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The Law of Agency. Introduction to principal-agent, employer-employee, and other representative relationships Rights & duties between the parties Liability of the employer or principal for acts of the employee or agent Some terminology Principal-agent

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the law of agency
The Law of Agency
  • Introduction to principal-agent, employer-employee, and other representative relationships
    • Rights & duties between the parties
    • Liability of the employer or principal for acts of the employee or agent
  • Some terminology
    • Principal-agent
      • The concept of the “general agent” & the “special agent” (not in the reading)
    • Employer-employee (“master-servant”)
    • Employer-independent contractor
agency cont
Agency, cont.
  • King v. Bankerd, p. 516
    • Facts
    • Take note of the exact language in the power of attorney. Broad, huh?
    • If the language granting authority to the agent (Mr. Bankerd’s lawyer) was so broad, why did the court conclude that the agent exceeded his authority?
    • Why did the agent get stuck having to pay over $13K (in mid-1980’s dollars) to old man Bankerd?
    • Note that this was a regular power of attorney. . . .
    • Now, what is a “durable power of attorney”?
agency cont3
Agency, cont.
  • Duties between principal & agent
    • There are several—study the reading on them, but we will discuss only the most important of the fiduciary duties of the agent to the principal—loyalty, that is, no conflicts of interests.
  • Girard v. Myers, p. 521
    • Facts (the R.E. speculator worked out a sweet deal for himself)
    • There was another part of the agreement that was too indefinite to be enforceable. What was that?
    • There were 2 possible problems, but only one of them turned out to be a conflict of interest sufficient to cause the speculator, as an agent, to lose his right to compensation.
agency cont4
Agency, cont.
  • Liability of principal for contracts made by the agent
    • Express authority
    • Implied authority (here is where the concept of “general” agent & “special” agent has an effect)
      • Incidental
      • Customary
    • Apparent authority (sometimes called “ostensible” authority)
    • Ratification
      • Express
      • Implied
agency contract liability
Agency, contract liability
  • Industrial Molded Plastics. v. J. Gross & Sons, p. 532
    • Facts
    • Peter did have some express authority, so what was the problem?
    • Why did Peter not have implied authority?
    • Why did Peter have apparent authority?
    • What are the consequences for the principal?
    • What about the consequences for the agent? (Different consequences than if there had been express or impl. auth., or if there had been a subsequent ratification)
agency contract liability6
Agency, contract liability
  • City Elec. v. Dean Evans Chrysler-Plymouth, p. 533
    • Facts
    • Obviously no express authority
    • Why was there no implied authority?
    • Why was there no apparent authority?
    • Why was there no implied ratification?
    • Note: In the summary of the facts, I make a statement that does not have a sufficient factual basis—who apparently paid the 2 invoices.
agency tort liability
Agency, tort liability
  • Liability of employer for torts committed by the employee
    • Employee or independent contractor
    • If an employee, was the tort committed while in the scope of employment?
    • In the case of some types of torts, mainly non-physical ones, such as fraud & defamation, courts often speak of “scope of authority” and use authority concepts.
agency tort liability8
Agency, tort liability
  • Branco Wood Prods. v. Huxford Trust, p. 539
    • Facts
    • Like other distinctions, the distinction between an employee and an independent contractor is best represented as spaces on a continuum. The extremes are easy, but there’s always a murky middle.
    • What is the overriding issue in distinguishing between an employee and an independent contractor?
    • What are some of the factors the courts consider in making the distinction?
    • What factors were important in this particular case?
    • In this case, the employer (a supervisor) did sometimes visit work sites to inspect the work. Why didn’t this make Ed Bell an employee?
agency tort liability9
Agency, tort liability
  • Lazar v. Thermal Equipment, p. 540
    • Facts
    • What is the “coming and going” rule?
    • Why was there an exception to the rule in this case?
    • What about the fact that Lanno was going in the opposite direction? What about “deviations” from scope of employment?
    • Would it have made a difference if Lanno had been using his own vehicle?
    • Note that the same concepts apply to workers compensation coverage—scope (or “course”) of employment, commuting rule, on-call, etc.
    • Also note some other effects of being on-call, such as calculating wages under the Fair Labor Standards Act.
agency tort liability10
Agency, tort liability
  • Dinkins v. Farley, p. 541
    • Facts
    • This is an example of a “mixed motive” scope of employment case
    • What was the main reason why the court reached the conclusion it did?
    • What if Farley had been required by Xerox to take this course?
    • Note some of the horribles the court hypothesized if it reached a contrary conclusion.
agency tort liability11
Agency, tort liability
  • Rappaport v. Int’l Playtex Corp., App. Ct., NY

Davis was a salaried outside salesman for Playtex in a 16-county area around Syracuse, NY. He sold directly to retail stores. He didn’t have an office, but worked from his home, and was on the road much of the time. He was required to use a car in performing his work. He regularly took work with him wherever he went—he had to in order to do the job. One Sunday morning he worked for a couple of hours at home, then left to drive to his girl friend Madeleine Reynolds’ home in another town, to have dinner and spend time with her. He also took work with him so that he could work on some of his account records while at her house.

On the way to his girl friend’s house, Davis was involved in a car wreck that was his fault (negligence). The other driver (Barnum) was killed, and the executor of his estate (Rappaport) sued Davis and his employer, Playtex. Davis was liable, of course, but was Playtex? That is, was Davis within the scope of his employment at the time?

agency tort liability12
Agency, tort liability
  • For both employer liability purposes, and for the employee’s workers compensation coverage, the scope of employment can expand while the employee is traveling away from home base.
    • Examples:
  • Deviations from scope of employment (already alluded to in Lazar v. Thermal Equip. case)
    • How substantial?
    • Foreseeable deviation?
    • Example in a workers compensation case (same principles)
      • Gary Segler, “punch-out monitor,” lunch, chicken pot pie, industrial oven