Law Chapter 14
what does the agent do
The agent receives authority & carries out the principal’s instructions
make a contract or are involved in a tort with the agent
Execute all transactions in connection with a business, i.e. managers
Agency coupled with an interest:
Agent has paid for the right to have authority for a business
Agent delegates authority to other agents
The legal document called a power of attorney establishes agency and creates an attorney-in-fact- Is this an attorney?
Read more: http://www.businessdictionary.com/definition/agency-by-estoppel.html#ixzz3Y2nzSuXQ
Necessity or emergencies create agency existence
The agent does acts and binds the principal by operation of law
Principal’s conduct or trade customs create authority
There is the appearance of authority that a third party could reasonably conclude
In 2009: Galgano leased office space from Cove Management. Lease listed the tenant as AFLC and listed Galgano as guarantor for office to be used for “insurance services”
Galgano signed as lessee and guarantor. Later he defaulted on lease payment.
Cove sued AFLAC for losses. Cove noted that office was clearly listed as an AFLAC office and engaged in business for AFLAC.
Cove asserted it had right to presume that Galgano had authority as an agent to bind AFLAC to lease
District court dismissed the suit; Cove appealed.
(ContinuDetermination of Galgano’s authority will define him as either independent contractor or an agent of AFLAC. Authority may be either actual or apparent.
Cove argued that AFLAC clothed Galgano with apparent authority, created liability in AFLAC as lessee under lease. Apparent authority defined: “such authority as the PRINCIPAL KNOWINGLY PERMITS THE AGENT TO ASSUME . . . OR HOLDS HIS AGENT OUT AS POSSESSING . . . .” The other party has “reasonably and detrimentally relied on agent’s authority.”
Most evidence came into existence AFTER signing of the lease.
Court cannot consider: (1) When office was set up, the parking signed had the AFLAC symbol and duck.(2) That there were AFLAC’s stylized blue materials – in and out of office. (3) AFLAC was listed on the director of the building.
Cove did not make any effort to determine if Galgano was independent contractor or agent of AFLAC. Cove relied exclusively on statement and representations of Galgano that he had authority to bind AFLAC to the lease on premises.
Galgano was not acting under apparent authority.
Indemnify (pay back)
– for services rendered
Unless agent agreed to work for free
Indemnify (pay back)
No reimbursement for agents “misconduct”
– as required by law and meet legal obligations
– for legal liabilities incurred by the agent
Obedience and Performance
Reasonable Care & Skill
Obedience and Performance
Can’t compete with principle without permission.
Massachusetts Court: Held CEO would forfeit all compensation paid to him during his disloyalty to the company
– to perform in compliance with the principal’s instructions.
– for the funds and property of the principal (avoid mixing personal funds with the principal’s).
– as to all facts of the agency purpose.
Unknown to Bearden, Gritton gave warranty deed with other documents for Bearden to sign. (Where was Bearden’s attorney??) She signed; he had signature improperly notarized; recorded the deed and title was transferred to Gritton.
Gritton doesn’t keep up on payments.
Bearden hires a lawyer; lawyer discovers Gritton’s fraud and that Gritton had also borrowed money against the property and it was in foreclosure for lack of payments to lender. Bearden paid $60,000 to keep property from being lost.
Sued Gritton and Wardley for breach of contract, fraud, & breach of fiduciary duty.
Jury awarded $75,000 damages + $25,000 punitive damages + $50,000 attorney fees, costs, etc. against Gritton & Wardley. Wardley and Gritton appealed.
Listing contract was with Wardley, with “fiduciary duties to seller” clause in it. Wardley’s internal policy prohibited agents to purchase properties they listed.
Gritton was employed by Wardley: Knew of listing agreement; Knew Gritton had purchased the property never questioned Gritton about violating internal policy re: purchase of listed property; Never asked Gritton to stop representing Bearden; Never informed Bearden of Gritton’s internal policy violations.
Wardley breached its duty of care to Bearden and is liable.
He decided to go into business for himself – compete with employer.
To cover his tracks, he installed a program to scrub his company computer clean of all information.
Some of the files would show he was collecting information for himself; others were company files he developed.
His computer had the only copy – valuable info. was destroyed.
Company sued him for violating the Computer Fraud and Abuse Act – that holds it illegal to intentionally damage a protected computer.
Federal Appeals Court held Citrin breached his duty of loyalty.
WHEN HE BREACHED HIS DUTY BY PLANNING HIS OWN GAIN, HE NO LONGER HAD AN AGENCY RELATIONSHIP THAT GAVE HIM ACCESS TO COMPANY FILES.
He then was liable for destroying files by accessing a computer he had no right to use.
However, the principal may sue the agent for losses if agent has breached a duty.
Agent may be indemnified by principal if agent acted within scope of his authority.
Account not paid. Fashion sued Yim. He denied liability, saying he acted as an agent for a corporation-principal, Hosung Enterprise, Inc.
Hosung did business under name Ho Tae.
Fashion said that at no time did Yim disclose existence of corporation entity with whom they were dealing.
Fashion thought they were always dealing with Yim with trade name Ho Tae.
Trial court entered summary judgment against Yim.
He appealed, saying he was only an agent for Hosung Enterprises.
Agent who makes a contract without giving identity of principal becomes personally liable.
There is a duty to disclose the principal’s identity.
Agent must be specific in disclosure.
Use of a trade name is not necessarily a disclosure of principal’s identity.
At no point did Yim indicate he was acting other than an individual doing business as Ho Tae.
Agent says, “I quit!”
Principal says, “You’re fired!”
Specific date set for agency to end
Purpose of agency is fulfilled
Termination by operation of law
Principal or agent dies
Subject matter of the agreement is lost or destroyed
Southern Equipment needed a new metal roof on a building. Accepted bid from Quality Metal Roof. Quality hired Royalty to work and Quality supplied materials.
While working on roof, France fell and suffered head injuries. He sued Southern (and others) for exposing him to an inherently dangerous job of roofing.
Court granted summary judgment for Southern.
France appealed. Affirmed.
Royalty Builders was an independent contractor. Southern had no control over the work done by Royalty Builders. Southern Equipment could not be held vicariously liable as Royalty Builder’s (thereby France’s) employer.
Employees: May work-at-will or quit when they want
Employees may sue for wrongful discharge under employment contract, BUT must establish contract had limits to employer’s rights to discharge Contract is danger form employer!
There may be a general public policy against dismissal
Important public duty (jury duty)
Public right (filing for workers’ compensation)
Breach of employment contract through express contract; implied contract; or implied covenant of good faith and fair dealing
Budget for Guz’s division was cut; he and others were terminated. The company was doing well. Guz’s duties were transferred to other employees. He applied for other positions at BNI but was rejected.
He sued, alleged breach of implied contract to be terminated only for good cause and breach of implied covenant of good faith & fair dealing.
Trial court dismissed suit, saying he was an at-will employee. Appeals court reversed, holding that his longevity, raises, etc. warranted a retrial. Is this the law??
HELD: Reversed in favor of BNI.
Employment relationship is contractual and parties may define for themselves causes for termination. Here, there is no evidence that BNI had additional terms to employment security and BNI had the right to reorganize and terminate employees as they wished.
Successful service, in and of itself, does not create a contractual guarantee for employment security.
Discuss grounds for discipline and dismissal
May limit rights of employers to dismiss employees under Employment-At-Will Doctrine
May be interpreted as creating express or implied contract between employer and employee
Not following procedures
Creating probationary period when indicate that permanent status when probation ends
Failure to update
Not mentioning at will or right to change terms
Listing firing offenses as only ones
Improper actions can bring lawsuits or bad image
Section 230 of Communications Decency Act (CDA) provides immunity for content posted/ submitted by 3rd parties if company is merely a publisher
This will not help content posted by company employees
Even if employee is not tweeting in official capacity
Employee still within “scope of employment”
Reasonable person could expect that tweeter was authorized by the company
Have means for addressing infringement & other claims
Companies may restrict links to outside sites (i.e. You Tube)
Editing offensive content is important
Companies may want to restrict employees’ non-work blogs
Under employment-at-will firms can impose restrictions.
Fire those who break the rules.
Principal may give actual authority or instructs to do a certain act.
Principal ratifies agents conduct.
Courts use the doctrine of respondeat superior.
Rare for an employer to be liable for acts committed by an independent contractor.
Employers may be liable for torts of employees due to negligent hiring or supervision.
Three men in Food Lion uniforms approached Ronnie. One, Brown, had been in a fight with Ronnie 2 years before. He attacked Ronnie with a box cutter. Another employee, Cameron, also attacked Ronnie.
When Tillie came to help Ronnie, Cameron punched her and knocked her down. Another shopper helped Tillie and called for assistance.
Armstrong sued Food Lion for numerous torts.
Trial held for Food Lion; appeals court affirmed. Armstrong appealed.
HELD: Affirmed. Respondeat superior does not apply here.
Acts of the employees were for an independent purpose than service to their employer at the store.
Brown and Cameron were not furthering Food Lion’s business in any manner when they attacked the Armstrong.
Obligations to check background of an employee
Obligation to check independent contractor for doubtful history. i.e.
Bad driving record: Should not be permitted to drive a company truck
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