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A. Definition: Agency is a CONSENSUAL, FIDUCIARY relationship & right
to control conduct
1. Must be for legal purpose; anyone w/ K capacity can employ
agent/servant; agency Ks VOIDABLE by Minors/Incompetents unless
disaffirm; H&W isn't agency
2. Requirements: nothing formal UNLESS Equal Dignities Rule (Agency K
writing b/c K to sign written)
3. Master/Servant Distinction: master controls physical activities of
servant (power, control, direction of servant's conduct) & liab. in tort
under res. superior
-> PRINCIPAL/AGENT: bus. relationshp w/ agent in place of principal
w/ a 3P; binds principal K'ly under K law (sometimes tort liab. if
fraud/deceit by agent)
-> Agent can also be a SERVANT
-> If ONLY agent, P NOT liab. in tort under res. superior for
ordinary/intentional torts of agent

B. Creation of the Agency Relationship
1. BY: (a) express/implied consent (b) statute--POA or statutory
agent for service
2. AGENCY BY ESTOPPEL: Principal/Master holds them out as
agent/servant, 3P detrimentally relied, damaged (advertised cab drivers
as e/ees though indep. K'ors)

C. Types of Authority
1. Express: for any act specifically stated (written or not)
2. Implied: do things consistent w/ direction to agent ("manage my
3. Apparent: P's conduct causes 3P reas. believe person has authority
to enter negotiations, make reptns for principal
4. Inherent Authority/Power: to meet commercial reality needs to
protect 3P (selling agent can warrant item)

D. Delegation of Authority
1. For Agency: delegate to subagents any acts EXCEPT if public policy
or agreement requires his personal performance
2. For Servant: Master NOT charged if employs helper UNLESS (a)
express/implied authority to (b) sudden emergency--AA (c) nature of work
requires help

E. Duties of Agent to Principal: confidential, fiduciary relationship
1. Agent act solely benefit P; noncompetitive enterprise own time by
agent OK
2. No Self-Dealing/Secret Profits: (a) must acct for profits via
constv trust; or (b) tort of CONVERSION if profits gone -- for breach
fid. duty & neglig. seeking compen. & punies
3. Agent Can't Co-Mingle Property: (a) equitable acctg (b) CONVERSION
if gone

F. Dual Agency Relationship (2 Principals/Same Transaction)
1. OK if full knowledge & consent; otherwise either P can rescind,
gets amounts paid & no compensation to agent

G. Duties of Principal to Agent
1. Reimbursement, Indemnification, Protection, Compensation
* 2. In agreement, otherwise once agent performs sues in quantum
meruit for reas. value of services given

H. Competition by Agent/Servant After Business Relationship Ends
1. General Rule: agent/servant employee CAN compete after e/mt
RIGHTFULLY ends, absent contra agreement
a. Covenants Not to Compete strictly construed (time & area
covered; hardship to employee)
b. Injunctn from competg if e/er shows IRREPARABLE INJURY*
2. Former servant/employee CAN'T use (a) trade secrets (b) written
customer lists (c) confidential info

I. Agent/Servant's Notice or Knowledge Imputed to Principal/Master
1. OK to impute under legal identity, alter ego theory
2. EXCEPTIONS (not imputed): (a) confidential info--atty/ client (b)
agent & 3P conspire cheat P (c) knowledge agent got while acting adverse
to P/wholly own benefit--FROLIC & no longer agent

J. Authority of Agent in Contract Matters
1. General Agent: conducts CONTINUOUS series of transactions; binds P
for USUAL & CUSTOMARY acts via implied authority
2. Special Agent: acts in a particular or small group of transaction
or 1 particular occasion; binds P only for NECESSARY acts to the purpose
via implied authority (BAR STACKS 1 PERSON W/ GEN'L AGENT & SPECIAL
3. Types of General Authority:
a. To buy/sell personalty (express or implied if needed)
b. To buy/sell realty
(1) Broker's Authority to Sell: broker usually indep. K'or w/
authority ONLY to find ready, willing, able buyer then gets commission
(2) Real est. co. not lliab. to Buyer since broker is indep. K'or
(3) No implied authority to make reptns about condition unless
had specific authority (SPECIAL AGENT THEN); if Seller allows statements
liab. is imposed
c. Authority to Warrant
(1) Special Agent: NO authority to give warrant not implied in
law (e.g. express W; Ws of fitness & merchantability arise by law) (RR
claims agent can't give injured e/ee guarantee of lifetime job)
(a) 3P dealing w/ special agent acts at his peril
(b) bus. usage/custom or prior dealings MAY confer IMPLIED
authority to give a W
(2) General Agent: HAS authority to Warrant (inherent)
-> Principal liable for general agent's reptns under inherent
authority, even w/o express auth
-> but NOT for EXTRAORDINARY guarantee beyond usage of business
(good for life)
(3) Authority by Necessity: Usually agent/servant no power to
bind principal/master for med expenses given at agent's direction.
(a) EXCEPTIONS: Common carrier - P/master owes duty of care;
Emergencies make tx necessary for humanitarn/public policy reasons
(factory mach)

K. Ratification (agent acts w/o authority)
1. Principal may ratify any unauthorizd act or trans. which he could
have authorizd agent to do on his behalf in 1st place
a. If does ratify, P can sue 3P to enforce act/transaction
2. Principal CANNOT ASSIGN right to ratify
3. Principal CANNOT RATIFY ONLY BENEFITS & disaffirm burdens
4. Need identifiable principal to ratify (fully/partially disclosed)
5. NOT ratificatn just b/c keep or fire e/ee who commited tort
-> MIN: servant bar assault; master ratified when told patron he'd
have broken his neck

L. Other Ways to Enforce K (Absent Ratification)
1. Adoption: by non-exist corp. when coming into being
2. Novation: COMPLETE release of agent if undisclosed prin.
substituted (vs. agent assignmt to undisclosed principal, 3P can sue

M. Disclosed and Undisclosed Principal
1. Disclosed Principal: "ABC Corp. by John Doe, representatv"
a. Agent is conduit; not liable in K nor can he enforce
2. Undisclosed Principal: "signed John Doe"
a. NO notice of agency or name of principal
b. Agent has K liab. (seek reimburse from P if act authzd)
c. If act authorized, P CAN enforce K against 3P**
(1) CAN'T ratify b/c not ID'd
(2) IF 3P said don't want to deal anyone else or esp. not
Principal, 3P right to rescind & restitutn for fraudulent misreptn
3. Ambiguous Signing: "ABC Corp. by John Doe"
a. Parol OK to explain circum. EXCEPT HIDC of comm'l paper
4. Doctrine of Election: choice by 3P on who to sue
a. NO electn if P fully disclosed (only P becomes K party)
b. Undisclosed or Partially (knows a P but not ID), 3P can enforce
against either P OR agent, NOT BOTH
c. MUST substite P or dismiss/refile if gets ID b/4 Judgmt
(1) otherwise s/to RES JUDICATA defense if later sues P
d. Agent or undisclosed P can sue for 3P breach (P s/to setoffs 3P
could take against agent)

II. TORT LIABILITY (Master/Servant only unless Agent also Servant)

A. Action must be in scope of employment AND in furtherance of the
master's business
-> Master liable under deep pocket & entreprenuer idea (can buy ins.
& customer price to bear loss)

B. Liability for Negligence
1. Master exonerated if NOT WITHIN E/MT SCOPE
a. Used instrumentality substantially difft than authorzed
a. Used job vehicle for recreation
3. 3P can still sue servant, if negligent of course

C. Intentional Tort Liability of Master
1. RESPONDEAT SUPERIOR still applies if w/in scope of e/mt AND e/ee's
intentional act in furtherance of master's business
a. Might create jury Q of whether acting w/in scope
b. Master could also be liable for punies if servant's tort
included malice
c. Examples where Master liable: unauthorzd trespass while
excavating, fight for parkg space, debt collectors
2. Was servant motivated by pers. reasons or acting to further
business interests of employer?

D. Deviation, Abandonment & Return
1. Dual Purpose Concept: servant still w/in scope of e/mt &
furtherance of master's business, yet acts partly for master & partly
for self (friend riding along)
a. Master still liable for tort to 3P but not passengr friend b/c
not authorized
2. Abandonment: when servant acts wholly for own purpose
a. Jury Q; complete defense to master liability
3. Deviation: If substantial, considered servant's own frolic
a. If a departure, servant has ABANDONED e/mt scope
b. Mere deviation still liable if insubstant'l; if substant'l it's
= to an abandonment
4. Example: 75 mi. off hwy for hotel room (NO ABANDONMENT); 75 mi.
off hwy to see friend (ABANDONMENT); 75 mi. off hwy for room & see
5. To And From Work: outside e/mt scope unless integral part of your
employment (salesman; ins. premium collector is servant and if writes
policies also agent)
6. Return/Re-Entry From Abandonment
a. Servant has abandoned; at what pt is reentry to scope of
employment & furtherance of Master's business?
(1) Moment of turning back or
(2) When reas. close to point of deviation (jury Q) or
(3) ACTUALLY back on authorized road (strict; OHIO)

E. Defamation by Servant
1. NOT LIABLE if made for servant's/agent's own purpose w/ no
apparent authority (jury Q) (e.g. call someone thief)

F. Liability Where Respondeat Superior Not Applicable
1. If can't say acting w/in scope of employment and in furtherance of
master's business, might be liable for negligent hiring or retention of

G. PRINCIPAL'S Liability for Torts of AGENTS
1. Negligent/Intent'l Physical Acts: Generally NO liability for
negligent or intentional physical acts of agent UNLESS also acting as a
2. Other Torts: Principal IS LIABLE to 3P for other torts of agent,
whether servant IF: (a) authorized or apparently authorized act, or (b)
was committed w/in agent's inherent powers, or (c) agent's position
enable him to commit the tort
3. Misrepresentatns by Agents: P is liable for agent misreptns in
authorized or apparently authorized trans. IF: (a) P intends the untrue
statemts be made, or (b) a matter P could reas. expect reptns be made on
& statemt is 1 not too unlikely fraudulent agent would make (c) agent's
position enabled him to deceive
-> 3P can seek fraud damage, rescission, reformatn from P
4. Respondeat Superior Liability: if agent also servant and master

H. Employer & Independent K'or
1. Generally e/er NOT liable for K'or negligent physical acts
a. NO resp. superior b/c e/er doesn't control work details
2. EXCEPTIONS: (a) inherently dangerous work (b) non-delegable
personal duties (c) if a public place (d) nuisance (e) negligent
selection of K'or (f) K'or misreptns where e/er authorized to make

I. Loaned or Borrowed Servant Doctrine*
1. When master has servant do work for another, becomes servant of
other for some/all acts if has right to control/supervise and PRIMARY
duty of obedience by servant for the act in Q is to Master 2
a. Inference is remains in service of Master 1
2. Factors Considered to Impose Liab. on Master2: (a) unskilled labor
(b) paid hourly (c) Master2 provides instrumentality (d) for
long/indefinite time (e) Master2 has right to fire (Ohio)
a. NOTE: even if liab. imposed, 3P can still sue Master1
3. MIN. says Borrower liable b/c gets direct benefits of servants
acts & has immediate right to control conduct


A. Agency at Will: Either P or agent can revoke ANYTIME w/o liab.
Agency for Definite Time: Either can revoke, but K damages if K
Termination by Law: death, insanity, bankruptcy P or agent ends agency
regardless of knowledge (common law)
1. OH: death DOESN'T terminate authority UNLESS TIMELY NOTICE
a. If agent acts after death in his own name & pursuant to
authority given, P's estate & reptvs bound if both agent & 3P were
ignorant of P's death (MIN)

B. Notice to 3P of Termination/Revocation of Agency
1. Special Agent: NO notice requird absent prior bus. dealings
a. Dealing at own peril as to authority extent anyway
b. ACTUAL notice required to those PRESENTLY dealing w/
2. General Agent: ACTUAL notice to those have had prior bus. dealings
w/; CONSTRUCTIVE notice to rest of world (notice in paper of gen'l
circulation co. where agent deals)

C. Death of Principal or Agent
1. Common Law: agency automatically ended w/o notice (theory: death
notorious act known by all)
2. EXCEPTIONS: (authority continues though Principal dead)
a. Surviving Partner's right to collect firm debts after death of
b. Acts by agent in own name where agent & 3P w/o knowledge (see
A.1.a. above)
c. Acts of agent under written POA re: personal property (binding
on P's estate if 3P relies on written authority & w/o actual notice of
d. Bank paymts/check certiftns for 10 days despite knowledge unless
someone asks they stop
* e. Agency Coupled With an Interest: when agent has vested interest
in the s/matter of the agency & authority to exercise power over it;
irrevocable during life & doesn't authority doesn't end on death
-> Example: agency to sell house & take repaymt for loan to P
from proceeds of sale
f. Agency Coupled with a Security: when agent holds power as
security for a debt owed to him (irrevocable proxy or voting trust)
-> Doesn't usually terminate on death EXCEPT if cognovit note w/
warrant of atty to act as agent for Principal/Maker to confess Judgment

D. Criminal Responsibility for Agent/Servant Acts
1. General Rule: not liable even though w/in scope of employment b/c
pers. & indiv. unless P/Master previously authorized or assented to the
a. Strictly Liable for the Crime by Statute (malum prohibitum)
(servant/bartender sale of beer to minor)
b. Corporations: agent/officer's criminal intent is imputed to corp
(assault, battery, specific intent crimes)
-> Bartender & corp. agent/officer also criminally liable

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