Agency

Question 1

agency definition

Answer 1

fiduciary relationship, where a person or entity acts on behalf of another

Question 2

agency creation

Answer 2

p manifest intent that agent act on his behalf and both parties consent

• control does not have to be significant
• does not have to be in writing unless falls within SOF

Question 3

termination of agency relationship

Answer 3

manifestation by either party that the agency is terminated

expiration of specific term of authority

death of principal or agent (operation of law) or

incapacity of principal or agent except if durable power of attorney exists

Question 4

termination of agency contract

Answer 4

principal can terminate the agent at any time
but, principal may be liable for damages if agent is terminated prior to expiration of k unless agent materially breached k

Question 5

actual authority definition

Answer 5

the authority the agent reasonably believes they posses based on expressions from the principal or based on the actions of the principal.

implied - authority agent reasonably believes they have based on principal words or actions
either
action is necessary to carry out agents express authorized duties or
agent acted similarly in prior dealings with the principal or
it is customary for an agent in that position (silence can give rise to reasonable belief of authority in future)

Question 6

actual authority principal liability

Answer 6

principal is bound to k entered into by agent acting with actual authority

Question 7

apparent authority definition

Answer 7

a third party reasonably believes the agent has authority to act on behalf of principal and
that belief is traceable to principal’s manifestations (principal held agent out as having such authority)

principal manifests such authority when he gives agent a position or title indicating such authority, previously held the agent out and did not publish a revocation, or cloaked the agent with the appearance of authority

*continues until principal manifests otherwise to third parties

Question 8

apparent authority principal liability

Answer 8

a principal is bound to k entered into by agent if the agent had apparent authority

*viewed from third party perspective

Question 9

inherent agency power

Answer 9

*eliminated in third restatement

protects third parties when dealing with agents even if there is no actual or apparent authority

two groups:
1. subjects an employer to liability when an agent acts in furtherance of employer’s business and his conduct harms a third-party

2. if an agent violates the principal’s orders and there is no actual or apparent authority, the inherent agency applies when an agency relationship exists and the agent engaged in acts that are generally of kind that would fall within his actual authority, but for the violation of principal’s instructions

Question 10

ratification

Answer 10

the principal will be liable for an agent’s k entered into without authority if the principal ratifies the k

ratification occurs when P has knowledge of all material facts or k terms and assents to the terms through words or conduct and has capacity to accept k

ratification is the unilateral act of principal and requires no consideration

*agent remains liable if principal was not disclosed
maj/rest 2 –> undisclosed principal cannot ratify; only disclosed or unidentified principals can ratify
rest 3 –> undisclosed principal can ratify

Question 11

agent contractual liability

Answer 11

agent bound to k unless principal existence and identity are disclosed – also can be liable for breach of implied warranty of authority

*if either are not met, agent is bound

agent may seek indemnification from principal if agent is liable and his conduct was authorized

Question 12

employee v. independent contractor

Answer 12

primary focus is whether the principal had the right to control the manner and method in which job was performed

Question 13

respondent superior doctrine

Answer 13

an employer is liable for an employee’s negligent acts if the employee was acting within the scope of employment

Question 14

principal liability for independent contractors

Answer 14

generally, principal has no liability for acts of independent contractors except
inherently dangerous activities involved
non-delegable duties are delegated
principal knowingly selected incompetent contractors (if only negligent in selecting, then only liable to extent of own negligence, not for contractors conduct entirely)

Question 15

liability outside respondeat superior

Answer 15

will be liable for agent activities outside RS doctrine if
principal intended the conduct or consequences
principal was negligent or reckless in training, supervising, hiring, etc.
it is a non-delegable duty or
agent had apparent authority, agent actions taken with authority constitute the tort, and the third party reasonably relied on such authority

Question 16

duties owed by agent to principal

Answer 16

duty of care - duty to use reasonable care when performing duties

duty of loyalty - duty to act solely and loyally for principal benefit

duty of obedience - duty to obey all reasonable directions of the principal

Question 17

principals duties to agent

Answer 17

compensation
cooperation
indemnity/reimbursement
express contractual duties

Question 18

agent remedies for principal breach of duties

Answer 18

contractual remedies

liens

Question 19

principal remedies for agent breach of duties

Answer 19

contract remedies 
tort remedies 
constructive trust 
action for secret profits 
withhold compensation 
terminate agency

Question 20

termination or revocation of actual authority

Answer 20

happening of event 
lapse of reasonable time 
change in circumstances
agent breach of fid duty 
either party unilateral termination 
operation of law

Question 21

irrevocable agencies

Answer 21

an agency coupled with an interest or a power given as security cannot be unilaterally terminated by principals if agency was given to protect the agent or third party rights and is supported by consideration

Question 22

agency by estoppel

Answer 22

where principal negligently permits an imposter to be in a position to appear to have agency authority, the principal will be held liable for the imposters actions undertaken with such authority - the principal is estopped from denying imposter was their agent

Question 23

principal contract liability

Answer 23

bound to k if authority existed - actual, apparent, ratification

Question 24

right to control employee/agent factors to consider

Answer 24

degree of skill required on the job, whose tools and facilities are used, the period of employment, the basis of compensation, the business purpose, whether the person has their own distinct business, characterization of parties, customs of locality

Question 25

scope of employment - respondent superior doctrine

Answer 25

nature of employees conduct only has to be similar or incidental to that of which was authorized

serious criminal acts are normally outside the scope

Question 26

frolic or detour

Answer 26

detour = small deviation from employers direction within scope of employment

frolic = major deviation requiring sub departure from employment scope

to be liable for torts during frolic there must be a return to employment before tort

Question 27

employer intentional tort liability

Answer 27

generally not liable except

1. conduct is natural incident of employee duties
2. employee is promoting the employers business or is motivated to serve employer or
3. authorized or ratified by employer