Agency Defined Created through Express Agency; Vicarious Liability; Implied Agency Implied Agency [Doty][Cargill]; Focus on Control

Rst 1 Agency exists when theres 1) manifestation of consent by one person that another person act on Ps behalf, and subject to Ps control 2) As consent to so act Factors showing Control: Manifestation of Consent [Doty] The requirement that coach be the driver her permission to use the car was contingent on that requirement [Cargill] Nine factors that proved agency relationship: Different from common lenders bc 1) Cargill made constant recommendation over phone 5) Cargill correspondence and criticism regarding Warrens finances, officers salaries and inventory Plus, 2) right of first refusal to grain 3) W unable to enter mortgages purchase stock etc without Cargill approval 7) Providing drafts and forms to W w/ Cargills name

Liabilities of Principal to Third Parties in Contracts Rst 144 Principles liability in K: A principal is subject to liability upon contracts made by an agent acting within his authority if 1)made in proper form, and; 2)with the understanding that the principal is a party Agency through Apparent Authority [370] Rst 3rd 2.03: When a third party reasonably believes the actor has authority to act on behalf of P and that belief is traceable to Ps manifestations K was sales representative Joyce did not have knowledge that sales rep did not have authority to sign contract 1) there has to be some connection between third party and P 2) look to how the third party learned of the agents alleged authority a) whether the P reasonably can be said to have been the source of that knowledge b) there must be some words or conduct by the P or some business custom which leads the third party to believe that A has requisite authority a. Joyce thinks K and M have authority while they dont believed in apparent authority Agency through Inherent Authority: Undisclosed Principal [Fenwick] Rst 8A Inherent Agency power: Power of an agent which is derived not from authority, apparent authority or estoppel but solely from the agency relation Rationale: Notion that undisclosed P should not be entitled to gains from endeavor without exposure to loss [Fenwick] could recover for the transactions conducted by an A who was not acting within the agreement with the P, because A was entrusted to transactions of that kind o There was no actual or apparent authority of P, but inherent authority Rst 8B Estoppel: Person who is not otherwise liable may be liable if he 1) intentionally or carelessly caused such belief and 2) knowing of such believe, did not take reasonable steps to notify parties

Rst 195(managers)/Rst 161(general agents) Undisclosed Principal: P who entrusts management of his business to agent, and agent enters into transactions usual in such business, although contrary to directions of principal, is liable to third persons in transaction Policy: Cheapest cost avoider, cheaper for owners to take precautions [Fenwick] P is liable when A acted within authority usually confided to an agent of that character Agency through Ratification [Botticello] 1) What types of acts constitute an affirmation by principal? 2) What effect should we give to that affirmation? [Boticello] If original transaction was not purported to be done on account of the P, the fact that P receives its proceeds does not make him a party to it. Rst 2d 82 Rst 3d 4.06: Not bound when ratification made without knowledge of material facts involved in the original act when the person was unaware of such lack of knowledge P must know or has reason to know of all material facts Rst 3rd 4.01 Ratification: 1) Affirmance of a prior act done by another whereby the act is given effect as if done by agent acting with actual authority 2) A person ratifies an act by (a) manifesting assent that the act shall affect the persons legal relations, or a. Express affirmation by P (b) conduct that justifies a reasonable assumption that the person so consents a. Implied affirmance through: i. acceptance of benefits of transaction at a time its impossible to decline to accept benefits ii. Silence or inaction iii. Bringing a lawsuit to enforce the K rd Rst 3 4.02 Ratification not effective when 1) K made through misrepresentation or other voidable conduct 2) in favor of A against P when P ratifies to avoid loss 3) to diminish the rights or other interests of persons, not parties to transaction, that were required in the subject matter prior to the ratification Ratification will be denied to protect rights of innocent third party Usually occur when there has been some material change in circumstances between time of the transaction and the time of the purported