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Title

Scharffs Business Associations

Description

BYU Law Business Associations Course

Total Cards

Subject

Law

Level

Graduate

Created

04/02/2009

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Term

Mill Street Church of Christ v. Hogan

Facts: Church hires Bill Hogan, a member, to paint the inside of the building. He discussed with the Church the idea of hiring an assistant, possibly Waggoner. Church agreed but said Waggoner was difficult to find. He ended up hiring Sam, his bro. Sam falls off a ladder within 30 minutes and breaks his arm.

Definition

Issue: Did Bill have actual implied authority to hire Sam?

Rule: Implied authority is actual authority circumstantially proven which the principal actually intended the agent to possess and includes such powers as are practically necessary to carry out the duties actually delegated. The agent must have a reasonable belief. Consider the nature of past employment practices of the principle, especially with agent. We are NOT concerned with what the 3rd party believes

Term

Lind v. Schenley

Facts: Lind was sales rep for Park & Tilford (PT). Lind was promoted and instructed by Herfeldt (VP of Sales) to speak with Kaufman about his responsibilities. Kaufman gave him a 1% commission on sales of all reps under him. 6 years later he asks for the company to pay up on his commissions

Definition

Issue: Whether Kaufman had apparent authority to grant 1% commissions?

Rule: Apparent authority arises when a principal acts in such a manner as to convey the impression to a third party that an agent has certain powers which he may or may not actually possess.Herfeldt's comments, including referring Lind to Kaufman for duties and salary information, conveyed the impression, or created a reasonable belief, that Kaufman had authority to do so.

Term

Three-Seventy Leasing corporation v. Ampex Corp.

Facts: Three-seventy, which is solely owned by Joyce, entered into negotiations with Ampex to buy six computer memory chips. At the same time Joyce entered into negotiations with EDS to lease to them the memory chips that he was going to buy from Ampex. Ampex then failed to deliver the computer memory chips, and Joyce sued them for breach of contract.

Definition

Issue: Is there a valid contract between Ampex and Three-seventy (Joyce)?

Rule: Kays had apparent authority to bind Ampex because Ampex acted in such a manner to lead Joyce to reasonably believe that Kays had the authority to accept an offer to buy from Joyce. What could Joyce have done to protect himself? Kays couldn't sign the K because he didn't have express authority to do so. Should have demanded a certificate from an officer in the company. What could Ampex have done? Stipulate in the K that only an officer could enter a contractual relationship.

Term

Watteau v. Fenwick

Facts: Manager of store, former owner, purchased cigars from a dealer even though he was not permitted to do so by his company.

Definition

Issue: Is an undisclosed principle liable for the unauthorized acts of its agent?

Rule: Principal will be held liable for all acts of the agent which are within the authority usually confided to an agent of that character, notwithstanding limitations, as between the principal and the agent, put upon that authority

Term

Watteau v. Fenwick (continued)

Facts: Manager of store, former owner, purchased cigars from a dealer even though he was not permitted to do so by his company.

Definition

Restatement (Second) of Agency § 194 states that an undisclosed principal is liable for acts of an agent done on his account, if usual or necessary in such transactions, although forbidden by the principal

Restatement (Second) of Agency § 195 “An undisclosed principal who entrusts an agent with the management of his business is subject to liability to third persons with whom the agent enters into transactions usual in such business and on the principal’s account, although contrary to the directions of the principal”

Term

Kidd v. Thomas A. Edison, Inc.

Facts: Fuller employed by TAE, Inc. to contract singers to put on tone test shows. Fuller contracted Kidd to a guaranteed contract in which she would be paid by Defendant for the various singing engagement that she would perform at. Defendant, however, claims that Fuller was only empowered to contract her for certain shows, not every show.

Definition

Issue: Whether Fuller was permitted to enter into the guaranteed contract with Kidd on behalf of Edison?

Rule: Scope of any authority must, of course, in the first place, be measured, not alone by the words in which it is created, but by the whole setting in which those words are used, including the customary powers of such agents

Term

Nogales Service Center v. Atlantic Richfield Co.

Facts: NSC contracted with ARCO to build a gas complex. NSC didn't build all of the promised facilities. They started falling behind on payments of loan and used initial loan money on a cantaloupe crop that failed. Tucker meets with Terpenny, new owner of NSC, and, per Terpenny, ARCO puts down more money and gives a 1 penny per gallon discount on gas in order to keep NSC competitive. ARCO lends the money but reneges on the discount. NSC claims contract breach. Tucker claims he did not give a discount and that alternatively he was not authorized to give the discount.

Definition

Issue: Did Joe Tucker have the authority to make binding promises?
Rule: Restatement Second of Agency Sec. 8A: Inherent agency power is a term used in the restatement of this subject to indicate the power of an agent which is derived not from authority, apparent authority or estoppel, but solely from the agency relation and exists for the protection of persons harmed by or dealing with a servant or other agent.
Restatement Second of Agency § 161: A general agent for a disclosed or partially disclosed principal subjects his principal to liability for acts done on his account which usually accompany or are incidental to transactions which the agent is authorized to conduct if, although they are forbidden by the principal, the other party reasonably believes that the agent is authorized to do them and has not notice that he is not so authorized.

Term

Humble Oil & Refining Co. v. Martin

Facts: Loves brought their car to Humble Oil station for service. The car rolled out of the lot and crashed into the Martins, injuring them. Schneider is the operator of the store. Manis was the only employee at the station when the incident occurred.

Definition

Issue: Is Humble liable for Schneider’s negligence?

Rule: The answer to the question turns whether there is a master-servant relationship between Humble and Schneider. A master is liable for the torts of his servants. Whether a master-servant relationship exists is a factual question turning on the day-to-day control of the operation. A key indicia is who bears the financial risk of loss.

Term

Hoover v. Sun Oil Co.

Facts: Hoover brough his car into a gas station. Attendant pumping the gas accidentally set it on fire causing an explosiong. Gas station, owned by Sunoco, operated by Barone, and attendant is Smilyk (hired by Barone). Lease agreement places risk of profit and loss on Barone who owns all products bought from Sun until sold to customer. Barone doesn't submit reports to Sunoco.

Definition

Issue: Is Barone a servant of Sunoco?

Rule: No. Indicia of Control: Reports, Duties, Hours, Advertising, Hiring/Firing ability, Power to Terminate agreement. Control follows risk, so it is appropriate to look at risk as a proxy for control. Who bears the financial risk in this?

Term

Murphy v. Holiday Inn, Inc.

Facts: Slip and fall on water leaked from and air conditioning unit

Definition

Issue: Whether this is a principal/agent or master/servant relationship?

Rule: A master is liable for the tort of the servant when they control or right to control the methods or details of doing the work. Holiday does not have the right to control. Indicia in this case: hiring, rates, employees, skills...

Term

Miller v. McDonald's Corp.

Facts: Woman bites into a sapphire stone while eating a Big Mac. McDonald's won on summary judgment .

Definition

Issue: Can McDonald’s be liable under actual agency or apparent agency theory?

Rule: Tort liability requires more than a garden variety principle/agent relationship. Master/Servant relationship must be found. This is a factual issue for the jury to decide.

Restatement of Agency S 267: One who represents that another is his servant or other agent and thereby causes a third person justifiably to rely upon the care or skill of such apparent agent is subject to liability to the third person for harm caused by the lack of care or skill of the one appearing to be a servant or other agent as if he were such.

Term

Gorton v. Doty

Facts:  Doty volunteered to let Garst, the football coach, drive her car to a football game for the purpose of transporting some of the players. While Garst was driving Doty’s car he got into an accident and one of the players, Gorton, was injured. Gorton’s father then sued Doty for damages on behalf of his son.

Definition

Term

Ira S. Bushey & Sons, Inc. v. United States

Facts:  Lane, a member of the United States Coast Guard, was out on leave for the night and got very drunk. At the end of his evening he returned to his boat which was in dry dock and as he was walking down the dry dock ramp he turned three wheels/levers that filled the dry dock with water and eventually sank the dry dock and partially sank the boat. The sinking boat caused damage to parts of the dry dock, which was the P’s property. The dry dock company, Plaintiff, sued the government for the negligence of Lane.

Definition

Term

Manning v. Grimsley

Facts: Orioles/Red Sox game, Grimsley was heckled by fans while warming up for a game. So he threw his ball in the bullpen right at the hecklers, ball went through the fence and hit Manning. Manning sues Grimsley and Orioles

Definition

Issue: Are the Orioles liable for Grimsley's actions?

Ruling: The court held that a jury could have reasonably found that Grimsley committed a battery against the fan, and that therefore gave rise to the courts decision that a jury could have found that the Orioles were liable for the actions of Grimsley. The rule that applies in Massachusetts was that an employer is liable for an employee’s assault if it was in response to the plaintiff’s conduct which was presently interfering with the employee’s ability to perform his duties successfully. The Orioles would be liable for the actions of Grimsley if the jury found that heckling actually interferes with baseball pitchers ability to pitch successfully.

Term

Arguello v. Conoco

Facts:  Appellants, Arguello et al., each suffered discrimination at the hands of Conoco employees. The basic situation is that each of the appellants was trying to purchase gas at a Conoco gas station when they were denied service based upon their race.

Definition

Issue:  Are the Conoco-branded stores agents of Conoco, Inc.? Were the Conoco-branded store employees acting within the scope of their employment?

Rule:  There was no principal-agent relationship between Conoco, Inc. and the Conoco-branded stores because the Petroleum Marketing Agreement signed by the parties’ states that they are separate entities and that Conoco, Inc. has no authority over the daily operations of the Conoco-branded stores

The court stated that the employees were within the scope of their employment. The factors to be considered when deciding whether an employee has acted within the scope of their employment are:

The time, place, and purpose of the act

Its (acts) similarity to acts which the servant is authorized to perform

Whether the act is commonly performed by servants

The extent of departure from normal methods

Whether the master would reasonably expect such act would be performed

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