Agency Flashcards
which topic is tested every time an agency question appears on the MEE?
Agents and principals’ liability to third parties is 100% of the time
Parties’ rights and duties 43%, agency relationship 25%
what duties does an agent owe his principal? Acronym
Cunts I Lick Owe U! CILOU
Care
Information
Loyalty
Obedience
Usurpation (not to do it)
The 3(4) elements of forming an agency relationship
- Manifestations of mutual agreement that
- agent will act on principal’s behalf
- agent will action subject to principal’s control
When must an agency relationship be formed in writing?
When Ks the agent would enter would trigger the need for writing in themselves, like if they trigger the SoF
When creating power of attorney
Some state stautes
What should you almost always include in an Agency MEE?
- the 3 elements of agency and whether they are fulfilled
- If appropriate, the duties A owes to P
3.
Who can be a principal?
Any entity that has the legal capacity to act like a person
Must be an adult and have capacity to enter into Ks
Who is frequently highlighted in agency and partnership questions as a principal?
Business owners–like sole proprietors without partners
who can be an agent?
Almost anyone, including minors and incompetents, so long as they have minimal capacity. Need not be able to form contracts.
When does an agent need to be compensated
Agent has right to compensation if P implies it. If no amount specified, compensation should be in customary manner for that type of work.
Lack of compensation does not prevent agency
3 types of agents and their duties
GENERAL: variety of tasks (gen store manager, purchase agent)
SPECIAL: limited scope, like real estate agent
SUBAGENT: agent of agent, appointed to do agency tasks (see limitations)
When may an agent appoint a subagent?
Agent may appoint their own agent if they have the actual or apparent authority to do so
To whom does a duly appointed subagent owe loyalty?
Both the principal and the appointing agent
Who is liable for the conduct of the duly appointed subagent?
Both the principal and the subagent, assuming the agency is valid and acting within scope, etc.
What level of control over A’s actions is sufficient for an agency relationship?
the right to control the result or the ultimate objectives of the agent’s work–need not have the right to control the full range of an agent’s actions (professional judgment). P can fail to exercise the right to control the agent–does not eliminate the principal’s rights or affect the existence of an agency relationship.
State the definition of agency
An agent agrees to be subject to the principal’s control, and a principal agrees to be bound by the acts of its agent within the scope of the agent’s authority
When is a duty (responsibility or commitment) non-delegable?
when the responsibility is so important to the community that a person should not be permitted to transfer it to another person or agent.
What is the equal dignity rule?
generally don’t need to writing for agency relationship, but if agent is handling a transaction that requires a writing (K to sell land)
Can an agent serve multiple principals?
Yes, so long as there is no conflict between the principals
How can an agent avoid becoming a party to a contract he’s making on a P’s behalf?
When entering a K on P’s behalf:
- affirmatively disclose the existence and identity of the principal
- explicitly enter into K on principal’s behalf
- not agree to become a party to K
What creates actual authority? 2 kinds
Express actual authority: P communicates to A to do a thing, A has express actual authority to do that thing.
Implied actual authority: P communicates A to do a thing, A has implied actual authority to take any action reasonably necessary to do that thing (based on reasonable understanding of P’s objective)
Does following the normal custom of a business justify actions an A takes under implied actual authority?
Yes, following custom of that business is a justification for A’s actions being within scope of authority
Ex: –if new manager sees other manager sign for soda delivery every week without checking it, then new manager can sign for it when asked
What distinguishes the creation of apparent authority vs actual authority?
Actual authority is based on representations from P to A
Apparent authority is based on reps from P to 3P
What creates apparent authority?
P communicates to 3P
Based on P’s actions/words, 3P forms a REASONABLE belief that A is acting on behalf of P
What situations means that P is liable for A’s contracts?
- Actual authority (express or implied)
- Apparent authority (3P’s reas belief based on P’s comms)
- Ratification (accepts benefits of K to A or 3P)
- Estoppel (3P justifiable detrimental change in position)
