Agency Flashcards
Agency is a __ relationship between __ having K capacity and __ having mental capacity where they __ to (1) agent’s __ to act __, agent owing __ and being subject __ the principal and (2) the principal’s obligation __, __, __ the agent.
fiduciary
principal
agent
mutually consent
authority to act for and in the best interests of the principal
fiduciary duties of care, loyalty, and obedience to the principal
subject to the control of
obligation to not interfere, reasonably compensate, and reimburse
Agency is a
a fiduciary relationship between a principal, having K capacity, and an agent, having mental capacity, where they mutually consent to the agent acting on behalf and in the best interest of, owing fiduciary duties of care, loyalty, and obedience to, and subject to the control of the principal and the principal’s obligation to not interfere, reasonably compensate, and reimburse the agent.
Requirements for Formation of Agency
(1) Mutual Consent
(2) Principal Contractual Capacity
(3) Agent Minimal Mental Capacity
(4) Principal Control
(5) Agent Authority
(6) Writing* for term of years or equal dignities rule
No Consideration Required
Agent’s fiduciary duties include
(1) Duties to act in best interest of the terms of their agreement
(2) Duty of Care
(3) Duty of Loyalty
(4) Duty of Obedience
The Agent’s duty of care is
that of gent owes a duty of reasonable care that increases depending on the skill of the agent and level of compensation.
The Agent’s duty of loyalty is
a duty of undivided loyalty. The agent must:
(1) act solely for benefit of principal and account to principal if individually benefit
(2) not act adversely to principal by themselves or for a third party
(3) not compete with the subject of the agency
(4) not use principal property for purposes other than the principal.
The Agent’s duty of obedience is
a duty to obey reasonable directions of the principal, and, if breached, is liable to principal’s losses
The Agent’s breach of these fiduciary duties gives the Principal remedies to
(1) sue in contract for compensated agents
(2) sue in tort for a wide range of equitable remedies “to do justice” such as disgorgement of profits, constructive trust, and accounting
The Principal’s owes nonfiduciary duties including
(1) duties under their agency agreement
(2) reasonable compensation
(3) reimbursement for agent’s expenses
(4) indemnity
(5) cooperation with agent’s performance
The Principal’s breach of these nonfiduciary duties gives the Agent remedies to
(1) sue for contractual remedies
The Principal may be bound to Agent’s Contracts when Agent has
(1) Actual Authority, whether express or implied
(2) Apparent Authority
(3) Inherent Authority
The Principal may be bound to Agent’s Contracts when Principal
(3) grants authority after the fact by ratification
The Agent has actual express authority when
the authority is contained in the oral or written words of their agreement, regardless of mistake or misrepresentation.
The Agent has actual implied authority when
the Principal’s manifestations to the agent would lead a reasonable agent to believe they have authority
Examples of reasonable, actual implied authority include authority
(1) incidental to express authority
(2) arising from industry custom
(3) arising from past principal acquiescence
(4) arising from emergency measures
(5) arising from the title or position of the agent
Generally, the Principal is not bound by Agent’s contracts once actual authority has terminated, including
(1) happening of an event in their agreement
(2) lapse of reasonable time
(3) a change of circumstances
(4) Agent’s breach of fiduciary duty
(5) Eithers unilateral termination
(6) Operation of law, including death or incapacity of the principal and the agent is aware
The Agent has apparent authority when
The Principal’s manifestations to the third party would lead a reasonable third party to believe that the agent has authority; this protects third parties who rely on a principal’s manifestations of agency.
The Agent has apparent authority
Where the Agent exceeds or has no actual authority, they may still have apparent authority to bind the Principal when
(1) the third party knows that the principal has authorized Agent in the past.
(2) the third party knows that the agent has a title/position with power to act.
(3) the Principal negligently permits imposter agents to take actions, apparent authority by estoppel
(4) the apparent authority lingers
The Principal may be bound by Agent’s contracts when the apparent authority lingers after termination of authority such as
(1) third party lacks notice that the agent no longer has actual authority
(2) the third party lacks notice that the principal has died
(3) the third party is relying on a prior written actual authority
Where the Agent lacks either actual or apparent authority, the Agent may have inherent authority when
(1) they may bind the Principal based on their relationship, respondeat superior, such as employer-employee
Ratification
Express Ratification
Requirements for Ratification
Knowledge
Entire Transaction
Capacity
What can be Ratified
What cannot be Ratified
Who may not Ratify
Undisclosed Principal
Unidentified Principal
Disclosed Principal
Third Restatement Principal Ratification
Principal Bound Analysis
Authority -> Actual -> Apparent -> Inherent -> Ratify`
Principal K Liability to 3rd
Bound if Agent had valid authority when K entered.
Agent K Liability to 3rd
Bound unless P existence and identity disclosed.
Bound and breach implied warranty of authority if enters K with no authority and discloses and identifies P.
3rd K Liability to Principal and Agent
Bound to P if fully disclosed
Bound to P or A if P is unidentified or undisclosed
Not Bound if A misrepresented P identity or increased burden upon later disclosure of performance to P
Principal Tort Liability to 3rd
Vicarious Liability -> Derivative Liability -> Respondeat Superior or Apparent Authority -> Employee or Agent’s torts
Direct Liability -> Personal Liability -> Principal Torts, Actual Authority, Independent Contractor
Respondeat Superior
Vicariously liable for employee’s torts committed within the scope of employment.
Employee v. Independent Contractor
-Threshold Question
-Ultimate inquiry is right to control the manner and method of agent’s daily duties and performance
Principal (“P”) Vicarious Liability for Employee (“E”) Torts
Generally,
-Principal not liable for intentional torts because presumptively outside scope of employment and liable for negligence because ordinarily within scope of employment.
-Court must look to factors for scope of employment.
Factors for Scope of employment
(1) conduct of the kind or similar to the what P inherently authorized (no actual authority or prohibition needed)
(2) conduct on the job, a mere detour (small deviation in time and place), but not a frolic (substantial departure)
(3) conduct where a substantial purpose is to benefit the principal (but not unauthorized use of instrumentality, invited passengers)
(4) conduct that is ratified by principal with knowledge of all material facts
P Vicarious Liability for Independent Contractor (“ID”) Torts
-Generally, not liable for ID’s torts
Except,
(1) inherently dangerous activities like blasting
(2) duties that can’t delegate for public policy reasons like discrimination, premises safety
(3) P knowing selection of incompetent ID
