Agency Flashcards
Agency relationships defined
Agency relationships are voluntary fiduciary relationships b/t a PRINCIPAL and an AGENT
P authorizes A to act on P’s behalf, and A binds the P by acting within scope of authority
Can be contractual but need not be
Types of agency relationships
Gratuitious Agency: P does not compensate A
Contractual Agency: many forms, most common is employment
- employer-employee: ER has right to control WHAT the EE does and HOW they do it
- employer-independent contractor: ER has right to control only WHAT the IC does, not HOW
Factors that determine which:
- is work typically performed by unsupervised specialists
- who supplies tools and place to work
- length and exclusivity of relationship
- is agent paid by the job, or at some time interval
- is agent’s work part of ER’s regular business
Agency as an equitable doctrine
“Agency by estoppel” and “apparent authority” are equitable doctrines invoked to protect 3rd party
Parties can use one when there is no IN FACT ACTUAL agency - if court agrees, parties are treated as if an agency had existed and agent had acted w/in scope of authority
When an agent contracts with a third party, with ACTUAL OR APPARENT authority, on behalf of a disclosed principal, a contract is formed b/t the principal and the 3rd party, not with the agent
Creation of an agency relationship
Need manifestation BOTH of P’s intent and A’s consent. i.e. need MUTUAL ASSENT
- P must manifest intent to grant authority subject to P’s control
- A must manifest consent to grant of authority
Can be either express or implied. Minimum required capacities: - P needs contractual capacity (i.e. capacity to contract, conduct business, control affairs)
- A needs minimum mental capacity to consent
Power of attorney specifically will usually require a signed writing
Agency by ratification
Ratification lets P grant retroactive authority for A’s previous unauthorized actions. Any act done or allegedly done for P’s benefit can be ratified
To ratify, need (at TIME OF RATIFICATION):
- requisite contractual capacity to authorize AND
- knowledge of all material facts concerning transaction
P ratifies either by:
- manifesting assent that act will affect P’s legal relations OR
- through conduct justifiable only on assumption that P consents to be bound
Duties owed by As to Ps (4)
Duty of Care: revocable by contract. Agent must:
- follow P’s reasonable instructions (when legal+ethical)
- perform duties with reasonable care
- indemnify P against loss caused by wrongful behavior/failure to act with reasonable care
Duty of Loyalty: not revocable due to fiduciary nature. A must:
- prefer interests of P over those of A or others
- avoid self-dealing
- neither compete with nor usurp business opportunities from P
Duty to Account:
- A must account for money/property received for P, and keep assets separate
Duty of Candor
- must fully disclose any facts relevant to a transaction that they reasonably believe P would want to know
Duties owed by Ps to As (2)
Duty of Compensation
- even if agreement doesn’t explicitly provide for compensation, P has quasi-contract duty to compensate
reasonable value for services rendered, unless specifically agreed otherwise
- restitution damages for failure
Duty of Reimbursement
- P obligated to reimburse A for all reasonable expenses in scope of agency
Power and authority of agents
Power to bind: when acting w/in scope, A has power to bind P to contracts entered on P’s behalf
Actual authority: created by P’s request that A act in particular way, and A agreeing to be bound
- express: authority of A to do those things that P has directly authorized
- implied: authority of A to do anything necessary to accomplish express request, and those things A
believes P wishes A to do based on reasonable understanding of request
Apparent authority: P is accountable for acts of A when P makes representations to a third party leading them to believe that A is acting within authority (belief must be REASONABLE and traceable to a MANIFESTATION of P)
A’s liability to third parties
A is liable for harm caused by negligence or intentional tort REGARDLESS of if they are acting within scope of the agency relationship
Contractual liability: is the P’s identity DISCLOSED?
- if P is fully disclosed, A is not personally liable for a contract on their behalf
- if P is not fully disclosed (partially or non), A is also personally liable on contract
To escape contractual liability, just make clear to 3rd party that A is representing a P, who P is, and that A is not a party to the contract
P’s tort liability to 3rd parties - scope of employment
Under Respondeat Superior, ER is STRICTLY VICARIOUSLY LIABLE regardless of ER’s fault, if EE is acting WITHIN SCOPE OF EMPLOYMENT. This is joint and several - EE is also still liable
P is generally not liable for A’s torts outside of employment context
- exception: apparent authority!
Scope of employment: task assigned by ER or engaging in course of conduct subject to ER control
- type of work hired to perform?
- time and space authorized by ER?
- intended to serve ER interests?
Frolic: substantial deviation from authorized route. ER NOT liable - but EE can return to scope
Detour: slight deviation from same. ER IS liable.
For INTENTIONAL torts, ER only liable if in the course of work AND for purpose of accomplishing work
- generally no defense that ER instructed not to use force
Generally, ER NOT liable for ICs. Rarely tested exceptions - inherently dangerous activities, nondelegable duties, negligent selection of contractor
Negligent supervision
P liable to 3rd party for harm caused by P’s negligence in selecting, retaining, supervising, or otherwise controlling A
