Agency Flashcards
Agency
- fiduciary relationship resulting from
- mutual consent
- that an agent shall act on behalf of the principal
- and subject to principal’s control
Capacity
principal = must have contractual capacity
agent = does not need capacity
Equal Dignities Rule
agency agreements must be in writing if:
- agent is to enter into certain contracts w/in SOF, or
- the agency agreement itself falls w/in SOF
Agent’s Duties to Principal
fiduciary duties:
- duty of care
- duty of loyalty
- duty of obedience
Principal’s Duties to Agent
obligations, not fiduciary:
- indemnification, for expenses incurred
- compensation, unless otherwise agreed
Duty of Care (agent)
agent must carry out her agency with reasonable care
Duty of Loyalty
- account to principal for profits made
- 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
Remedies for Breach of Duty of Loyalty
- damages caused by the breach
- disgorgement of profits made by agent
- equitable remedies
Duty of Obedience (agent)
obey all reasonable directions of principal
Types of Authority
- actual authority (express/implied)
- apparent authority
- ratification
Actual Express Authority
authority the agent reasonably thinks she possesses as a result of the principal’s oral or written words
Actual Implied Authority
authority the agent reasonably thinks she possesses as a result of the principal’s actions
- words
- conduct
- custom
- title or position
- acquiescence
Termination of Actual Authority
- after specified time or event
- after a reasonable time
- by a change of circumstances
- by a breach of fiduciary duty
- by unilateral act of either
- by death/incapacity of either
Apparent Authority
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
Ratification
if agent had no authority, principal will be bound if he ratified
- express = oral/written affirmation
- implied = principal accepts the benefits
requirements:
- principal has knowledge of all material facts
- principal accepts the entire transaction
- cannot use to alter the rights of intervening parties
Liability of Principal on Contracts
princiapal is liable if:
- actual/apparent authority or ratification
agent is not liable unless:
- principal is undisclosed OR
- principal is partially disclosed
Respondeat Superior
(Vicarious Liability)
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
Employee vs. Independent Contractor
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
Factors to Determine
Independent Contractor vs. Employee
- principal right to control the manner/method of performance → control = EE
- skill required → more skill = IC
- tools/facilities → principal supplies = EE
- period of employment → longer = EE
- basis of compensation → time = EE; job = IC
- business purpose → in furtherance of business = EE
- distinct business → own company = IC
Scope of Employment
factors:
- conduct “of the kind” employee was hired to perform
- conduct was “on the job” → frolic vs. detour
- conduct actuated to benefit the principal
Liability for Intentional Torts
general rule = not liable
unless:
- conduct is in the nature of the job
- conduct is motivated to serve the employer
- conduct is specifically ratified by the employer
Borrowed Employee
when an employer lends the services of an employee to another, the employer with the primary right of control over the employee is liable
Direct Liability
everyone is liable for their own torts
- negligent training or supervision
- failure to check criminal records or job history
