BADM III
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School
University of Illinois, Urbana Champaign *
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Course
300
Subject
Law
Date
Jan 9, 2024
Type
docx
Pages
3
Uploaded by AmbassadorWaterCapybara52
BADMIII
Agency Laws
Corporation, Limited partnership, and Limited Liability Company
All 3 require statutory formalities
All have more disadvantages (+Majority over minority)
Advantages: Limited liability and tax benefits
Liability claim needs a contract. No contract, no liability. A basic situation for agency law is if K is breached, and buyer wants to sue, is agent or principal liable?
Fiduciary
: duty of loyalty and consent; Trust laws; a trustee has duty to his beneficiaries
. Agency needs mutual consent; no agency if either party withdraws
Determination of manifestation creates an objective test for the court
Agency could be established orally or in writing. Do we need to know what establishes agency? Only consent?
EX: If principal tells agent to buy land for 100k and agent make a typo and spends 1 Mil. Agent is liable? But he
does have consent right?
Capacity: The ability to create or enter contract.
Principal’s capacity is to be bound upon a contract made by someone else
Minor has limited contract capacity. (
EX
: if agent binds principal, who is a minor, into a contract, then principal’s contract could be voidable, rendering agent liable.)
All corporate contracts are agency?
Agent has capacity to bind someone to a contract. Agency could be oral or written consent. Contracts, however, have to be written.
Duty
If agent fails to perform duties, agent is liable. Principal sues agent. Fiduciary=agent? And what is insider trading? duties:
Duty to not act in self interest
Agent has a duty to act on the principal’s behalf
Agent duties:
Account for money or property received on the principal’s behalf
Duty to not compete with principal
Duty to not disclose confidential/private information
Duty not to use confidential info for personal gain
Duty to not to use property of the principal for personal benefits
Obligation against self-dealing: conflict of interest (Examples for all?)
Principal duties:
No duty for agent’s interest (generally)
Unless agent agrees to serve gratuitously
, principal needs to pay agent
Duty to indemnify or reimburse the agent for expenses incurred on the principal’s behalf
Duty to reimburse for losses incurred through no fault of the agent
Duty for reasonable care to prevent agents from being injured during the performance of the agency
If the source of dispute arise from the employment, then the principal is liable since it is expectable in hindsight
. EX: bodyguard, bouncer at a bar, a security guard
Mistakenly believe that he is protection the master’s business and property. EX: manager at a jewelry store. He drives by the store and see someone walks around the store. Manager follows the person on car and drives
him off the road. But the person is actually an employee of a gas company. This is foreseeable in hindsight so employer is liable. If business related, then liable. Type III Case
: Conduct clearly outside of the scope of employment. Criminal conduct. There’s an exception
to the rule. Clearly outside of scope of employment but master still liable. Master is liable if the agent is aided by the existence of the relationship of the agency.
Aided by Agency
. Have access to the plaintiff’s property. EX: Leaf Green wanted an insurance for his property. He talks to an agent from the American Insurance at his house and while talking, leaf green shows his jewelry to the agent and the location of that jewelry. The agent later stole the jewelry. This is
definitely not a scope of agency. Agent would not have had access to the jewelry if he was not an agent
of the company. The company is liable. How much liability?
Respondeat superior
Type III: Sexual assault: police, massage therapist, medical technician, security guard, High school teachers…
Type III: If employer had no liability, then they have no incentive to stop it. The USSC: Civil rights act: prevents employment discrimination. Liability for sexual harassment by co-
employees. This is Federal law, not state law. CURRENTLY MOST STATES HAVE NO LIABILITY RULE (No Type III?)
Liability for fraud: agent makes a fraudulent statement to the buyer. This is treated under the contract law, not respondeat superior law. P is liable if A is apparently authorized to make the fraudulent statement.
Agent is liable unless 1) principle is disclosed and 2) agent is authorized
Liable as a group for the injury. What is liable individually?
What is the minority rule? A modification of the election doctrine?
1.
Most election are inadvertent
Modern rule is to reject the election doctrine
Joe Dou
Ractification The doctrine of apparent authority
Warranty of authority
Breach of warranty authority
Insider trading: based on agency fiduciary loyalty! Disclose or abstain
2 kinds of insider trading cases: insider defendant, outsider defendant
All members of investors should have access to all the information for risk and profitability. Jointly and severally
Temporary Cases: S.E.C. v Texas Gulf Sulphur Co.
S.E.C. v W.J. Howey Co.
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