Agency Flashcards
An agency relationship is a voluntary, fiduciary relationship between two parties:
a principal and an agent.
Gratuitous agencies:
The principal does not compensate the agent for the work the agent does on the principal’s behalf.
To create an agency relationship there must be both:
manifestation of the principal’s intent and of the agent’s consent. In other words, there must be mutual assent by both parties—principal and agent—to the relationship.
When a principal is an employer of the agent, the agent is either an ________ or ________ _________.
employee or independent contractor.
CLIPS PTSD (agency - factors to determine whether agent is employee or independent contractor)
C = Control principal exerts over agent L = Length of time agent engaged by principal I = Intent to create employment relationship or independent contractor P = Payment by the job or by the hour S = Suppling tools for work and place of performance
P = Principal is in business T = Type of work agent is doing is customarily done under the supervision of principal S = Skill of agent D = Distinct occupation or business of agent
The concept of “agency by ratification” refers to the ___________creation of an agency relationship.
post-hoc
T or F Only transactions entered into on behalf of another, or purportedly entered into on behalf by another, can be ratified.
True
an actual principal-agent relationship is retroactively created when?
When a party, without authority, enters into a contract on behalf of another, and this other party thereafter affirms or ratifies this transaction on its behalf, an actual principal-agent relationship is retroactively created.
Duties Owed by Agents to Principals
Duty of Care
Duty of Loyalty
Agents owe their principals a duty of care.
Pursuant to this duty of care, an agent must:
follow the principal’s instructions;
indemnify the principal against loss caused
Agents owe their principals a duty of loyalty.
Pursuant to this duty of loyalty, an agent acting on the principal’s behalf must:
avoid self-dealing; and
neither compete with the principal nor usurp business opportunities belong-ing to the principal.
In determining whether an employee’s conduct is within the scope of employment, some fac-tors to be considered include:
(1) Is the conduct the kind of work the em-ployee was hired to perform;
(2) did the conduct occur substantially within the time and space authorized by the employer; and
(3) was the conduct was in-tended to serve the interests of the employer.
Employee’s negligence
(a) The liability of an employer for its employee’s negligence is limited to actions that occur
within the employee’s scope of employment.
To enter into an agency relationship, the would-be AGENT must have:
To enter into an agency relationship, the would-be PRINCIPAL must have:
at least minimum mental capacity.
the contractual capacity to effect transactions.
An employer-employee relationship exists where the employer: has the right to
has the right to control, or controls the agent’s performance or the means and manner in which the sought after results are achieved.
An employer-independent contractor relationship exists where the employer:
determines what services that the agent is to perform but not how the agent performs the services.
To grant authority retroactively to a purported agent who had entered into a contract on its behalf, the would-be principal must: have knowledge at the time of ratification of all?
To ratify the actions of an agent or purported agent, the principal must manifest assent, by word or conduct, that:
knowledge, at the time of ratification, of all material facts concerning the transaction entered into on its behalf.
the agent’s earlier unauthorized transaction is now binding on the principal so as to impact the principal’s legal relationships.
Ratification requires that the would-be principal have requisite capacity to author-ize the agent’s actions at the time of _________.
T or F It is not necessary for ratification that the principal have had capacity as well at the time of the act that the ratification concerns.
ratification.
True
Agents owe their principals a duty of care.
Pursuant to this duty of care, an agent must:
follow the principal’s instructions;
perform any service or task within the scope of the agency with reasonable care;
indemnify the principal against loss caused by: the agent’s failure to act with reasonable care (when that failure occurs within the scope of the agency.)
Agents owe their principals a duty of loyalty.
Pursuant to this duty of loyalty, an agent acting on the principal’s behalf must:
prefer the interests of the principal over those of the agent or others
avoid self-dealing; and
Not compete with the principal nor usurp business opportunities belong-ing to the principal.
Agents have a duty to account for:
b. Agents have a duty to keep separate the:
c. Agents have a duty of candor, which requires them to:
a. money or property received on behalf of a principal
b. principal’s assets from their own assets.
c. fully disclose to a principal relevant to a transaction that the principal would reasonably want to know.
Duties Owed by Principals to Agents
- Duty of Compensation
a. RULE: Even if the agency agreement does not specifically provide for compensation for the agent, the principal has a quasi contract duty to: - Duty of Reimbursement
a. RULE: The principal is obligated to reimburse the agent for:
pay the agent the reasonable value of services rendered.
- allows agent to seek restitution
all reasonable expenses incurred in the scope of agency
under what circumstances can an agent bind the principal to contracts he enters into on the principal’s behalf?
: When an agent acts within the scope of his authorized power he has the power to bind the principal
An agent’s actual authority can be express or implied.
Actual express authority is the authority of the agent to:
Actual implied authority includes the authority of the agent to:
actual authority: do those things that the principal has in an express communication directly authorize the agent to do.
actual implied authority: conduct transactions that are reasonably necessary to fulfill the broader responsibilities given to him by the principal including those incidental to the main business at hand.
