Agency

Practicing Definitions
- = “Agency is the fiduciary relationship that arises when one person (a ‘principal’)
manifests assent to another person (an ‘agent’) that the agent shall act on the
principal’s behalf and subject to the principal’s control, and the agent manifests assent
or otherwise consents so to act.” Restatement 1.01.
o Elements stated in 1.01 must be present / popular term usage not controlling:
o (a) a principal manifests assent to an agent that the agent (ii) act on the
principal's behalf and (i) subject to the principal's control;
o (b) the agent manifests assent or otherwise consents to act thusly.
o Needs consent from both parties
o No consideration necessary
- Can two parties opt in to or opt out of an agency relationship?
o Due to concerns for the welfare of third parties embedded in agency law, it is
easier to structure a relationship to effectively opt in than it is to effectively opt
out.  Although not dispositive, the parties' characterization may be probative.
- Importance of agency in a developed economy
o Very few of the goods and services we benefit from as consumers are produced
solo.  The hierarchy implied by the agency relationship is in many contexts a
relatively efficient arrangement for organizing production.  Contractual
relationships suffer from under-specificity and renegotiation costs, although they
are also widely present. 
- Management effectively controls the work of subordinate employees, who do work that
benefits management. Are employees agents of management? 
o No. The employees are acting on behalf of the employer, just as are the
managers.  The right to control is delegated to management from the employer
rather than established between management and employees directly. 
Actual Authority
- = “An agent acts with actual authority when, at the time of taking action that has legal
consequences for the principal, the agent reasonably believes, in accordance with the
principal’s manifestations to the agent, that the principal wishes the agent so to act.” 
Restatement. Section 2.01. 
o Does not have to be written; may be oral
- Actual authority may be implied, including such acts as are necessary or incidental to
achieving the delegated goals. Actual authority turns on the reasonable beliefs of the
agent based on the principal's prior manifestations.
Apparent Authority
- “Apparent authority is the power held by an agent or other actor to affect a principal’s
legal relations with third parties when a third party reasonably believes the actor has
authority to act on behalf of the principal and that belief is traceable to the principal’s
manifestations. ‘
-
- “Apparent authority is created by a person’s manifestation that another has authority to
act with legal consequences for the person who makes the manifestation, when a third
party reasonably believes the actor to be authorized and the belief is traceable to the
manifestation.”  Restatement. 3.03. 
-