The Law of Agency

1
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

2
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. Bankerds 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-1980s dollars) to old man Bankerd?
• Note that this was a regular power of attorney. .
  . .
• Now, what is a durable power of attorney?

3
Agency, cont.

• Duties between principal agent
• There are severalstudy the reading on them, but
  we will discuss only the most important of the
  fiduciary duties of the agent to the
  principalloyalty, 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.

4
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

5
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)

6
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
  basiswho apparently paid the 2 invoices.

7
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.

8
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 theres 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 didnt this make Ed Bell an employee?

9
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 coveragescope (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.

10
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.

11
Agency, tort liability

• Rappaport v. Intl 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 didnt 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 wenthe 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 friends 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?

12
Agency, tort liability

• For both employer liability purposes, and for the
  employees 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