Agency

Question 1

Agency

Answer 1

Agency is a fiduciary relationship that can be created by express or implied means, in which an agent acts on behalf of a principal.

Question 2

Creating an Agency Relationship

Answer 2

1. consent by principal that agent will act on principal’s behalf
2. consent by agent that he will act on principal’s behalf
3. the agent is subject to the control of the principal

There is NO WRITING REQUIREMENT and there is No consideration requirement.

Question 3

Express Authority

Answer 3

Principal expressly gives the agent authority to act on his behalf.

Question 4

Termination

Answer 4

Either the agent or the principal can terminate the relationship.

Death of the principal does not terminate the relationship until the agent has actual knowledge of the death.

Death of the agent terminates the relationship automatically.

Question 5

Implied Authority

Answer 5

Principal’s conduct has led the agent to believe he has authority to act on the Principal’s behalf. This may be based on past conduct, emergency situations, or necessity.

Terminates regular ways (unilateral decision, death) but also by changes in circumstances or if the agent acquires an adverse interest to the principal.

Question 6

Apparent Authority

Answer 6

Apparent authority is created when

1. the person dealing with the agent must do so with a reasonable belief in the agent’s authority
2. the belief is generated by some act or omission by the principal
3. the person relying on the agent’s authority is not negligent in his reliance

Question 7

Ratification

Answer 7

An agent who exceeds his authority may be within the scope of his role as an agent if the principal subsequently affirms the act with full knowledge of the act.

Question 8

vicarious liability

Answer 8

Principal and the agent are liable in tort if the agent SMI:
1. acting in SCOPE of employment
or
2. made a minor deviation (a detour - not a frolic)
or
3. committed an intentional tort that (BAN): 1. for the principal’s benefit, 2. principal authorized it, or 3. it arose naturally in the course of the agency relationship

Question 9

Direct liability

Answer 9

Principal can be directly liable for its own negligence if it negligently hired, fired, or supervised its employees.

Question 10

Duties of Agent

Answer 10

Duty of care
Duty to obey instructions
Duty of loyalty (no self-dealing, no usurping business opportunities, and no making a profit without disclosure)

Remember that principal does not really owe duties to agent - he doesn’t even need to pay agent - but he is assuming liability for these actions.