Agency

Question 1

Agency

Answer 1

1. fiduciary relationship resulting from
2. mutual consent
3. that an agent shall act on behalf of the principal
4. and subject to principal’s control

Question 2

Capacity

Answer 2

principal = must have contractual capacity

agent = does not need capacity

Question 3

Equal Dignities Rule

Answer 3

agency agreements must be in writing if:

1. agent is to enter into certain contracts w/in SOF, or
2. the agency agreement itself falls w/in SOF

Question 4

Agent’s Duties to Principal

Answer 4

fiduciary duties:

1. duty of care
2. duty of loyalty
3. duty of obedience

Question 5

Principal’s Duties to Agent

Answer 5

obligations, not fiduciary:

1. indemnification, for expenses incurred
2. compensation, unless otherwise agreed

Question 6

Duty of Care (agent)

Answer 6

agent must carry out her agency with reasonable care

Question 7

Duty of Loyalty

Answer 7

1. account to principal for profits made
2. no self-dealing

• act solely for benefit of the principal
• refrain from dealing with the principal as an adverse party
• cannot compete with the principal
• may not use the principal’s property for agent’s own purposes

Question 8

Remedies for Breach of Duty of Loyalty

Answer 8

1. damages caused by the breach
2. disgorgement of profits made by agent
3. equitable remedies

Question 9

Duty of Obedience (agent)

Answer 9

obey all reasonable directions of principal

Question 10

Types of Authority

Answer 10

1. actual authority (express/implied)
2. apparent authority
3. ratification

Question 11

Actual Express Authority

Answer 11

authority the agent reasonably thinks she possesses as a result of the principal’s oral or written words

Question 12

Actual Implied Authority

Answer 12

authority the agent reasonably thinks she possesses as a result of the principal’s actions

• words
• conduct
• custom
• title or position
• acquiescence

Question 13

Termination of Actual Authority

Answer 13

1. after specified time or event
2. after a reasonable time
3. by a change of circumstances
4. by a breach of fiduciary duty
5. by unilateral act of either
6. by death/incapacity of either

Question 14

Apparent Authority

Answer 14

when principal’s words or conduct would lead a reasonable person in the third party’s position to believe the agent has authority to act on the principal’s behalf (“holds out”)

• power of title/position
• lingering apparent authority

unilateral agent representations = not apparent authority

• unless in principal’s presence and principal does not interject

Question 15

Ratification

Answer 15

if agent had no authority, principal will be bound if he ratified

• express = oral/written affirmation
• implied = principal accepts the benefits

requirements:

1. principal has knowledge of all material facts
2. principal accepts the entire transaction
3. cannot use to alter the rights of intervening parties

Question 16

Liability of Principal on Contracts

Answer 16

princiapal is liable if:

• actual/apparent authority or ratification

agent is not liable unless:

• principal is undisclosed OR
• principal is partially disclosed

Question 17

Respondeat Superior

(Vicarious Liability)

Answer 17

employer is liable for torts committed by his employee within the scope of his employment

• employer and employee = jointly and severally liable

employer is generally not liable for torts committed by independent contractors

Question 18

Employee vs. Independent Contractor

Answer 18

employee = subject to the control of another as to the means used to achieve a particular result

independent contractor = subject to control of another as to his results only

Question 19

Factors to Determine

Independent Contractor vs. Employee

Answer 19

1. principal right to control the manner/method of performance → control = EE
2. skill required → more skill = IC
3. tools/facilities → principal supplies = EE
4. period of employment → longer = EE
5. basis of compensation → time = EE; job = IC
6. business purpose → in furtherance of business = EE
7. distinct business → own company = IC

Question 20

Scope of Employment

Answer 20

factors:

1. conduct “of the kind” employee was hired to perform
2. conduct was “on the job” → frolic vs. detour
3. conduct actuated to benefit the principal

Question 21

Liability for Intentional Torts

Answer 21

general rule = not liable

unless:

1. conduct is in the nature of the job
2. conduct is motivated to serve the employer
3. conduct is specifically ratified by the employer

Question 22

Borrowed Employee

Answer 22

when an employer lends the services of an employee to another, the employer with the primary right of control over the employee is liable

Question 23

Direct Liability

Answer 23

everyone is liable for their own torts

1. negligent training or supervision
2. failure to check criminal records or job history