Agency Flashcards
Who is an agent?
An agent does things on behalf of the principal
Who is a principal?
Directs the agent’s acts
When might a principal be liable to an agent?
In K and tort
Three components of agency relationship
ABC
Assent - requires that both parties manifest assent to work with one another
Benefit - the agent agrees to work for the principal’s benefit
Control - the agent agrees to work subject to the control of the principal
What will courts look to if one or more parties disclaim the creation of an agency relationship?
Manifestations of assent which can range from a formal letter, to spoken words, to physical actions
Who can be a principal?
Any person or entity that has legal capacity (excludes minors and anyone incapacitated by illness or intoxication)
What types of entities can be principals?
- Employer
- Corporation
- Partnership
- Not unincorporated associations bc they lack legal capacity
How to tell if someone is an employer
Significant amount of control over day to day activities of the employees including:
- Giving employees tools at the workplace
- Paying employees on a structured pay period; and
- Directing the ways in which employees should finish and perform the tasks
Who can be an agent?
Any person or entity who has minimal capacity, including minors
What is minimal capacity?
Must be able to:
- Assent to the agency relationship
- Perform tasks on behalf of the principal; and
- Be subject to the principal’s control
What are the formalities for creating an agency relationship?
(i) Assent, (ii) benefit, and (iii) control, No consideration required and no consideration in writing necessary.
Types of agents
Servants/employees and indept Kers
Servant/employee
Employer has the right to control the agent’s physical conduct of work
Independent contractors
Principal does not have the right to control the agent’s physical conduct of work. Characteristics:
- Maintain a high level of independence
- Free to work for other people
- Paid on a fixed fee
- Typically owns his own tools
Who can terminate an agency relationship?
Either party can terminate unilaterally
When is a principal liable for Ks that an agent enters on behalf of the principal?
Bound on a K when:
- The principal has authorized the agent to enter the K; and
- The agent acted with legal authority
Four types of legal authority
- Actual express authority
- Actual implied authority
- Apparent authority
- Ratification
Actual v apparent authority
When you are trying to discern between actual authority and apparent authority, look to the communication. When the principal is communicating with the agent, there is actual authority; when the principal is communicating with the third party, there is apparent authority.
How is actual express authority created?
The principal creates actual express authority by using words written or spoken to convey authority to the agent
Actual express authority: requisite intent
Subjective intent: the agent must believe that he is doing what the principal wants him to do
Objective intent: The belief must be objectively reasonable
Termination of authority by death
Upon the death of the principal, actual express authority terminates when the agent has actual knowledge of the principal’s death. Actual express authority terminates immediately upon the death of the agent.
How is actual implied authority created?
Principal creates actual implied authority by using words, written or spoken, or other conduct to convey authority to the agent to take whatever steps are necessary to achieve the principal’s objectives
What are the limits to agent’s actions under actual implied authority?
The agent has actual implied authority (absent express instructions to the contrary) to act within the accepted business custom or general trade usage
Communication to look to for the different types of legal authority
Actual express authority - comm between agent and principal
Actual implied - comm between principal and agent
Apparent authority - comm between principle and the third party
Ratification - no pre-act comm to consider
