Agency

Question 1

Creation of Agency

Answer 1

Assent by two persons or entities for one of them to act on behalf of the other for the benefit of the principal, who can control the duties of the agent

Question 2

Termination of an Agency

Answer 2

An agency can be terminated by: PAID

1. Purpose has been fulfilled and term ends
2. At will of either party
3. Incapacity of either party
4. Death of either party

Question 3

Actual Authority

Answer 3

Can be Express or Implied

Express – agent is given express authority to act on behalf of the principal

Implied – agent has reasonable belief that they have authority to act based on principal’s conduct

Implied can also be determined by either

1. Agent’s previous acts in similar dealings for principal;
2. Agent’s need to carry out certain acts in order to fulfill their express authority; OR
3. Customary duties of an agent in the same type of position

Question 4

Apparent Authority

Answer 4

The elements of apparent auythority are

1. the person dealing with the agent must do so with a reasonable belief in the agent’s authority; and 2
2. the belief must be generated by some act or neglect on the part of the principal

In other words, apparent authority is manifested when 1) a third party has reasnoable belief that the agent has authority to act due to 2) the conduct or acts of the principal that holds the agent out as having authority to act for principal

Holding out can mean that the principal has neglected to tell 3P that agent doesn’t have authority or has done something that shows the agent to have authority (and principal doesn’t contradict it)

Question 5

Scope of Apparent Authority

Answer 5

Agent does not have apparent authority (or principal isn’t liable) if either 3P knows or has reason to know that agent doesn’t have the authority; or the agent acts outside of the ordinary course of the relationship

Question 6

Ratification

Answer 6

Ratification occurs when a principal knew of a deal that the agent entered into without principal’s permission; and principal assents to the transaction, usually by reaping the benefits of the transaction

Question 7

Contractual Liability of Agents and Principals

Answer 7

Agents are not contractually liable for a transaction if they had authority to act (actual or apparent) and fully disclosed the principal to the 3P

Question 8

Vicarious Liability and Respondeat Superior

Answer 8

A principal may be held vicariously liable for injuries due to negligence that an agent commits while within the scope of their employment

Scope of their employment means that either the agent was engaged in a task directly assigned to them by the principal or they’re engaged in an act that benefits the principal

An agent is always liable for their own intentional torts, unless 1) principal expressly authorized the tort; 2) the principal desired the act or the consequences; or 3) the tort was a naturally occurring act due to the nature of the employment

Question 9

Difference Between Employee and Independent Contractor

Answer 9

A principal is not liable for the negligent acts of an independent contractor that are committed during the contractor’s work for the principal unless

1. Contractor was engaged in inherently dangerous activity;
2. Contractor was engaged in activity subject to control of the principal; OR
3. The act was subject to a non-delegable duty

Main difference between IC and Employee – whether the principal can control the manner in which the agent does their work

Question 10

Other ways Vicarious Liability can be Applied to a Principal (Respondeat Superior does not apply to the facts)

Answer 10

1. Apparent authority given to agent
2. Principal intended conduct/consequences
3. Principal was negligent in hiring
4. Non-delegable duty

Question 11

Fiduciary Duties of Agent

Answer 11

Duty of Care

Duty of Obedience

Duty of Loyalty