AGENCY

Question 1

Creation of Agency

Answer 1

Agency is fiduciary relationship where agent acts on principal’s behalf and is subject to principal’s control

Question 2

Actual Authority

Answer 2

Principal is bound to Ks entered into by its agent if agent has actual or apparent authority. Actual authority may be express or implied. Express authority is when principal has explicitly told agent (orally/in writing) that is entitled to act. Implied authority occurs when either (1) agent believes entitled to act because action is necessary to carry out expressly authorized duties; (2) agent has acted similarly in prior dealings; or (3) it’s customary for agents in that position to act that way.

Question 3

Apparent Authority

Answer 3

Agent acts with apparent authority when (1) principal holds the agent out as having authority to act on principal’s behalf; and (2) principal’s conduct causes a 3rd party to reasonably believe that agent has authority to act on behalf of principal.

Question 4

Ratification of Agent’s Contracts

Answer 4

Principal’s ratification of agent’s conduct will make principal liable for Ks entered into by agent without authority. Ratification occurs when principal: (1) has knowledge of all material facts or K terms; and (2) manifests assent through words/conduct.

Question 5

Agent’s Contractual Liability

Answer 5

Generally, agent has no contractual liability to third-party if they (1) fully disclose principal; and (2) agent has actual authority or apparent authority.
Agent will be liable to 3rd party when principal is undisclosed or partially undisclosed or unidentified (when 3rd party does not know agent is acting on behalf of principal or when 3rd party knows acting on behalf of a principal, but does not know principal’s identity).

Question 6

Employee vs. Independent Contractor`

Answer 6

Employer is vicariously liable for employee’s negligent acts if employee acting within scope of employment. Employer is generally NOT vicariously liable for torts of independent contractor. Determining whether employee or independent contractor depends on whether principal has right to control manner and method in which job performed. An employee is agent who employer contracts manner and means of agent’s performance. Independent contractor is person who contracts to do something and whose performance is not controlled.

Question 7

Doctrine of Respondeat Superior

Answer 7

Under doctrine of respondeat superior, employer vicariously liable for employee’s negligent acts if employee acting within scope of employment. Employee acts within scope of employment when (1) performing work assigned by employer; or (2) engaging in conduct subject to employer’s control.

Question 8

Vicarious Liability for Independent Contractors

Answer 8

Employer is generally NOT vicariously liable for torts of independent contractor. But employer WILL be vicariously liable if: (1) independent contractor is engaged in inherently hazardous activity; (2) duty owed by principal is non-delegable; or (3) principal holds independent contractor out as as his agent to third party and third party reasonably relied on agent and suffered harm.