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Agency Flashcards

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1
Q

Agent definition

A

Person that does things on behalf of principal

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2
Q

Principal definition

A

Directs agent’s acts, and almost always responsible for them

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3
Q

When can a principal be liable?

A

In contract or tort

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4
Q

How is an agency relationship created?

A
  1. Assent
  2. Benefit
  3. Control
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5
Q

What does assent require (for creating an agency relationship)?

A

That both parties manifest assent to work with one another.

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6
Q

What does benefit require (for creating an agency relationship)?

A

Agent agrees to work for principal’s benefit.

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7
Q

What does control require (for creating an agency relationship)?

A

Agent agrees to work subject to principal’s control.

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8
Q

Is consideration required to create agency relationships?

A

No

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9
Q

Do parties need to know they are in an agency relationship?

A

No

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10
Q

What if one or more parties disclaim an agency relationship?

A

Court looks to manifestation of assent. Can be manifested formally, spoken and informal, physical assent, etc.

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11
Q

Who can legally be a principal? (Who is included vs. excluded?)

A

Almost any [legal] person or entity that has legal capacity.

Excludes: minors and the incapacitated (bc of illness or drugs); unincorporated associations

Includes: employers, LLCs, corporations, partnerships, other business entities

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12
Q

If principal more heavy handed, more or less liable?

A

More, and vise versa.

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13
Q

Which entities cannot be principals?

A

Unincorporated associations (bc lack legal capacity)

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14
Q

Who can be an agent? (Who is included vs. excluded?)

A

Any legal person or entity that has minimal capacity.

Includes: minors and almost any type of business entity

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15
Q

Can agents have more or less capacity than principals?

A

Less

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16
Q

Can a minor serve as an agent?

A

Yes

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17
Q

To have min capacity, agent must be able to…

A

1) assent to agency relationship
2) perform the tasks
3) be subject to the principal’s control

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18
Q

Can you be a gratuitous agent?

A

Yes

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19
Q

Do you need evidence in writing to create an agency relationship?

A

No

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20
Q

What are the different types of agents?

A

1) Servant/employee-type:
a) Dominated by principal
b) Employer has right to control agent’s physical conduct of work

2) Independent contractor:
a) under less control
b) principal does not control or have right to control agent’s physical conduct of work

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21
Q

Independent contractor characteristics:

A
  1. Maintain high level of independence
  2. Free to work for others
  3. Typically paid fixed fee (as opposed to salary)
  4. Typically owns own tools
22
Q

Which agency relationship comes with more or less liability—employee-type or independent contractor?

A

Employee-type

23
Q

How do you get out of an agency relationship?

A

Either party can terminate unilaterally. Other party doesn’t need to agree to it. But remember that if based on apparent authority, P needs to tell third party or still liable.

24
Q

When is a principal liable for a contract created by agent?

A

1) Principal has authorized agent to enter into it, or

2) Agent has acted with legal authority

25
Q

What are the different kinds of legal authority?

A

1) Actual express
2) Actual implied
3) Apparent
4) Ratification

26
Q

If principal communicates with agent, more likely to be ___ authority. If principal communicates with third party, more likely to be ___ authority.

A

actual; apparent

27
Q

What is actual express authority?

A

When principal uses words, written or spoken, to convey authority to agent.

28
Q

What is the test for actual express authority?

A
  1. Did agent subjectively believe what they were doing was right?
  2. Was that objectively reasonable?
29
Q

What happens to actual express authority when principal dies?

A

It terminates when agent has actual knowledge of principal’s death.

30
Q

What happens to actual express authority when agent dies?

A

It terminates immediately.

31
Q

Principal creates actual implied authority by doing what? What does this give the agent authority to do?

A

(Think Godfather:) Using words, written or spoken, or other conduct to convey authority to agent to take whatever steps necessary to achieve principal’s objective.

Gives agent authority to act within accepted business custom or general trade usage.

32
Q

Principal creates apparent authority by doing what?

A

Using words–written or spoken–that cause third party to reasonably believe principal consents to have acts done on the principal’s behalf by the agent.

Comms is between principal and third party.

33
Q

How do you know if third party belief about apparent authority is reasonable?

A

Look at their business dealings in the past.

34
Q

What if there is apparent authority, but then principal specifically tells agent not to do something. Is principal still liable for that thing?

A

Yes, still bound by apparent authority.

35
Q

What if principal fires agent but then agent keeps using apparent authority?

A

Still liable until apparent authority revoked with third party.

36
Q

What is a ratification agency relationship? What does it require?

A

No comms between principal or anyone before contract entered into. Requires that principal has knowledge of material contract, and then principal accepts contract’s benefits.

37
Q

What does it mean to say that a principal is disclosed? And who is liable on the contract when that is the case?

A

3rd party knows that agent is acting on behalf of principal, and the principal’s ID.

Principal and 3rd party are liable on the contract.

38
Q

What does it mean to say that a principal is partially disclosed? And who is liable on the contract when that is the case?

A

3rd party knows that agent is working for someone but doesn’t know ID of principal.

Any of the three parties can be sued.

39
Q

What does it mean to say that a principal is undisclosed? And who is liable on the contract when that is the case?

A

3rd party doesn’t know about existence of principal at all.

Parties to contract are just 3rd party and agent alone. Can’t sue the principal. Agent is responsible for it.

40
Q

Vicarious liability/respondeat superior definition

A

When principal can be liable to a third party victim for tortious acts of agent.

41
Q

When does vicarious liability/respondeat superior apply?

A
  1. Employee-type agency (bc principal has sufficient control over agent)
  2. Tort committed in scope of employment
42
Q

Is a principal vicariously liable for independent contractors?

A

Generally not.

Exceptions:

  1. Task is inherently dangerous
  2. Neg in hiring independent contractor
  3. Principal retains control over certain tasks and tort occurs within those tasks
43
Q

Test for whether something is within the scope of employment:

A
  1. Did agent intend to benefit principal?
  2. Was agent’s conduct of the kind he was hired to perform?
  3. Did tort occur on the job?
44
Q

Frolic vs. detour

A

Frolic: Not within scope of employment. Significant deviation from assigned path.

Detour: Within scope of employment. De minimis deviation from assigned path.

45
Q

Are intentional torts within or outside scope of employment?

A

Typically outside, so principal not liable.

Exceptions:

  1. Conduct occurs within general space and time limits of the employment,
  2. Agent motivated in part to benefit principal, and…
  3. Agent is doing the kind of act he was hired to do.
46
Q

What fiduciary duties do agents owe principals?

A
  1. Duty to exercise reasonable care
  2. Duty to obey reasonable instructions
  3. Duty of loyalty
47
Q

Do the agents owe their principals duties if gratuitious?

A

Yes

48
Q

Under the duty of loyalty, an agent cannot…

A
  1. Usurp a business opportunity. (Usual cure is to disclose the conflict.)
  2. Take in secret profits.
  3. Compete in a competing business with the principal.
49
Q

What happens if agents violate their fiduciary duties?

A

Could be liable.

50
Q

Estoppel:

A

If P learned that someone was going around telling third parties that A had authority to enter into contracts on P’s behalf, and P does nothing to tell third parties that’s not true, P will be estopped from claiming no agency relationship or liability to third party.

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