Quiz 32: Agency Formation and Duties


The court listed several factors which created the unclear situation. As far as not competing during his time as an employed of T, W did not take advantage of any employees at T, lease office space for his new venture, did not enter any agreements regarding his new venture, etc. With those facts, it seems he was not competing. However, W did not that T had a similar product on the market and was planning on releasing a revised version of the product. The court then remanded for further investigation on how similar the T and W products were and if W had reason to know of the new T product.

An agency exists when an agent agrees to act on the behalf of the principal, in the principal's best interest, and there is a manifestation of intent for both parties. In addition, the principal is always ultimately in control. In this case, PG never consented to an agency relationship with AW. He did not know AW was pretending to act on his behalf. AW did not act in the principal's best interest, because PG had no knowledge of these deals and AW disappeared when the contract was completed. There was no agency relationship.

There is a possibility that W could still be in a breach of loyalty if he is not acting in good faith or in the best interests of his corporation. Although W may not be in direct competition with this employer, if he is failing to carry out his job with his best efforts and in the best interest of the company, he could still be breaching a fiduciary duty. For instance, if he continually failed to attend meetings or perform basic job tasks, he could be creating a loss for his corporation, which he would be liable for. Even if he is not creating a product like the one his employer is, he may be usurping knowledge or expertise from his colleagues. This could also make up a breach of loyalty, since W would be acting in his best interest, rather than the companies.

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