Deck 25: Nature and Creation of an Agency

Question 1

What authority does a principal give to a special agent?

Answer 1

Agent
According to the agency law the person that is involved in non contractual fiduciary relationship, quasi contractual relationship is known as an agent. The agent is appointed by the principal and the agent posse's full authority to act on behalf of the principal for entering into relationship with the other party.
In case of special agency relationship the agent is not entitled to bind the principal. He is the authorized person designated by the principal for undertaking transaction that involves particular acts on his behalf. Very limited powers are being assigned to a special agent that can only be utilized for special act or purpose. The authorization provided by the principal entitle the agent to perform specific or single task viz. purchasing a house, undertaking repetitive act of the same kind such as sale of tickets for movie.

Question 2

The Willamette Spine Center, LLC (WSC) leased a medical office building and sublet space in the building to various medical providers. Signs on and near the building identified it as WSC, and one sign included a logo. David Eads sought treatment for back pain from chiropractor Michael Freeman, whose office was in the building. Another tenant, Dr. Frederick Tiley, shared space in the building and collected rent from Dr. Timothy Borman. Freeman referred Eads to Borman, who operated on Eads at a local hospital and injured his spinal cord, leaving him partially paralyzed. Some physicians from WSC had advertised in the yellow pages using the term "WSC providers" and the logo, but Borman was not one of them. Borman's charges were billed to his individual professional accounts. Eads sued WSC alleging that Borman was its apparent agent. Should the court find an agency?

Answer 2

Apparent Authority:
Apparent authority occurs where the principal's utterances or behavior would lead a reasonable person (third party) to believe that the agent had legal authority to act, even if the principal did not have an association with the supposed agent.
Legal Reasoning:
In Eads v. Borman, and Willamette Spine Center, LLC (LLC) , CC 05C18610; CA A137410; SC S058445), 234 Or.App. 324, 227 P.3d 826 (2012), the trial court granted summary judgment for the LLC, concluding that the evidence was insufficient for the LLC to be vicariously liable for the surgeon's negligence on an apparent agency theory.
The Court of Appeals agreed, and affirmed. The Supreme Court of Oregon also affirmed.Therefore, the court should NOT find an agency.

Question 3

What power do commission merchants have to bind a principal?

Answer 3

Commission merchants
A factor refers to the person who gets the possession of the property of another person in order to sell off the same in lieu of commission. These agents sell the property in their own name and sometime in the name of the principal. These agents collect the entire amount for the property being sold off and after deducting the fatorage and commission; the remaining balance is being paid to the principal.
In this case, the third party of the purchaser is aware that the agent is doing the dealing in his own name. All the documents concerning the sale and purchase of the land is issued in the name of the agent only. The power that the commission merchants possess to bind the principal is the customary terms pertaining to sale for the kind of business they are actually pursuing. The powers of the commission merchants are somewhat more than that of the special agent.

Question 4

North American Specialty Insurance Co. (NAS) underwrote construction bonds. Brunson Bonding and Insurance Agency was an agent for NAS, and Reid Methvin was an employee of Brunson. The agency agreement between NAS and Brunson required NAS to give prior approval before a construction bond was issued. Methvin issued bonds without prior approval from NAS. After NAS learned about the unauthorized bonds, it accepted and kept the premiums from Brunson. When a number of the unauthorized bonds resulted in defaults, causing NAS to pay out claims on them, NAS sued Methvin, Brunson, and Brunson's insurer. The defendants argued that acceptance of the premiums by NAS constituted ratification of Methvin's unauthorized acts. Did it?

Question 5

What classes of acts does a general agent normally have the authority to transact?

Question 6

Injured while using exercise equipment at AMTX Hotel Corporation's Holiday Inn in Texas, Cathy Trei sued AMTX in New Mexico, where she lived. AMTX was a franchisee of Intercontinental Hotels Group (IHG), the franchisor of Holiday Inns. AMTX did not have any facilities, employees, or agents in New Mexico, so it normally could not be sued in New Mexico courts. But Trei alleged that the national advertising of IHG, which she saw and heard, should be imputed to AMTX. She alleged that IHG acted as AMTX's agent by promoting Holiday Inn in New Mexico since AMTX benefitted from these promotional activities. Was IHG the agent of AMTX?

Question 7

What does ratification of an unauthorized act done in someone else's name do for the assumed agent?

Question 8

Why are there always three parties involved when an agent enters into a contract for the principal?

Question 9

When does an agency by estoppel arise?

Question 10

Dennis Vackar suffered severe spinal injuries, resulting in paralysis and the use of a ventilator when he fell eight feet from the bucket of a front-end loader. He was estranged from his wife, Betty, and son, Dustin. Hospital staff suggested Dennis execute a durable power of attorney, which he did naming his sister, Magdalen (Maggie) Marbry, to be his agent. The document stated, "I, Dennis Vackar, appoint Maggie Marbry as my agent (attorney-in-fact) to act for me.... " Dennis signed by placing his thumbprint on the document. Using the power of attorney and at Dennis' request, Marbry named herself the beneficiary of his life insurance policy. His health declined, and Dennis decided to discontinue treatment and all supportive care. He died shortly thereafter. In a court proceeding that followed, Betty argued that the durable power of attorney was not valid. Had Dennis executed a power of attorney?

Question 11

What law governs an agency relationship?

Question 12

Ash Grove Cement Company hired Electric Company of Omaha (ECO) to relocate a cable tray. ECO gained access to the tray from the flat roof of Ash Grove's building and controlled the work. While walking backward and carrying cable, Darryl Didier, an employee of ECO, fell twenty feet off the roof, onto a concrete surface. He sued Ash Grove. Should he recover?

Question 13

May all acts be delegated to an agent?

Question 14

The City of Lebanon was having a budget crisis and its agreement with a union was about to expire. City councilors would vote to approve any agreement, but none were on the city's team that negotiated an agreement. City councilor Margaret Campbell wrote a letter to the newspaper telling union members to find out how to decertify the union so they could keep their union dues. The letter recited that she wrote as an individual and that it did not reflect the opinion of the city council or the city. The union filed an unfair labor practice complaint against the city alleging that Campbell was the apparent agent of the city when she wrote the letter. Was Campbell exercising apparent authority in writing the letter?

Question 15

May a minor make a valid contract appointing an agent?

Question 16

Sharon Ellison entered a neighborhood Burger King and waited to order. After some time passed, Ellison said, "Hi, is anybody going to welcome me to Burger King? Somebody going to please take my order?" An employee explained the staff was busy with other orders and offered to take her order. The manager then walked out from behind the counter and asked, "Why is it every time you come into the restaurant, you have to make a noise?" The manager "put her hands around my neck in a semi-head lock position... and start[ed] shaking like three times or whatever. Then [the manager] turned loose and said, 'Are you all right now?'" Ellison filed a complaint against BKC (the franchisor), SRH (the franchisee and restaurant operator), and the manager. The manager was an employee of SRH (franchisee) not BKC. SRH owned and operated the restaurant in accordance with a franchise agreement with BKC. The franchise agreement specified that SRH was an independent contractor and that BKC was not an employer of SRH. SRH had the sole authority over employee hiring, working hours, benefits, wages, and employment policies. Should Ellison recover against BKC?

Question 17

What authority does a general agent have in addition to express authority?

Question 18

Robin Broussard purchased what she believed was a San Juan Capistrano fiberglass swimming pool from Hamilton Pools Inc., an authorized dealer in such pools. Defects appeared after installation, and Broussard discovered that the product she purchased was a "knock-off" manufactured by another company. Broussard sued the manufacturer of genuine San Juan Capistrano swimming pools, American Environmental Container Corporation (AECC), and its licensor, San Juan Products Inc. (SJP), alleging they were liable for the conduct of Hamilton Pools. She argued that because AECC and SJP failed to repudiate the transaction, they therefore ratified it. AECC and SJP neither provided the product involved in the transaction nor accepted any benefit from the transaction. Should AECC and/or SJP be liable?