Hunter Mining Labs v. Management Assistance
Facts: Manufacturer (∆) sued by buyer (∏) of its products for breach of Ks entered into by two of its distributors/dealers, who ∏ alleged to agents of ∆.
Issue: Are distributors agents of Manufacturer and thus ∆ contractually liable?
Holding: The distributors had no authority to create a contractual relationship btwn MAI (∆) and Hunter (∏) or any other buyer.
· MAI didn’t really control the way its distributors handled MAI products.
o MAI only had the types of controls found in typical manufacturer/distributor agreements, such as keeping appr premises, notifying of changes in mgmt, updates of #s of installs.
o MAI had no power to control its distributors business expenditures, fix customer rates, or demand share in profits.
· There was no fiduciary obligation on part of distributors (alleged As) to “act primarily for benefit of MAI”
o The distributors set their own prices and had no duty to account to MAI (∆) for prices charged or profits received. They acted at all times independently and in their own name.
· Only relationship between Manufacturer and Distributors were of seller and buyer.
Analysis: For an agency relationship to be found, the seller must be selling the goods not as his own property, but as the property of the P, who remains the owner of the goods and therefore has the firght to fix the price and terms of the sale. The P must receive the proceeds from the sale, less A’s commission. One who is acting primarily for his own benefit in a sale is generally not considered an A.
o Distributor, Franchisee, Landlord are possibilities as the excuse relationship as an alternative to the agency relationship
§ The question that usually comes up is the amount of control consistent with what the kind of business is. Sometimes they are depending on the facts, jury, etc. General rule is that they are not agents though.