Agency Flashcards
Define Agency
Agency concerns the relationship that exists between Agent & principal;
where the Agent acts on principals behalf;
And is subject to principal’s control
How do you create an Agency relationship?
Consent: parties expressly/impliedly agree to enter an agency relationship;
Control: agent is subject to the principal’s control
Or, just remember A.B.C.
How is an Agency relationship ended?
An agency relationship can end by act or
by agreement of the parties or
by operation of law.
Can an Agency relationship be terminated by the parties?
Yes, agency can be terminated by parties where:
Parties desire;
Expiration of relationship;
Purpose fulfilled
What 3 duties does an Agent owe to a Principal?
Loyalty - fiduciary duty of undivided loyalty.
Obedience - Agent must obey Principal’s lawful instructions
Care - Agent must carry out her duties with reasonable care.
Remember: L.O.C.
What 3 duties does an Principal owe to an Agent?
Compensation - reasonable compensation, unless Agent acts gratuitously;
Reimbursement - Principal must indemnify agent for all reasonably incurred expenses and losses in carrying out duties;
Cooperation - Principal must cooperate with Agent to help Agent carry out functions
What is actual authority?
Actual authority is the authority the Agent reasonably believes he possesses based on his dealings with Principal.
What is Express Actual Authority?
Authority expressly provided to Agent by Principal.
Provided in writing or orally
What is Implied Actual Authority?
Authority Agent reasonably believes he has based on the Principal’s actions, by words or by conduct.
Includes incidental acts taken by agent that are reasonably necessary to complete a task or transaction.
If an Agent doesn’t have Actual Authority, might he still have some other Authority to act on Principals behalf?
Yes, if Agent doesn’t have Actual Authority he might have Apparent Authority.
If a third party knows the Agent doesn’t have Actual Authority, can there still be Apparent Authority?
No, if a third party already knows the Agent doesn’t have Actual authority then Apparent Authority does not exist.
2 elements for an Agent to act with Apparent Authority?
(1) Principal holds Agent out as having authority to act on Principal’s behalf; and
(2) Principal’s conduct causes a third party to reasonably rely on the Agent’s appearance of authority.
What does “Holding Out” mean for Apparent Authority?
When the Principal affirmatively acts or fails to act in a way that causes the third parties’ reasonable belief.
Major difference between Actual Authority and Apparent Authority?
Apparent authority arises from the reasonable belief of third parties
Actual arises from the reasonable belief of the Agent himself
Can a Principal be bound by Agent’s acts where the Agent lacked authority?
Yes, if:
Agent purported to act on Principal’s behalf;
Principal has knowledge of material facts of K;
Principal affirmed conduct.
If the Principal is disclosed to third party, who is liable?
Principal is liable, Agent is not.
If the Principal is not disclosed or identified to third party, who is liable?
Both Agent and Principal are liable to third party and either can enforce the K
What is Respondeat Superior in Agency?
Doctrine that holds Principal liable for torts committed by Agent within scope of Agency/Employment.
Are Principals liable for torts committed by hired Independent Contractors?
Generally, no because Principal generally doesn’t have right to control manner and method by which a person performs their job.
What is the major distinguishing factor between Independent Contractors and Employees
Employee relationship - employee is compensated on time basis and Employer has right to control manner and method of how to carry out task.
Independent Contractor - are hired and paid to do a job and Principal has limited rights to control manner and method.
What 2 instances will Principal be liable for torts committed by ICs?
(1) inherently dangerous activity
(2) principal knowingly hired incompetent IC
