Exam 14: Agency and the Employment Relationship

When an agent pays for the right to exercise authority for a business, there is an agency coupled with an interest.

To establish an agency relationship:

An agency relationship may terminate by lapse of time.

Fact Pattern 14-1 Emile owns Emile's Used Car Emporium. Several people work for him at the Emporium. When Emile is gone, he leaves one of his best salespersons, Meg, in charge. Over the years, Emile has given Meg the authority to contract with vendors, negotiate sales, and conclude car sales contracts in his name. One August, Emile takes a long vacation, leaving Meg in charge. While he is gone a hurricane hits Florida where the Emporium is located, causing severe damage. Because Emile is floating down the Amazon, Meg cannot reach him for instructions. She decides that rather than leave the place in shambles, she will hire people to repair the Emporium. Meg hires a carpenter to rebuild a wall that was blown down by the storm. Phil, the carpenter, is busy at work on his scaffold when Meg's Scottish terrier Adam, who she keeps with her at work, plows into the scaffolding while chasing a cat. Phil is knocked off the scaffold and falls ten feet to the ground, suffering a broken leg. -Refer to Fact Pattern 14-1. As Meg's principal, Emile is required to:

Someone designated to do all acts that can be legally granted to an agent is called a:

In Yin v. J's Fashion Accessories, the court stated that in most cases if an agent makes a contact without identifying his principal, the agent incurs personal liability for the contract.

If the subject matter of an agency agreement is destroyed, the agency relationship continues until new subject matter is found.

The power of an agent to do whatever is reasonable and customary to carry out the agency purpose is given by:

Apparent authority arises when the principal creates an appearance of authority in an agent that leads a third party to conclude that the agent has authority to act for the principal.

In Yim v. J's Fashion Accessories, Inc., where J's Fashion sued Yim for failing to pay for goods he bought under the name Ho Tae and Yim denied liability on the grounds that he had been acting as an agent for Hosung Enterprise, Inc which also did business under the name Ho Tae, the courts held that Yim was liable because:

Actual authority give the agent:

Fact Pattern 14-1 Emile owns Emile's Used Car Emporium. Several people work for him at the Emporium. When Emile is gone, he leaves one of his best salespersons, Meg, in charge. Over the years, Emile has given Meg the authority to contract with vendors, negotiate sales, and conclude car sales contracts in his name. One August, Emile takes a long vacation, leaving Meg in charge. While he is gone a hurricane hits Florida where the Emporium is located, causing severe damage. Because Emile is floating down the Amazon, Meg cannot reach him for instructions. She decides that rather than leave the place in shambles, she will hire people to repair the Emporium. Meg hires a carpenter to rebuild a wall that was blown down by the storm. Phil, the carpenter, is busy at work on his scaffold when Meg's Scottish terrier Adam, who she keeps with her at work, plows into the scaffolding while chasing a cat. Phil is knocked off the scaffold and falls ten feet to the ground, suffering a broken leg. -Refer to Fact Pattern 14-1. Emile gives Sally authority to execute all normal transactions connected with his business. In this case, Meg is:

Because of the ____ an agent may not represent another party whose interests are in conflict with those of the principal.

In Guz v. Bechtel National, where Guz was fired after many years of good work at Bechtel, the California supreme court held that his tenure at the company did not affect the right of the company to dismiss him without good cause.

Carla agrees to try to sell Frank's prize dog Spike for him. Carla does this as a favor to Frank because she knows many professional dog breeders. Carla may be best described as:

An agent's ____ is the power to change the principal's legal obligations.

In Town Center Shopping Center v. Premier Mortgage, a lease for office space, made by a manager of a mortgage company, was negated by the courts because the manager did not have authority to commit her company to that.

If an agent competes with his principal without the principal's consent:

If an agent is discovered to be representing conflicting interests, she has violated her duty of loyalty.

A principal has a ____ the agent for reasonable expenses incurred in carrying out the duties of the agency.