Agency

Question 1

Agency Relationship

Answer 1

(1) consent by both parties that the agent will act on behalf of the principal and (2) the agent is subject to the principal’s control.

Question 2

Actual Authority

Answer 2

Authority the agent reasonably thinks he possesses based on the principals’ dealing with him. Actual authority can be expressor implied from the actions of the principal.

Question 3

Apparent Authority

Answer 3

(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.

Question 4

Principal’s Liability:

Answer 4

the principal is liable to third parties if the agent acted with actual or apparent authority.

Question 5

Agent’s Liability:

Answer 5

the agent is liable to the third party if he acted with no actual or apparent liability or if the principal was undisclosed (3rd party doesn’t know the agent is acting on the principal’s behalf) or partially disclosed (third party knows the agent is acting on his behalf but doesn’t know the identity. The agent is liable to the principal for breach of contract if he exceeds his scope of authority.

Question 6

Vicarious Liability:

Answer 6

the employer is liable in tort for the acts of his employee if the employee was acting in the scope of employment, took a detour, or it was an intentional tort where it was for the principal’s benefit, it was authorized or it naturally arose from the nature of employment.

Question 7

Indemnification:

Answer 7

A principal has a duty to indemnify an agent when the agent makes a payment “(i) within the scope of the agent’s actual authority, or (ii) that is beneficial to the principal.” The agent has a duty to indemnify the principal when he exceeds the scope of his authority.

Question 8

Ratification:

Answer 8

a principal ratifies a contract when he affirms or accepts benefit from a contract so long as he knew the material facts and had capacity to do so.

Question 9

Duty of Care:

Answer 9

the duty to act as a prudent person would under similar circumstances.

Question 10

Duty of loyalty:

Answer 10

duty to act for sole benefit of the principal and not engage in self-dealing transactions.