Agency Flashcards
1
Q
Elements of an agency relationship
A
ABC:
- Assent: agent and principal must manifest assent through words or conduct
- Benefit: A agrees to work on behalf of P and for P’s benefit
- Control: A’s actions are subject to P’s control
2
Q
Parties to an agency relationship
A
- Any individual or legal entity can be either principal or agent
- Principals must have legal capacity; Agents only need minimal capacity
3
Q
Common P-A scenarios
A
- Employer - Employee
- Corporation - D/O
- Partnership - Partner
4
Q
Termination of an agency relationship
A
- Generally: either party may unilaterally terminate
- Particular circumstances that also terminate:
- P revokes A’s authority
- Parties terminate by agreement
- Changed circumstances
- Passage of time
- Breach of fiduciary duty by A
- Death of A
- Death or incapacity of P, effective only once A has notice (note: P’s death will not terminate A’s durable POA)
5
Q
Under what circumstances is a principal contractually liable to a third party
A
- Actual express authority
- Actual implied authority
- Apparent authority
- Ratification
- Estoppel
6
Q
Actual authority
A
P causes A to reasonably believe that A has authority to act.
-
Express: by written or spoken communications from P to A
- A must have a subjective and objectively reasonable belief that P wants A to act
- P’s actual/subjective intent is irrelevant
-
Implied: A may take whatever reasonable steps are necessary to achieve P’s objective, within accepted business practice or custom
- By position—P places A in a position where A has authority to act
- By acquiescence—P accepts or stays silent re: A’s conduct
7
Q
Apparent authority
A
P causes a 3P to reasonably believe that A has authority to act.
- Imposter can bind if P was negligent in creating the appearance of authority
- A without authority acting in the ordinary course of business can bind if 3P lacks notice
- A may also have inherent authority from P placing him in a position that usually has that sort of authority (e.g., giving A the title of VP)
- Otherwise, look to communications between P and 3P.
8
Q
Ratification
A
With knowledge of material facts, P affirms the contract made on P’s behalf.
9
Q
Estoppel
A
- P may be barred from denying an agency relationship or A’s authority if:
- 3P detrimentally relied on A’s authority AND
- P’s negligence caused 3P’s belief, or P failed to correct mistake
10
Q
Liability of the agent
A
Whether A will also be liable to the 3P depends upon P’s status
-
Disclosed principal: A is not liable
- 3P had notice and knew the identity of the P
-
Partially disclosed principal: A and P are both liable
- 3P had notice that A was acting as the agent of another, but did not know P’s identity
-
Undisclosed principal: only A is liable
- 3P did not know of agency relationship at all
11
Q
Tort liability of principals
A
P may be vicariously liable for tortious acts of his agents committed within the scope and course of his employment.
-
Exceptions:
- Frolic (c.f. detour)
- Intentional torts, unless acting for P’s purpose and closely connected to the assigned task (e.g. a bouncer)
- Use of physical force, unless necessary to complete assigned task
- A’s action was not for P’s purpose or benefit (i.e., outside of agency relationship)
-
Other situations in which P will be liable:
- A has apparent authority
- P is directly liable due to authorizing or ratifying A’s conduct, negligent hiring/supervision of A, or delegating a non-delegable duty
12
Q
Employee vs. independent contractor
A
-
Employer - Employee relationship: the employer has the right to control the manner and means of A’s performance
- Provides tools, structures pay, directs the way A must complete tasks
- Liability: P will be vicariously liable
-
Independent contractor: employer does not have the right to control the manner and means of A’s performance
- A provides own tools, sets terms of payment, often has multiple clients/employers
- Liability: employer cannot A cannot bind P unless the task is inherently dangerous, P was negligent in hiring, or P chooses to retain control over specific task
13
Q
Tort liability of agents
A
An agent will be responsible to 3P for own torts, but not for P’s torts
14
Q
Duties of the agent
A
LORcNa
- Duty of loyalty: work only for P’s benefit, do not compete, usurp P’s business opportunities, or take secret profits
- Duty of obedience: obey reasonable instructions
- Duty of reasonable care: perform with reasonable diligence and skill
- Duty of notification and accounting: must keep P informed of and account for funds
15
Q
Duties of the principal
A
- Duty to compensate per agreement
- Duty to deal fairly and in good faith: includes providing a safe work environment
- Duty to cooperate
- Duty to indemnify and reimburse for losses not resulting from A’s wrongful conduct
