7.1 - Agency Flashcards
A legal relationship in which one person or entity (principal) assents to have another person or entity act on the principals behalf :
Agency
What is required to create an agency relationship?
A principal with contractual capacity and consent of the partie
Many states require a written agency agreement if:
- The agent is to buy or sell an interest in land for the principal
- Agency agreements that cannot be performed within 1 year
Do both the principal and agent need to be competent?
No, just the principal needs to be competent
A written authorization of agency where the agent has the power to act on behalf of the principal
Power of attorney
The agent under a power of attorney is referred to as:
Attorney in fact
What are the 4 duties an agent owes to a principal?
Duty of loyalty
Duty of obedience
Duty of reasonable care
Duty to account
This person owes a duty of care to both the agent and the principal:
Subagent (assistant)
What are 4 remedies a principal can take is an agent breaches a duty?
Tort damages
Contract damages
Recovery of secret profits
Withhold compensation
What are the 2 duties a principal has to an agent?
- Compensation
- Reimbursement / indemnification
Who has the right to terminate an agency coupled with an interest?
Only the agent
An agents power to bing a principal can arise through:
- A grant of actual authority
- Apparent authority or estoppel
- Ratification
Sometimes called real authority is the authority the agent reasonably believes he possesses because of the principals communications to the agent:
Actual authority
Includes the authority to do things reasonably necessary to carry out the agency (eg. manage a business, hire employees, etc.)
Implied actual authority
Is expressly granted either orally or through written instructions:
Express actual authority
Termination of actual authority can occur by:
- Act of parties
- Accomplishment of objective
- Expiration of stated period
- Automatic termination of actual authority
How is actual authority terminated automatically by operation of law by any of the following:
Death of either the principal or the agent
Incapacity of the principal
Discharge in bankruptcy of the principal
Failure to acquire a necessary license
Destruction of the subject matter of the agency
Subsequent illegality
Situations in which the gent will nevertheless have the power (but not the right) to bind the principal:
Apparently authority
Requires a holding out by the principal or negligent inaction by the principal. The purported agents mere representation that she is an agent is not sufficient to establish apparent authority:
Apparent authority
This is based on the third party’s reasonable belief that the agent has the power to bind the principal:
Apparent authority
Will perform a series of transactions involving a continuity of service:
General agent (business manager))
Will perform one or more transaction not involving a continuity of services:
Special agent (realtor)
When a principal terminates an agents actual authority, the agent will continue to have apparent authority until:
The principal notifies third parties who might have known of the agency
Must be given to terminate apparent authority to old customers:
Must be given to terminate apparent authority as to potential customers who may have known of the agency but who had not done business with the agent:
Actual notice
Constructive notice
If a person intentionally or carelessly caused a 3rd party to believe another is their agent and the 3rd party detrimentally relied on this belief:
The person will be estoppel from denying the other person acted as their agent and will be bound
Allows a principal to choose to become bound by a previously unauthorized act of his or her agent:
Ratification
The general rule is that a principal is not liable for the torts committed by the agent, however the exception is that:
An employer can be liable for an employees torts if they were committed within the scope of employment
One who works full time for an employer, uses employer tools, is compensated on a time basis, is subject to the supervision of the principal:
An employee
Has a calling of her own and who uses her own tools, is hired for a particular job, is paid a give amount for that job and followed her own direction in carrying out the job:
Independent contractor
An employer can be liable for the torts of an independent contractor if:
The employer authorized the tortious acts or if the work involved ultra-hazardous activity
