1-24 Flashcards
Sole Proprietorship
Business owned by one person. Sole right to manage, sole right to profits, personal liability for debts of the business.
Independent Contractor
One with authority to act without principals’ approval. Simply fulfill his duties and recieves no direction from the principal.
Agency
Legal relationship between the agent acting on behalf of the principal.
Master-Servant Relationship
Master possesses actual control or the right to control the servant in the discharge of his duties. Common example is employer/employee relationship.
Agency by Agreement
Requires a valid legal purpose, and both parties must manifest an intent to be bound. Principal must have capacity to contract. No contractual formalities to be valid.
Agency by Ratification
Principal accepts the benefits or conduct of the agent through expressed or implied means. Establishes Agency by Ratification
Sub-agents duty
Hired by agent with principals’ consent and bound by same fiduciary duty as the agent.
Vicarious Liability in Agency
Employer will be liable for torts of his employee if the employer authorizes, allows or ratifies the employees tortious acts.
Liability of Agent and Principal to Third Party
When an agent acts for an undisclosed principal and no statement exists indicating an agency, the agent is liable. But if agent acts with actual authority, the principal is also liable. If third party has notice that agent acts for another , then evidence can be shown that the agent and principal did not intend to be bound.
Agency by Estoppel
Third party detrimentally relies upon principals representation regarding agent. Principal estopped from denying the relationship.
Agents Authority
Principal bound by agents act if there is: 1) Actual Authority 2) Apparent Authority
Actual Authority
Agents duties are expressly assigned to the agent by the principal. May also be implied by customary usage or principals behavior.
Apparent Authority
Principal leads third party to believe that another acts as his agent and third party reasonably relies upon statement. Principal is bound to third party.
Inherent Powers of Agent
Agent has inherent powers which include power to make express and implied warranties and make representations regarding agency subject matter.
Imputed Notice
Principal not subject to imputed notice unless agent had actual or apparent authority to receive notice from third party.
Imputed Knowledge
Principal not subject to imputed knowledge unless the facts concern agency and fall within the scope.
Principals Duties
Principal has duty to pay agent and not interfere with agents discharge of duty.
Agents duties
Must use Reasonable care, Skill, and Diligence when performing contract.
Rights of Third Party against Agent/Principal
Third party has right to bring action against principal and agent, but can only recover from one party. Minority, filing against one party releases other party. Majority, may file against both but make final decision regarding recovery prior to court decision.
Rights of Agent and Principal against Third Party
Generally, only principal is entitled to enforce the contract against third party, but where agent has power to contract and an interest in agreement, agent entitled to recover.
Borrowed Servant Doctrine
Employer may be held liable for actions of temporary employee.
Fiduciary Duty
Duty of upmost good faith, candor, honesty, duty of care, duty of loyalty, and in the best interests of other partner.
Conflict of Interest
Incompatibility between ones own interest and one’s duties to another.
Sub-Agent
Person whom agent delegates to perform the act for the principal.
