In Johnson v. Priceline, did NYOP customers have an agency relationship with Priceline that would create a duty to disclose the spread between bids and hotel payments?

• A. Yes, because Priceline acts as a travel agent and customers are principals
• B. No, NYOP customers are not Priceline's principals and there is no agency
• C. Yes, but only for certain bids
• D. No, such an agency would exist only if Priceline collected a fee

Answer: (B)

Agency relationship hinges on a principal empowering an agent to act on the principal’s behalf and bind them in dealings with third parties, with the agent owing loyalty and certain duties (including disclosure of material matters) to the principal. In Johnson v. Priceline, the NYOP customers were not found to be Priceline’s principals, and Priceline did not act as the customers’ agent in a way that would bind them to hotel contracts or create fiduciary duties to reveal the spread between bids and hotel payments. The arrangement is a marketplace facilitation: customers place bids and hotels decide whether to accept, with Priceline handling the transaction, but there isn’t the kind of control, reliance, or authority that would make Priceline a fiduciary or an agent for the customers. Because there is no agency, there is no duty to disclose the spread.

So, there is no agency to trigger a disclosure obligation. The other options either treat Priceline as the customer’s agent or tie disclosure duties to a fee, but the concept at issue is the existence of an agency relationship itself, which the court found absent here.