Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

RW - MEE > Agency > Flashcards

Agency Flashcards

1
Q

c

Agency

A

Agency = a fiduciary relationship that arises when one person (the principal) appoints another (the agent) to act on the principal’s behalf and the agent consents to act.

  • The agent must act subject to the principal’s control
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Three Requirements in Agency Relationship

A

For the formation of a valid agency relationship, the following must be present:

  1. Consent: of both agent & principal; can be given impliedly or expressly
  2. Control: agent must act subject to the principal’s control, though the degree of control need not be significant.
  3. Capacity: the PRINCIPAL must have the capacity to contract (but not the agent).
  • E.g., minors cannot appoint agents to act on their behalf, but minors may serve as agents.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Writing Requirement for the Formation of an Agency Relationship

A

General Rule: there is no writing requirement in agency law however the statute of frauds may warrant a writing in the formation of an agency relationship.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Equal Dignities Rule

A

Agency agreements must be in writing when:

  1. Agent is to enter into certain Ks within the Statute of Frauds (MYLEGS), OR
  2. Agency agreement itself would fall within the SoF.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Consideration Requirement for Formation of Agency Relationship

A

NONE.

No consideration is required for the formation of an agency relationship; an agency relationship may be gratuitous.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Agent’s Fiduciary Duties to Principal

A

Rule: An agent, even if unpaid, is a fiduciary to its principal and owes corresponding fiduciary duties to its principal:

  • Duty of Care
  • Duty of Loyalty
  • Duty of Obedience
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Agent’s Duty of Loyalty to Principal

A

Duty of Loyalty = agent owes a duty of undivided loyalty to principal; agent must treat principal with fairness in all aspects.

Examples

  • Agent can’t compete with principal.
  • Agent can’t use principal’s property (including info) for the agent’s personal benefit.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Agent’s Duty of Obedience

A

Duty of Obedience = agent must obey all reasonable directions of their principal.

  • If the agent disobeys a reasonable direction, the agent will be liable to the principal for any loss that the principal suffers.

.

  • Some courts would deem the duty of obedience as an aspect of the duty of loyalty
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Remedies for Agent’s Breach of Fiduciary Duty

A

In general, a court has discretion to do whatever it wants to achieve justice in the situation, but most commonly, remedies include:

  • Suit for breach of fiduciary duty and and demand for damages,
  • Disgorgement (an equitable recovery): the agent must relinquish the profits received from breach.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Principal’s Duties to Agent

A

A principal does not owe fiduciary duty to her agent.

Common Law Obligations: Although the principal does not owe fiduciary duty to an agent, the principal owes common law obligations to the agent:

  • Indemnity: principal must indemnify agent’s losses in carrying out a principal’s instructions.
  • Compensation: unless the circumstances otherwise, the principal must compensate the agent.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Types of Agent Authority

A
  1. Actual
  2. Apparent
  3. Ratification
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Actual Authority

A

Actual Authority = authority that the agent reasonably believes they possess based on the principal’s dealings with them.

Actual authority may be express (directly conveyed by principal with words) or implied (agent reasonably believes exists due to the principal’s words or conduct).

  • If the principal’s words or conduct would lead a reasonable person in the agent’s position to believe that the agent has authority to act on the principal’s behalf, the agent has actual authority to bind the principal.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Termination of Actual Authority

A

Termination or revocation of actual authority occurs by:

  1. The happening of an event specified in agent/principal’s agreement as something that will terminate the agent’s authority,
  2. Lapse of a reasonable time if a time for termination is not specified in the agreement,
  3. A change in circumstances, including destruction of the subject matter of the authority, insolvency of the agent or principal, and a change in the law or business conditions,
  4. Agent’s breach of fiduciary duty,
  5. Either party’s unilateral termination (although termination may constitute breach), OR
  6. Operation of law (for example, death or loss of capacity of either party except where a durable power of attorney—written authority that says it will not terminate on the principal’s disability—is present.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Apparent Authority

A

Apparent Authority = a third party is reasonably led to believe that authority exists (even though as between the agent and the principal, no such authority has been granted).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Distinction Between Apparent Authority & Actual Authority

A

Actual Authority = principal’s words/conduct would lead the reasonable person in the agent’s position to believe the agent had the authority to act.

Apparent Authority = principal’s words/conduct would lead a reasonable person in the position of a third party to conclude that the agency has the authority to act on the principal’s behalf.

  • Apparent authority MAY exist even where actual authority does not
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Establishing Apparent Authority

A

An agent acts with apparent authority when:

  1. The principal holds the agent out as having authority to act on the principal’s behalf, AND
  2. the principal’s conduct, when reasonably interpreted, would lead a third party to rely on the agent’s appearance of authority
17
Q

Termination of Apparent Authority

A

Must affect the mind of the third party; third party must be informed of termination of the agency relationship.

18
Q

Ratification

Definition & Methods

A

“After the Fact Actual Authority”: even if the agent had no authority at the time of entering the contract, the principal will still be bound by the agent’s actions if the principal ratifies the contract.

Methods of Ratification: may be express or implied.

  • Express = oral or written affirmation
  • Implied = principal accepts the benefits
19
Q

Requirements for Ratification

A
  1. Principal must have knowledge of all material facts of the contract,
  2. Principal must accept the entirety of the transaction, AND
  3. Principal has the capacity to ratify.
20
Q

Who is bound to contract under agency law?

A

A principle is bound where actual or apparent authority, or ratification exists; the agent is not (with exceptions).

If the identity of the principal is undisclosed or partially undisclosed, the agent is also bound.

  • E.g., third party has no notice that the agent is acting for a principal.
  • Partial Disclosure = third party knows agent is acting for a principal but does not know the identity of the principal.
21
Q

Theories of Principal Liability for Agent’s Torts

A

Respondeat Superior: an employer (a “master”) is liable for the torts of an employee (a “servant”) committed within the scope of the employment.

  • A principal generally is not liable for torts committed by an independent contractor.

Apparent Authority

22
Q

Distinction between Employee and Independent Contractor

A

Test for Servant or Independent Contractor: if the principal has the right to tell the agent how to achieve the results the principal desires, the agent is an employee/servant.

  • Independent Contractor = person contractually obliged to do work but is not controlled in how the work is completed.

facts indicative of control include:

  • Skills required to do work,
  • Tools and facilities: if worker uses tools belonging to principal, more likely an employee
  • Period of Employment: the longer the term, the more likely an employee.
  • Basis of Compensation: if compensation is paid on the basis of time, you’re more likely an employee; if paid based on job, the worker is an independent contract.
23
Q

Principal Liability for Agent’s Intentional Tort

A

Rule: An employer is generally NOT LIABLE for the intentional torts of an employees, though there are exceptions.

  • Exception: Employee will be liable for the intentional tort of an employee when the conduct is natural given the nature of the job (e.g., a bar bouncer)
24
Q

Respondeat Superior: Scope of Employment

A

Rule: the employer is liable for the employee’s torts only if they were committed within the scope of the employee’s employment.

Analysis

  1. Was the conduct of the kind the agent was hired to perform?
  2. Did the tort occur “on the job”?
  3. Was the conduct actuated at least in part to benefit the principal ?
25
Q

Principal’s Vicarious Liability in Agency Relationship

A
  1. If the agent is not liable, the principal cannot be held liable (HOWEVER, an agent’s immunity from a lawsuit does not bar recovery from the principal).
  2. A principal may be directly liable for their own negligence in hiring, retaining, or supervising the agent.
  3. A principal may be directly liable for an agent’s tort if they gave the agent actual authority to commit the tort or ratified the tort.
26
Q

Principal Liability for Intentional Tort of Agent

A

A prinicipal (employer) is not liable for the intentional torts of an agent (employee) UNLESS:

  1. The tort was authortized by the principal/employer, OR
  2. Force is within the scope of the employee’s work (e.g., security guard).
27
Q

When is a principal liable for the torts of an independent contractor?

A

A principal may be liable for the torts of an independent contractor if:

  1. The independent contractor made material misrepresentations that benefitted the principal,
  2. Independent contractor is engaged in abnormally dangerous activities, OR
  3. independent contract acts with apparent authority

RW - MEE (8 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions