Agency Flashcards
Respondeat superior
Generally, a principal is not liable for his agent’s torts. However, under the doctrine of respondeat superior, there is an exception for employers. An employer can be held vicariously liable for its employee’s negligent acts that occur within the scope of employment.
Employment vs independent contractor
An employment relationship exists where a principal has a right to control the manner and method of the agent’s acts.
Agency relationship
An agency relationship is created when an agent consents to act for the principal’s benefit and subject to his control.
Scope of employment
A court will generally look to three factors to find scope of employment: (1) whether the conduct was one that the employee would normally perform, (2) whether the conduct was substantially removed from the authorized time and space limits - frolic or detour, and (3) whether the conduct was to benefit the employer .
Frolic and detour
When an employee substantially departs from his assigned task on his own personal affairs, there is a frolic. An accident that occurred during a frolic will not be deemed to be within the scope of employment unless the employee returns to the original employer’s purpose which would be considered within the scope of employment.
Breach
As a general rule, if an agent breaches a duty owed to his principal, the agent can be held liable for damages. An agent owes the principal the duties of loyalty and obedience.
Duty of obedience
The duty of obedience requires an agent to obey all reasonable directions from the principal.
Duty of loyalty
The duty of loyalty requires the agent to act solely for the benefit of the principal in the appointed task. If this is breached, the principal may recover profits from the agent made from the breach.
Independent contractor liability
Despite the general rule, a principal can be held liable for the tortious acts of an independent contractor if: (i) the independent contractor is engaged in inherently dangerous activities; or (ii) the principal has a duty that is nondelegable on public policy grounds
Atual authority
Actual authority can be express, where the agent is expressly given authority to act for the principal, or implied, where the principal’s conduct leads the agent to believe it has authority.
Apparent authority
The elements of apparent authority are (1) the person dealing with the agent must do so with a reasonable belief in the agent’s authority, and (2) the belief must be generated by some act or neglect on the part of the principal.
Liability of agent
The agent is bound to a third-party on a contract he entered into with the third-party if the agent had no actual or apparent authority. The agent is also liable if the principal is undisclosed (third-party does not know the agent is acting on another’s behalf) or if the principal is partially disclosed (third-party knows the agent is acting on behalf of another but does not know the identity of the principal).
Partnership
A partnership is the association of two or more to carry on as co-owners, a business for profit whether or not the persons intended to form a partnership. Profit sharing creates a presumption that a person is a partner unless the profits were received in payment of a debt, rent, wages, etc. Other indicia of a partnership include capital contributions and mutual agency.
Agency relationship
An agency relationship exists where
Partners as agents
Partners are agents with equal rights to comanage the partnership and thus will bind the partnership in any agreements entered into for the benefit of the partnership that are matters of ordinary affairs of the partnership. Extraordinary matters of the partnership business, a unanimous vote between the partners is required.
