Analyzing the agency relationship Relationship of agency and authority is

Analyzing the agency relationship relationship of

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4.Analyzing the agency relationship - Relationship of agency and authority is viewed as position of status, not of contract.1.Is there a relationship between P and A? 2.If there is a relationship, what is it?3.What are the dimensions of the relationship? What is it’s scope? How broadly does it extend?1.At what point does the relationship get broken? At what distance are actions outside the scope of the relationship?4.What are the implications (legal and practical) of the relationship?1.Consider the underlying social implications as well…2.Does this type of relationship cover the type of liability incurred through the particular action/incident in question?2.Gorton v. Doty (Idaho 1937) (p.1)– Who is an Agent?1.Pre-mandatory automobile insurance case. Involved person loaning car to another on condition that only that other can drive it. 2.Was the driver the agent of the car’s owner? YES. 3. Court imposed an agency constraint regardless of the agreement between the parties – recognizes presumption that driver is agent of owner 1. Court wanted to get to this result – because insurance company would pay judgment, need to hold party tied to the insurance liable 1. Trying to spread costs through the insurance pool 2. Different now that there are mandatory owner liability statutes to cover this 4. Dissent – agency needs more than this, “involves request, instruction or command,” this was just a loan 3. Gay Jenson Farms Co. v. Cargill, Inc. (Minn. 1981) (p.7) 1. Case arose out of financial collapse of Warren Seed & Grain Co, a local grain elevator. C, the defendant, was a worldwide grain dealer that had loaned money and exercised significant influence over W. Plaintiffs want W (now insolvent) to be C’s agent so that they can recover from C. 1. Creditor exercising control over its debtors after the debtor has experienced financial difficulty 2. P and A are both business entities rather than individuals 2. Did “C, by its course of dealing with W, became liable as a principal on contracts made by W with plaintiffs”? YES. C had sufficient control and influence over W. 1. The lender began to become involved in the day-to-day business of the borrower, made more than a superficial connection, adopted a position of some control 1. Both considered it a lender-borrower relationship, but… 2. Made conditions on the lending – information, mandatory disclosure, inability for borrower to make certain major decisions/actions w/o permission 1. Borrower required to get permission from lender, risks having loan called if acting without permission real control 3. C had acted as W’s agent in other things, and seemingly vice versa 4. “The point at which the creditor becomes a principal is that at which he assumes de facto control over the conduct of his debtor.” 5. Not a buyer-supplier relationship – suppliers receive fixed prices regardless of price paid, act in their own name and receive title to property which is then transferred again, have an independent business buying/selling similar property 2
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