agency

Question 1

capacity- principal

Answer 1

principal must have capacity to contract.

Minor cannot appoint an agent.

Question 2

capacity- agent

Answer 2

• agent needs only minimal capacity- i.e. only mental capacity. does not need contract capacity
• agent CAN be a minor

Question 3

writing requirement

Answer 3

if the contract A is to enter into with TP requires a writing, the agency agreement also requires a writing
(ex: length of time of TP contract, land sale)

Question 4

agency

Answer 4

fiduciary relationship which results when

One person (principal) appoints
Another person (agent)
To act on the principals behalf, subject to principal’s control,
And agent consents

Question 5

control required for agency

Answer 5

P just must have specified task
more control is indicative of employment, less independent contractor

need not prescribe details

Question 6

proving consent

Answer 6

consent may be by express agreement, or inferred from conduct

Question 7

irrevocable agency relationship

Answer 7

if coupled with an interest or power given as security

Question 8

lingering apparent authority

Answer 8

where the agent’s actual authority has been terminated, he will have apparent authority to act on P’s behalf as to all 3rd parties w/ whom P knows he dealt unless and until 3rd parties get ntc

Question 9

when A’s manifestations can create apparent authority (rare)

Answer 9

• when the principal negigently allows impostor to take action appearing to have authority, P liable.
• also if P was present and would have denied A’s statement - silence will be considered holding out

Question 10

agent fiduciary duties

Answer 10

1 duty of care- reasonable care depending on circumstances like whether agent is paid and what they’re doing

2 duty of loyalty- act solely for the principal benefit. Look to see if agent is taking benefit away from the principal

3 duty of obedience to reasonable directions- obey directions that don’t harm p and are not illegal

Question 11

if a subagent that the agent hires breaches a duty, who is liable?

Answer 11

the agent

Question 12

partially disclosed principal and who is liable in that situation

Answer 12

third party knows the principal exists but not his identity
No effect on principal liability- still liable
Agent is now liable when otherwise he would not be if tp knew of principal

Majority of states allow both to be sued but normally if either the principal or agent object, the third party must choose before judgment who to obtain judgment from

Question 13

undisclosed principal

Answer 13

neither identity nor existence disclosed
The principal is still liable and so is the agent

Question 14

scope of employment

Answer 14

Ask if the agent conduct is
- similar or incidental to what agent authorized to do
- within time and place of authorized employment (small deviation w/in scope but major is not)
- done at least in part to serve employer?*

*will serve employer if it at least partly serves an employer’s substantial purpose

Question 15

liability for I/C

Answer 15

-if inherently dangerous activities involved
-nondelegable duties delegated
-principal knowingly selected incompetent independent contractor
if only negligent- principal only liable for own neg

Question 16

Is a writing required for an agency relationship ?

Answer 16

Only if the agency is for more than a year or otherwise falls within the statute of frauds (real estate agent for example)

Question 17

Principal duty to agent

Answer 17

No fiduciary duty!
Pay reasonable compensation for services
Reimburse for expenses incurred by agent
Indemnify agent for losses suffered in performing duties

Question 18

Actual authority- types

Answer 18

Authority that agent reasonably believes they have based on communications or acts of the principal

Principal will be bound to a contract agent made if there is either:

a) Express authority from principal- explicitly stated in written agreement or orally

b) implied authority based on principal’s words or conduct that would lead a reasonable person to think they have authority to do something

And the authority has not been terminated

Question 19

Termination of actual authority

Answer 19

Happening of a stated event
Death or loss of capacity of principal and agent has notice
Change in business conditions, destruction of subject matter
Passage of reas amount of time if not stated
Express termination by either party
Breach of fiduciary duty by agent
Death of the agent

Question 20

Irrevocable agency

Answer 20

1) a. agent receives an interest in the subject matter of the agency
b. power to act as an agent given as security
2) supported by consideration (for Restatement approach)

Can’t be revoked by either p or a or by operation of law

Question 21

Apparent authority

Answer 21

When the principals words or conduct make a third party reasonably believe the agent has authority even if the agent does not actually have authority

Prior dealings- third party and agent entered into a contract like this before, principal knows the third party knows, and principal did not object

Title - tasks someone with that title can normally do are apparently authorized (ex: treasurers can typically write checks)

False Statements by the agent that agent had authority, that principal was aware of, principal was silent (negligently allowing an imposter to hold themselves out as agent)

Lingering apparent authority

Question 22

Ratification

Answer 22

Transaction by an agent without actual authority that is later affirmed by the principal by either implication, like accepting benefits or staying silent when there is a duty to disaffirm, or express statement (verbal agreement to the terms, or corporate resolution).

Principal must have knowledge of all material facts of the contract
Principal must accept entire contract - all material terms
Principal must have capacity at time of ratification

Question 23

Disclosed principal and effect

Answer 23

Agent explicitly says he is acting for x person
The principal is the only person bound on the contract

Question 24

Employee or independent contractor and effect on liability of principal

Answer 24

If an employee (principal has a lot of control over the manner and method in performing the task), the principal is liable for torts committed in scope of employment or during a minor deviation from scope of employment (instructions)

If the agent is an independent contractor then the principal is usually not liable

Question 25

Situations when principal is liable for independent contractor torts

Answer 25

Activity is inherently dangerous
The duty can’t be delegated (duty of possessor of property to keep it safe)
The principal knowingly selected an incompetent agent

Question 26

Intentional tort liability of agents- principal liability

Answer 26

Generally intentional torts are outside the scope of employment and principal is not liable
If the nature of the job makes use of force foreseeable and the employee is promoting the principals interests, then the principal is liable (security guards)

Question 27

If a principal negligently selected an independent contractor is the principal liable for the torts of the contractor?

Answer 27

No but can be liable for principals own negligent hiring

Question 28

If an employee commits a tort during their employment are they liable?

Answer 28

Yes they are liable and may be jointly and severally liable with their employer if the employee was acting within the scope of employment or with a minor deviation from employer directions

Question 29

Is a principal liable for acts of sub servants?

Answer 29

Yes if the agent had actual implied or express authority to hire a sub agent
Implied could arise when agent has hired sub servants before and principal knew and never objected

Question 30

Liability by principal for agent torts based on apparent authority

Answer 30

Apparent authority has to enable the agent to commit a tort - there must be a connection between the apparent authority and the tort

Question 31

is consideration required for an agency relationship?

Answer 31

no

Question 32

creation of agency by operation of law

Answer 32

statute appoints an agent (secretary of state for corporations in some cases)

Question 33

breaches of duty of loyalty

Answer 33

agent cannot use their position to profit for themselves
must act solely for benefit of principal
must not be an adverse party in a transaction (buying from principal or selling to principal, or lawsuits)
cannot use the principal’s property for their own purposes

Question 34

what is the remedy if an agent breaches a fiduciary duty?

Answer 34

can impose a constructive trust or file a lawsuit to recover secret profits, regardless of whether the breach caused any loss

principal can also withhold compensation, or terminate the agency relationship

there may also be a breach of contract and tort liability

Question 35

remedy for intentional torts of an agent

Answer 35

constructive trust or other damages available in tort law

Question 36

co- agent vs sub-agent

Answer 36

co-agent owes duties to the principal and sub-agent woes duties to the agent

Question 37

if an agent appoints a sub-agent is the agent liable for the sub-agent breaches of duty?

Answer 37

yes

Question 38

real estate broker- duty of principal

Answer 38

the principal has a duty to accept offers that comply with the terms of the contract, or will be found to be interfering with the agent’s duties and will still be liable to pay the agent the agreed compensation

Question 39

examples of things agent may have implied authority to do

Answer 39

things that principal previously did not object to or acquiesced in

things customarily done to carry out the authorized task (ex: picking up and paying for goods purchased when authority to buy, deliver goods or land when authority to sell, giving warranties as to fitness and giving customary warranties in land sales)

things you need to do complete the authorized task

acting in emergencies

Question 40

inherent authority

Answer 40

because of the agency principal will be liable in some instances by law even if no actual authority:

respondent superior- principal liable for agent employee acts within scope of employment

acts of the agent similar to conduct authorized by principal

Question 41

what kind of principals can ratify?

Answer 41

only disclosed principals traditionally but the modern view is that any principal can

Question 42

situations when principal cannot ratify

Answer 42

third person withdrew
contract illegal at time of ratification
material change in circumstances

Question 43

when will an undisclosed principal be unable to enforce a contract?

Answer 43

when the agent fraudulently represented the principal’s authority

when the third party will be harmed by having to give performance to the principal instead of the agent

Question 44

who can enforce a contract if the principal is undisclosed or unidentified?

Answer 44

either the principal or the agent

if the agent sues the benefits still flow to the principal and not the agent

Question 45

vicarious liability

Answer 45

principal and agent are jointly and severally liable

Question 46

things that are not done to serve the employer

Answer 46

having passengers in a vehicle while serving the employer

using substantially different tools than the ones authorized (more dangerous)

Question 47

liability for acts of borrowed employees

Answer 47

the agent with the most control over the employee will be liable

Question 48

principal’s direct liability

Answer 48

negligent hiring, training or supervision of an agent

Question 49

If an agent does not have actual authority can he be liable to the third party he dealt with on behalf of principal?

Answer 49

the agent can be liable to the third party for damages for a breach of a warranty that the agent had authority