Agency

Question 1

Agency relationship

Answer 1

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

Question 2

An agent requires ____ capacity.

Answer 2

Minimal

Question 3

Do you need a writing or consideration to form an agency relationship?

Answer 3

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.

Question 4

A principal is liable to third parties for contracts made by the agent if there is:

Answer 4

• Actual authority
• Apparent authority
• Ratification

Question 5

A principal is liable for an agents torts if. . .

Answer 5

The agent commits the tort within the scope of employment

(respondeat superior)

Question 6

Agent’s duties to principal

Answer 6

• Duty of care
• Duty of loyalty
• Duty of obedience

Question 7

Creation of the agency relationship

Answer 7

• Capacity
• Formalities

Question 8

A principal requires ________ capacity.

Answer 8

Contractual

Question 9

Duty of care

Answer 9

Agent’s duty to carry out the agency with reasonable care

Question 10

Duty of loyalty

Answer 10

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.

Question 11

Principal’s duties to agent

Answer 11

• all duties imposed by contract
• reasonable compensation
• reimbursement for expenses

Question 12

What is actual authority?

Answer 12

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)

Question 13

What is apparent authority?

Answer 13

Principal holds out another as possessing authority and a third party is reasonably led to believe that the authority exists.

Question 14

Can apparent authority linger after actual authority ends?

Answer 14

Yes, unless notice (actual/constructive) is given to third parties.

Question 15

Is a principal bound by a unilateral agent representation?

Answer 15

No, a principal is not bound when the principal does nothing to hold the agent out as having authority.

Question 16

What is ratification?

Answer 16

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.

Question 17

How can you terminate actual authority?

Answer 17

• 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

Question 18

When is an agent personally liable for a contract made within his authority?

Answer 18

When the principal is undisclosed or partially disclosed, the agent may be personally liable.

Question 19

Is an employer/principal liable for the acts of an independent contractor?

Answer 19

Generally, no.

Question 20

Right to control factors

Answer 20

• Skill required
• Whose tools and facilities
• Period of employment
• Basis of compensation
• Business purpose
• Distinct business

Question 21

Scope of employment factors

Answer 21

• 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

Question 22

Is an employer generally liable for an employee’s intentional torts?

Answer 22

Generally, no, unless the tort was authorized or motivated by the employer.