Agencies

Question 1

What are the three components of an agency relationship?

Answer 1

• Assent: both parties must manifest assent to work with one another
• Benefit: the agent agrees to work for the principal’s benefit
• Control: agent agrees to work subject to the control of the principal
• no consideration required
• no writing required

Question 2

What are the two types of agents? How do you define each type?

Answer 2

• servants/employees: employer has the right to control the agent’s physical conduct of work
• independent contractors: the principal does not control or have the right to control the agent’s physical conduct of work

Question 3

How do you terminate the agency relationship?

Answer 3

Either party can terminate an agency relationship unilaterally.

Question 4

Contractual liability: When is the principal bound on a contract entered into by the agent?

Answer 4

1) principal authorized the agent to enter into the contract OR
2) the agent acted with legal authority
* actual express authority
* actual implied authority
* apparent authority
3) ratification

Question 5

When is there actual express authority?

Answer 5

• principal uses words to convey authority to the agent
• agent objectively and subjectively believes that he is doing what the principal wants him to do
• terminates when agent has actual knowledge of the principal’s death or immediately upon death of agent

Question 6

Actual Implied Authority

Answer 6

• principal uses words or other conduct to convey authority to agent to take whatever steps are necessary to acheive the principal’s objectives
• Agent has actual implied authority to act within the accepted business custom or general trade usage

Question 7

Apparent Authority

Answer 7

• pricipal uses words to make third party reasonably believe that principal consent to have acts done on the principal’s behalf by the agent
• applies even when principal expressly tells agent not to do something

Question 8

Ratification

Answer 8

• no pre-act communication
• principal has knowledge of material terms of the contract
• principal then accepts the contract benefits

Question 9

Vicarious liability (respondeat superior)

Answer 9

Principal is liable for the tortious acts of his agent when:
1. the principal has sufficient control over the agent’s conduct such that the agency relationship is employer-employee (controls physical conduct) AND
2. the tort was committed while the agent was acting within the scop of his employment (frolic v. detour)

No vicarious liability for torts committed by independent contractor EXCEPT
* task is inherently dangerous
* principal was negligent in hiring indpendent contractor
* principal retains control over certain tasks and tort occurs within those tasks

Question 10

When can employer be held vicariously liable for intentional torts?

Answer 10

generally outside the scope of employment
EXCEPTIONS
* conduct occured within teh space and time limits of employment
* agent motivated in some part ot benefit the principal and
* the act is a kind that the agent was hired to perform

Question 11

What are the 3 duties agents owe to principals?

Answer 11

• duty to exercise reasonable care
• duty to obey reasonable instructions
• duty of loyalty (can’t usurp business opportunity, take in secret profits, or compete for business)

Question 12

Disclosure of principals: how does the level of disclosure of the principal affect who is party to contracts?

Answer 12

• disclosed (knows agent acting on behalf of principal + identity of principal) –> contract parties are third party and principal
• partially disclosed (knows agent acting on bhealf of principal but NOT identity of principal) –> contract parties are third party, principal, agent
• undisclosed (thid party knows neither the agent’s status nor principal’s identity) –> third party and agent and principal if agent had authority to bind principal