Agency Flashcards
Agency relationship
Fiduciary relationship that arises when one person appoints another to act on principal’s behalf and agent consents to act
*degree of control does not have to be significant
An agent requires ____ capacity.
Minimal
Do you need a writing or consideration to form an agency relationship?
No, but SOF may require a writing when agent is to enter into certain contracts within the SOF or when the agency agreement itself would fall within SOF.
A principal is liable to third parties for contracts made by the agent if there is:
- Actual authority
- Apparent authority
- Ratification
A principal is liable for an agents torts if. . .
The agent commits the tort within the scope of employment
(respondeat superior)
Agent’s duties to principal
- Duty of care
- Duty of loyalty
- Duty of obedience
Creation of the agency relationship
- Capacity
- Formalities
A principal requires ________ capacity.
Contractual
Duty of care
Agent’s duty to carry out the agency with reasonable care
Duty of loyalty
Agent’s duty of undivided loyalty. Agent must account for any profits made, act solely for the benefit of the principal, and may not compete with the principal.
Principal’s duties to agent
- all duties imposed by contract
- reasonable compensation
- reimbursement for expenses
What is actual authority?
Authority the agent reasonably believes they possess based on the principal’s dealings.
- Express: oral or written, effective even if granted by mistake or misrepresentation
- Implied: inferred from principal’s actions (custom, prior acquiescence, incidental to express authority)
What is apparent authority?
Principal holds out another as possessing authority and a third party is reasonably led to believe that the authority exists.
Can apparent authority linger after actual authority ends?
Yes, unless notice (actual/constructive) is given to third parties.
Is a principal bound by a unilateral agent representation?
No, a principal is not bound when the principal does nothing to hold the agent out as having authority.
What is ratification?
The principal subsequently validates the agent’s act and becomes bound.
Principal must: 1) have knowledge of all material facts regarding the contract, 2) accept the entire transaction, and 3) have capacity.
How can you terminate actual authority?
- happening of an event
- lapse of reasonable time
- change in circumstances
- agent’s breach of fiduciary duty
- unilateral termination
- death/loss of capacity *with notice
When is an agent personally liable for a contract made within his authority?
When the principal is undisclosed or partially disclosed, the agent may be personally liable.
Is an employer/principal liable for the acts of an independent contractor?
Generally, no.
Right to control factors
- Skill required
- Whose tools and facilities
- Period of employment
- Basis of compensation
- Business purpose
- Distinct business
Scope of employment factors
- The conduct was of the kind agent is hired to perform
- The tort occurred on the job (frolic versus detour)
- The conduct was actuated at least in part to benefit the principal
Is an employer generally liable for an employee’s intentional torts?
Generally, no, unless the tort was authorized or motivated by the employer.
