with the performance of duty, and furnish such information as is provided in their agreement or by the custom of the business.

DUTY TO KEEP AND RENDER ACCOUNTS:

In connection with the agency business, in accordance with their agreement, custom of the business, method of compensation, and other relevant factors.

DUTY OF GOOD CONDUCT:

Must conduct in such manner as not to harm the agent's reputation nor make it impossible for agent to perform employment and keep his self-respect. EXAMPLE: The agent does not have to put up with physical and verbal abuses and
insults from the principal.

DUTY TO INDEMNIFY:

For any losses or damages suffered without agent's fault while carrying out the agency business.

DUTY TO COMPENSATE:

To pay agent any agreed salary, or, if no sum was set, whatever is customary or reasonable under the circumstances.

DUTY NOT TO TERMINATE OR REPUDIATE:

Agency relationship in violation of the employment contract.

30.7 P. 484 Dual Agency Chemical Bank is the primary bank for Washington Steel Corporation (Washington Steel). As an agent for Washington Steel, Chemical Bank expressly and imphedly promised that it would advance the best interests and welfare of Washington Steel. During the course of the agency,
Washington Steel provided the bank with comprehensive and confidential financial information, other data, and future business plans. At some point during the agency, TW Corporation (TW) and others approached Chemical Bank to request a loan of $7 million to make a hostile tender offer for the stock of Washington Steel. Chemical Bank agreed and became an agent for TW. Management at Chemical Bank did not disclose its adverse relationship with TW to Washington Steel, did not request
Washington Steel's permission to act as an agent for TW, and directed employees of the bank to conceal the bank's involvement with TW from Washington Steel. After TW commenced its public tender offer, Washington Steel filed suit seeking to obtain an injunction against Chemical Bank and TW. Who wins? [Washington Steel Corporation v. TW Corpora� tion, 465 F.Supp. 1100 (W.D.Pa. 1979)]

Dual Agency

30.7 Washington Steel wins. Washington Steel and TW had adverse interests to each other because of TW's planned hostile tender offer for the stock of Washington Steel. The court held that Chemical Bank owed a fiduciary duty of loyalty not to act adversely to the interests of its client, Washington Steel. By accepting TW as a client and agreeing to finance its hostile tender offer on Washington Steel, Chemical Bank became a dual agent. Chemical Bank did not disclose its dual agency status to Washington Steel, did not seek to obtain Washington Steel's permission to act as a dual agent, and intentionally concealed its dual agency status from Washington Steel. The court held that Chemical Bank's undisclosed dual agency status violated the fiduciary duty of loyalty it owed to Washington Steel. The court enjoined Chemical Bank from in any way financing or participating in the TW's tender offer, and also temporarily enjoined TW for a period of 90 days from proceeding with its tender offer for Washington Steel. Washington Steel Corporation v. TW Corporation, 465 F. Supp. II 00 (W.D. Pa. 1979).




AGENCY RELATIONSHIP WITH THIRD PARTIES

LIABILITY OF PRINCIPAL FOR AGENT'S CONTRACTS

Liable to third persons on contracts made by the agent for the principal w/in scope of agent's authority.

AUTHORITY OF THE AGENT MAY BE EITHER ACTUAL OR APPARENT

ACTUAL AUTHORITY:

Express or implied authority the principal intentionally confers on agent.

EXPRESS AUTHORITY: Actual authority given agent in words�oral or written.

IMPLIED AUTHORITY: Actual authority of agent which is inferred from words or conduct of the principal.

(a) INCIDENTAL AUTHORITY: That reasonably necessary to
carry out the express authority. EXAMPLE: Principal
expressly employs and authorizes agent to manage
apartment building for stated salary; implied
authority may be inferred to hire needed help, make
repairs, purchase heating fuel, and arrange for
rubbish pick-up.

(b) CUSTOMARY AUTHORITY: According to custom of community,
normally given agents to conduct their business. EXAMPLE: Authority to advertise carries customary
incidental authority to contract for television time.

APPARENT OR OSTENSIBLE AUTHORITY:

That which principal either intentionally or negligently allows third person to believe agent possesses.

ACTS OF PRINCIPAL:

Leading third person to believe that agent had authority is the test of apparent or ostensible authority.

GOOD FAITH REQUIREMENT:

If third persons reasonably and in good faith rely upon the apparent or ostensible authority of an agent, principal is bound by the agreement. EXAMPLE: Store manager had actual authority to receive checks but not to endorse and cash. However, where he had done so for some time without complaint from principal, he had apparent authority to continue.

NO AUTHORITY:

Agent contracts w/o actual or apparent authority, principal not bound.

RATIFICATION:

Principal subsequently ratifies unauthorized action of the agent it becomes authorized.

DISCLOSED PRINCIPAL AND UNDISCLOSED PRINCIPAL:

Where principal is named in the contract and not excluded by its terms, and the existence of the agency appears, the authorized contract made by the agent is that of the disclosed principal. CF:

Agent enters into contract on behalf of his principal w/o disclosing to third party acting as an agent, the transaction is for an undisclosed principal; and since contract is really made for the principal, even though undisclosed, the principal has the right to enforce it against the third party.

RIGHT OF THE THIRD PARTY IN UNDISCLOSED PRINCIPAL SITUATION:

When discovers identity may enforce contract against either the agent or the principal, but not against both.

RATIONALE:

Originally believed agent was principal, so he may continue to hold him as such, but, in reality contract was that of the undisclosed principal. Since there can only be one principal, the third party must elect which party he intends to hold responsible.

PARTIALLY DISCLOSED PRINCIPAL:

Agent makes contract with third person and reveals he is acting as an agent but does not disclose the identity of the principal, most courts treat it as an undisclosed principal. EXAMPLE: Agent advises acting as agent, signs the agreement, "John Doe, agent," but does not identify the principal. Unless parties intended to bind only the principal, not the agent, the transaction will usually be treated as that of an undisclosed principal.

LIABILITY OF PRINCIPAL FOR AGENT'S TORTS

DOCTRINE OF RESPONDEAT SUPERIOR: LET THE SUPERIOR RESPOND:

Principal, or employer, liable for torts and wrongful acts of agent or employee committed w/in scope of agency or employment.

FAULT:

Immaterial on theory that principal or employer can spread the risk of loss through business overhead or insurance.

AUTHORITY:

Majority rule: Immaterial that agent acted in excess of his authority or even contrary to instructions as long as the act done in the scope of employment.

SCOPE OF EMPLOYMENT:

Wrongful act done in the course of agency by virtue of the authority of agency and in carrying out the principal's business.

ACTS FOR PERSONAL CONVENIENCE OR PLEASURE:

Acts necessary for the comfort, health, convenience, and welfare of the agent {e.g., coffee breaks, drinking, smoking, warming, and similar acts} are incidents of employment and do not take the agent out of the scope of employment.

DEVIATION AND DEPARTURE:

Slight deviations or departures by the agent or employee to take care of personal business or pleasure, where the main
purpose of activity is the principal's business, will not take agent outside the scope of employment. EXAMPLE: Truck driver starts on direct route from employer's factory to railroad depot to deliver goods, but on the way, stops by his home, a few blocks off direct route. As he leaves home, has an accident due to his negligence. Employer would be liable since the deviation was slight.

SUBSTANTIAL DEVIATION:

Deviaton or departure for personal business or pleasure is a substantial one, agent or employee may be held to be on a "frolic and detour" of his own; principal would not be liable.

COMING AND GOING RULE:

Applies to an employee or agent going to and from work, or to meals, and is considered a substantial departure outside the scope of the employment.

EXCEPTIONS TO THE COMING AND GOING RULE:

Several exceptions where such travel still considered within scope of the employment.
(a) BUNKHOUSE RULE: Agent/employee lives at his place of
work {e.g., a ranch hand in a bunkhouse), considered
within the scope of employment while going to and from
his job.

(b) TRAVELING SALESPEOPLE: Generally considered in scope
of their employment during their entire absence from
home, even when not actually at work.

(c) SPECIAL ERRAND OR DUAL PURPOSE: Going and coming has
some additional business purpose, entire trip may be
considered within the scope of employment. EXAMPLE:
Night employee went home to get some tools and then
went to dinner. On return had an accident. Dual
purpose was to get needed tools and to eat, was in scope of his employment.

(d) EMPLOYER PROVIDES TRAVEL: Provides the travel,
compensates agent/employee for travel time, or defrays
expenses, Courts have held exception to the coming and
going rule.

(e) SPECIAL RISK: Teacher mugged in her car just outside
of school grounds while driving home, Court applied a
"special risk" exception since "but for" the employment,
worker would not have been at the location of the risk.
[Parks v. Workers' Compensation Appeals Board, 33 Cal.
3d 585 (1983)]

INDEPENDENT CONTRACTOR'S TORTS AND RESPONDEAT SUPERIOR RULE:

Because Principal has no right of control over independent contractor rule not apply. Principal generally not liable for torts of an independent contractor.

EXCEPTIONS:

1. HIGHLY DANGEROUS ACTS: Public policy theory.

2. NEGLIGENT SELECTION OF CONTRACTOR BY EMPLOYER:

3. INTENTIONAL TORTS: Principal or employer liable for malicious or intentional acts of the agent or employee done w/in scope of employment or connected with the employment.

MAINTAINING ORDER OR PROTECTING PROPERTY: Employment involves risk of force, and act connected with the employment, the employer is liable. EXAMPLE: The employer liable where a night club bouncer assaults a noisy customer. EXAMPLE: Security guard throws rock at trespasser on premises and causes an injury for which employer is liable. COMPARE: Bartender shot a customer who made advances to another patron: Held: Outside scope of his employment\.

D. CRIMINAL LIABILITY:

Respondeat superior is rule of vicarious civil liability for damages in tort; does not apply in criminal law. Principal would be criminally responsible only if she participated in the criminal act or a criminal conspiracy. COMPARE: Corporation can be held criminally liable for the acts of its officers and employees on rationale that corporation can act only through them.

FRAUD:

Generally, principal liable for fraudulent representations of a type normally incident to the employment.

UNUSUAL AND EXCEPTIONAL MISREPRESENTATIONS:

Of the agent usually not binding on principal unless principal, with knowledge of the fraud, retains benefits of transactions. EXAMPLE: Owner of business employs broker to sell it and broker misrepresents to buyer net income and falsely states that an insurance company going to build a tract of homes nearby which will greatly increase the business. RATIONALE: The FIRST LIE one principal might expect agent to make, so principal would be liable. However, THE SECOND so unusual to sale of business that principal might not be responsible. BUT NOTE: Some states hold principal liable under respondeat superior regardless of unusual or extreme nature of fraudulent statement.

INNOCENT MISREPRESENTATION:

Agent generally not liable for deceit if he honestly believes representations supplied by his principal are true.

NOTICE OF FALSITY:

Agent becomes personally liable for his misrepresentations once he knows, or should have known, statements were false.

AUTOMOBILE STATUTES:

Many states statutes impose liability upon automobile owners and drivers by operation of law.

OWNER'S "PERMISSIVE USE" LIABILITY:

Some statutes on agency theory hold owner of a vehicle liable for limited amounts of damages caused by anyone driving the vehicle with the owner's permission. [Cal. Vehicle Code � 17150]

EMPLOYER NOT LIABLE FOR UNAUTHORIZED OPERATION OF AUTOMOBILE:

Unless statute imposing liability or personal fault on part of owner, employer not liable for negligent use of a motor vehicle under the following circumstances: (i) An employee who was not authorized to use the vehicle; (ii) An employee who was not subject to control of the operation of the vehicle; (iii) An employee who without authorization invites a person to ride with him; (iv) An employee who permits another to drive the vehicle without authority; and (v) A non-employee bailee.

LIABILITY OF THIRD PERSON TO PRINCIPAL

Can be liable to principal in contract or in tort.

LIABILITY IN CONTRACT:

Contracting with agent for disclosed principal liable on contract to principal as though made directly with principal.

UNAUTHORIZED CONTRACTS:

Not binding on third person until ratified by the principal.

UNDISCLOSED PRINCIPAL:

Liable to principal on contracts made by an agent even though the principal was undisclosed.

EXPRESS EXCEPTION:

If terms of contract expressly bar any undisclosed principal, there is no third party liability.

FRAUD EXCEPTION:

Where third person would not contract with particular principal and is known to both principal and agent, fraud not to disclose principal's identity.

LIABILITY IN TORT:

Liable in tort to principal for injuries committed by them to a principal's property or interest in the hands of an agent just as if they were dealing directly with the principal whether known or undisclosed.

INDUCING FIDUCIARY BREACH:

Knowingly induces or aids agent in breaching fiduciary duty owed to the principal liable to the principal. EXAMPLE: Third person bribes agent to obtain confidential information belonging to the principal.

FRAUD AND COLLUSION:

Colludes with agent to represent third person rather than principal: liable for fraud. EXCEPTION: Where third person acts under reasonable belief principal has knowledge of facts and consents: no fraud.

INDUCING BREACH OF CONTRACT:

Induces agent to fail in performance of contract with principal liable to the principal for damages.

LIABILITY OF AGENT TO THIRD PERSON

Certain circumstances agent may become personally liable to third person.

TORTS: [�1463]

Like any other tortfeasor, personally responsible for any wrongful act committed by him, regardless of respondeat superior liability of his principal. Even if tort has been committed pursuant to instructions of principal agent is still responsible for his intentional wrongful acts. COMPARE: When innocent agent commits tort pursuant to principal's instructions and agent is required to pay damages; agent is entitled to reimbursement.

2. CONTRACT MADE IN THE NAME OF AGENT

UNDISCLOSED AGENCY AND UNDISCLOSED PRINCIPAL:

Agent's name appears alone on contract w/o identity of principal or statement of fact of agency, agent is personally liable.

DISCLOSED AGENCY AND PARTIALLY DISCLOSED PRINCIPAL:

Most states hold when agent signs contract as an agent, but does not identify principal, agent becomes liable on contract unless otherwise agreed.

MINORITY RULE: California and some other states hold: Agent liable even if the fact of agency is disclosed unless it appears on the face of the instrument that only the principal is to be bound.

ELECTION BY THIRD PERSON:

When third discovers identity of undisclosed or partially disclosed principal, choice of holding either agent or principal to the contract, but not both. NOTE: Once election made to hold either agent or undisclosed principal, bound by choice and cannot hold the other.

WARRANTY OF AUTHORITY:

Every agent warrants authorized by principal to do what doing. If act unauthorized, agent personally liable unless later ratified by principal.

INCOMPETENCY OF PRINCIPAL

Most states: Agent does not warrant the competency of the principal to make contracts.

HOWEVER:

A. DUTY TO INFORM:

When the agent knows principal lacks capacity to contract; duty to advise third persons, failure to disclose may constitute fraud.

LIABILITY OF THIRD PERSON TO AGENT

Contract Liability:

When agent makes contract with third person on behalf of disclosed principal, usually neither agent nor third person has action against the other on the agreement.

UNDISCLOSED AND PARTIALLY DISCLOSED PRINCIPAL:

Agent may hold third liable on contract until such time as principal asserts rights under the contract.

AGENT INTENDS TO BE BOUND:

If parties intended agent be bound on contract, even though agency known, agent may bring action against third person for breach of contract.

TORT LIABILITY:

Third person liable for fraudulent or other wrongful acts causing injury to agent. EXAMPLE: Third person lies to principal about agent's conduct, causing discharge of agent.

AGENT AS ASSIGNEE:

Principal assigns or otherwise transfers rights or claims to agent, agent then acquires rights of principal to bring action against the third person. EXAMPLE: Principal assigns agent some outstanding debts for collection; agent may then sue third person for the debts.

AGENT'S ACTION FOR INJURY TO PRINCIPAL'S PROPERTY:

Agent in possession of principal s property has interest in such property and may maintain an action against a third who disturbs his possession or unlawfully injures the property.
AND: EXTENT OF THIRD PERSON'S LIABILITY: Not limited to agent's interest, but covers entire amount involved. Agent is required to account to the principal for any recovery in excess of the agent's interest

INDEX:

THESE CASES WERE ALL DISCUSSED IN LECTURE. YOU CAN �PLUG� THEM IN WHERE THEY BELONG.

P. 510 Case 30.2 Independent Contractor: Lewis v. D. Hays Trucking, Inc.
Facts: Hercules, Inc., a large chemical corporation. Hercules purchases tree stumps from various parties, including D. Hays Trucking, Inc. (Hays). Hercules and Hays entered into harvesting contract and a freight contract. These contracts specifically stated that, �Contractor, its employees and agents will in no way be regarded, nor shall they act as agents or employees of Hercules.� One night, when Mr. Hays, the owner of D. Hays Trucking, Inc., was driving a trailer tracker loaded with pine stumps from Alabama to the Hercules plant in Georgia, he crashed the tractor trailer into the car of Phyllis Lewis, killing her. Preston Lewis, the executor of the estate of Phyllis Lewis, brought suit in U.S. District Court against Mr. Hays, D. Hays Trucking, Inc., and Hercules, Inc., to recover damages for negligence and respondeat superior. Hercules made a motion for summary judgment, alleging that D. Hays Trucking, Inc. was an independent contractor and therefore Hercules could not be held liable for its negligence.
Issue: Is D. Hays Trucking, Inc., an independent contractor or an employee of Hercules?
Decision: The U.S. District Court held that Hays was an independent contractor, and not an employee, of Hercules. The court granted Hercules�s motion for summary judgment.
Reason: Here, the terms of the Harvesting Contract and Freight Contract between Hays and Hercules clearly denominate Hays as an independent contractor. Hays determined the time, manner, and method of his work. Thus Hays is an independent contractor and not an employee.
Case Questions
Critical Legal Thinking: Critical factors in determining independent contractor status include:
� Whether the worker is engaged in a distinct occupation or an independently established business
� The length of time the agent has been employed by the principal
� The amount of time that the agent works for the principal
� Whether the principal supplies the tools and equipment used in the work
� The method of payment, whether by time or by the job
� The degree of skill necessary to complete the task
� Whether the worker hires employees to assist him or her
� Whether the employer has the right to control the manner and means of accomplishing the desired result
� Implied Agency (ACQUIESCENCE)

� The Sullivans owned real property obtained a secured loan from the Federal Land Bank of Omaha (FLB), with the property securing the loan.
� They defaulted on the loan; FLB brought action to forclose on the mortgage.
� FLB's lawyer wrote a letter to the Sullivans outlining a settlement offer.
� Copy of the letter sent to FLB's regional office. This office did not notify attorney he did not have authority to offer the settlement w/o its permission.
� Sullivans accepted settlement offer, and the regional office refused to approve the deal. Sullivans sued to enforce. Did the attorney have authority to settle the case?

� YES. General rule: An attorney who is clothed with no other authority than that arising from his employment has no implied authority by virtue of his general retainer to compromise and settle his client's claim or cause of action. The client, however, can give actual authority to the attorney to settle a case on his behalf. Actual authority can be created by the ACQUIESCENCE of the principal in the actions of the agent. Here, the regional office acquiesced in the attorney's action by making no attempts to stop the settlement negotiations or inform the attorney of the limitations of his authority.
� Court: FLB was bound to the settlement agreement with the Sullivans based on ACTUAL AUTHORITY, not IMPLIED AUTHORITY. Federal Land Bank of Omaha v. Sullivan, 430 N.W. 2d 700 (S.D. 1988).



29.2 P. 491 Court of Appeals of North Carolina.
MATTHEWS v. FOOD LION LLC
v. Diamond J. MATTHEWS, Plaintiff, v. FOOD LION, LLC, Defendant.

Plaintiff appeals from a trial court order granting Defendant's motion for summary judgment. For the reasons stated herein, we affirm.
Hall, an employee of Food Lion, LLC (hereinafter Defendant) allegedly injured Plaintiff, Diamond J. Matthews, while Hall entered the bathroom at a brisk pace. While on duty, Hall's responsibilities as a part-time cashier consisted of serving customers and bagging groceries. Hall had �clocked out� heading towards the bathroom HURRIEDLY b4 leaving the premises. Upon opening the door, Hall discovered Plaintiff on floor, some distance from the door, injured and upset. Hall called for assistance from other employees of Defendant and called 911. On 24 March 2009, Plaintiff-appellant filed a Complaint against Food Lion, Inc. and Delhaize America, Inc. In the complaint the Plaintiff alleged that she suffered constant pain as a result of her injury and incurred substantial medical costs. Plaintiff argued that there was sufficient evidence to create a genuine issue of fact as to Hall's negligence and Defendant's liability under the theory of respondeat superior. The original Complaint improperly alleged negligence caused by �Brittany Hall,� an employee of Defendant. Plaintiff alleged, inter alia, that �Brittany Hall� was negligent and as an employee of Defendant, acting within the scope of her employment, Defendant was liable for Plaintiff's damages under a theory of respondeat superior and/or agency.
On 7 May 2009, Defendant filed its answer denying negligence and a Motion to Dismiss due to Plaintiff's failure to properly identify Defendant as Food Lion, LLC. On 28 July 2009, Plaintiff filed an Amended Complaint which properly identified Defendant as Food Lion, LLC. Defendant responded on 6 August 2009, by filing an Answer to the Amended Complaint denying negligence and a Motion to Dismiss pursuant to Rule 12(b)(6) of the North Carolina Rules of Civil Procedure. On 209 November 2009, Plaintiff filed a Motion to amend its Complaint, along with its Second Amended Complaint, which properly identified Defendant's employee as �Brigitte Hall.� After completion of discovery, the trial court entered an Order on 30 November 2009 granting Defendant's Motion for Summary Judgment.
_
On appeal, Plaintiff argues that there is a genuine issue of fact as to whether Hall, Defendant's employee, was acting within the scope of her employment at the time of the alleged negligence. We disagree.
Summary judgment is appropriate if �the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law.� N.C. Gen.Stat. � 1A-1, Rule 56(c) (2009). The standard of review from a grant or denial of summary judgment is de novo. Builders Mut. Ins. Co. v. North Main Constr., Ltd., 361 N .C. 85, 88, 637 S.E.2d 528, 530 (2006). Because summary judgment is a �drastic remedy� that eliminates the need for a full trial, summary judgment should be �granted cautiously.� See Savings & Loan Assoc. v. Trust Co., 282 N.C. 44, 51, 191 S.E.2d 683, 688 (1972). Summary judgment is particularly regarded as an extreme remedy in negligence cases and rarely appropriate, since the reasonable person or due care standard is ordinarily a jury question. See generally Williams v. Power & Light Co., 296 N.C. 400, 402, 250 S.E.2d 255, 257 (1979). However, where no genuine issue of material fact exists and reasonable people could only conclude that Defendant was not negligent, summary judgment is proper. See Wilson Brothers v. Mobil Oil, 63 N.C.App. 334, 337, 305 S.E.2d 40, 43 (1983); see also Byrd Motor Lines v. Dunlop Tire and Rubber, 63 N.C.App. 292, 304, 304 S.E.2d 773, 779-81 (1983).
I. Doctrine of Respondeat Superior
Generally, employers are liable for torts committed by their employees who are acting within the scope of their employment under the theory of respondeat superior. See Estes v. Comstock Homebuilding Cos., 195 N.C.App. 536, ----, 673 S.E.2d 399, 402 (�[A] master is responsible for the negligence of his servant which results in injury to a third person when the servant is acting within the scope of his employment and about the master's business.�), disc. review denied, 363 N.C. 373, 678 S.E.2d 238 (2009). As a general rule, liability of a principal for the torts of its agent may arise in three situations: (1) when the agent's act is expressly authorized by the principal; (2) when the agent's act is committed within the scope of his employment and in furtherance of the principal's business, or (3) when the agent's act is ratified by the principal. See Snow v. DeButts, 212 N.C. 120, 122, 193 S .E. 224, 226 (1937). There is no contention that Defendant expressly authorized or ratified Hall's conduct. For this Court to conclude that summary judgment was inappropriate, there must be a genuine issue of material fact as to whether Hall was acting within the scope of her employment at the time of the incident and her negligence can therefore be imputed to the Defendant.
In Overton v. Henderson, 28 N.C.App. 699, 222 S.E.2d 724 (1976), this Court stated that
[t]he principal is liable for the acts of his agent, whether malicious or negligent, and the employer for similar acts of his employees,․ The test is whether the act was done within the scope of his employment and in the prosecution and furtherance of the business which was given him to do.
Id. at 701, 222 S.E.2d at 726.
In the event that an employee is �engaged in some private matter of his own or outside the legitimate scope of his employment� the employer is no longer responsible for the negligence of the employee. Van Landingham v. Sewing Machine Co., 207 N.C. 355, 357, 177 S .E. 126, 127 (1934). �It is only when the relation of master and servant between the wrongdoer and his employer exists at the time and in respect to the very transaction out of which the injury arose that liability therefore attaches to the employer.� Estes v. Comstock H
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