Agency

Question 1

What is needed to create an agency relationship?

Answer 1

1) consent by both the principal and agent that the agent will act for the principal’s benefit
2) the agent is subject to the principal’s control

it is a good idea to start an agency Q w/ a. Brief discussion about creating an agency relationship

Question 2

A _________ is liable for a contract entered into by an agent, so long as the agent had some kind of authority to enter into the contract.

Answer 2

Principal

partners are agents of a partnership and can bind the partnership if any authority exists

Question 3

A principal is liable for a contract entered into by ______, so long as the agent had some kind of authority to enter into the contract.

Answer 3

An agent

Question 4

A principal is liable for a contract entered into by an agent, so long as the agent had some kind of ______ to enter into the contract.

Answer 4

Authority

Question 5

Partners are ______ of a partnership and can bind the partnership if authority exists.

Answer 5

Agents

Question 6

Partners are agents of a partnership and can bind the partnership if _______ exists.

Answer 6

Authority

Question 7

Express Actual Authority

Answer 7

The agent is expressly given authority to act for the principal.

the authority terminates by an act of the principal or death/incapacity of the principal

Question 8

Even if an agent does not have any authority to enter into a transaction, the principal can _______ the acts (and thus become liable) by expressly or impliedly affirming or accepting the benefit of the act so long as he knew the material facts and had capacity.

Answer 8

Ratify

Question 9

Even if an agent does not have any authority to enter into a transaction, the principal can ratify the acts (and thus become liable) by expressly or impliedly _______ so long as he knew the material facts and had capacity.

Answer 9

affirming or accepting the benefit of the act

Question 10

The employer (principal) is liable in tort if the employee (agent): [SMI]

Answer 10

(1) was acting in the scope of employment, or
(2) made a minor deviation (a detour) from employment (rather than a major one - a frolic), or
(3) committed an intentional tort, only if it: [BAN]
(a) was for the principal’s benefit,
(b) was authorized by the principal, or
(c) arose naturally due to the nature of the employment

Question 11

The employer (principal) is liable in tort if the employee (agent): [SMI]

(1) was acting in the scope of employment, or
(2) made a minor deviation (a detour) from employment (rather than a major one - a frolic), or
(3) committed an intentional tort, only if it: [BAN]

Answer 11

(a) was for the principal’s benefit,
(b) was authorized by the principal, or
(c) arose naturally due to the nature of the employment

Question 12

The employer (principal) is liable in tort if the employee (agent): [SMI]

(1) was acting in the scope of employment, or
(2) _________, or
(3) committed an intentional tort, only if it: [BAN]
(a) was for the principal’s benefit,
(b) was authorized by the principal, or
(c) arose naturally due to the nature of the employment

Answer 12

made a minor deviation (a detour) from employment (rather than a major one - a frolic)

Question 13

The employer (principal) is liable in tort if the employee (agent): [SMI]

(1) was acting in the scope of employment, or
(2) made a minor deviation (a detour) from employment (rather than a major one - a frolic), or
(3) committed an intentional tort, only if it: [BAN]
(a) was for the principal’s benefit,
(b) was authorized by the principal, or
(c) arose naturally due to the nature of the employment

Answer 13

was acting in the scope of employment

Question 14

If a principal/employer is liable in tort under _________, an agent/employee is liable, too, under a theory of joint and several liability.

Answer 14

vicarious liability (respondent superior)

Question 15

If a principal/employer is liable in tort under vicarious liability (respondent superior), an agent/employee is liable, too, under a theory of ________.

Answer 15

joint and several liability

Question 16

Sometimes respondeat superior turns on whether an agent is an employee or independent contractor. If the agent is an independent contractor, the principal ___________.

Answer 16

is not generally liable, unless the duty was nondelegable.

Question 17

Sometimes respondeat superior turns on whether an agent is an employee or independent contractor. If the agent is an independent contractor, the principal is not generally liable, unless ______.

Answer 17

The duty was nondelegable

Question 18

3 Duties Owed By Agent

Answer 18

1. Duty of Care
2. Duty to Obey Instructions
3. Duty of Loyalty

Question 19

An independent contractor is generally not considered _____.

Answer 19

An agent

Question 20

An independent contractor is generally not considered an agent. A key factor in determining whether a worker is an independent contractor or employee is ________.

Answer 20

the level of control the principal exercises over the worker

Question 21

An independent contractor is generally not considered an agent. A key factor in determining whether a worker is an independent contractor or employee is the level of control the principal exercises over the worker.

A principal is thus generally not liable for the torts committed by an independent contractor unless:

Answer 21

(1) the duty is nondelegable (e.g., inherently dangerous activity), or
(2) if estoppel is present (I.e., if the principal holds out a contractor as an agent and there is reliance by a third party, the principal may be held liable for the contractor’s actions.)

Question 22

A principal is liable for a contract entered into by an agent, so long as _______.

Answer 22

the agent had some kind of authority to enter into the contract

Question 23

3 Types of Authority

Answer 23

1. Actual (express & implied)
2. Apparent
3. Ratification

Question 24

Apparent Authority Elements

Answer 24

(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 25

2 Ways for Principal to be Liable for Agent’s Torts

Answer 25

1. Vicarious Liability (Respondeat Superior)
2. Direct Liability of Principal (negligent hiring/supervising/firing)

Question 26

Agent’s Duty of Loyalty

Answer 26

Agent must not:
(1) engage in self-dealing
(2) take an opportunity that belongs to the principal, or
(3) make a profit without disclosure

Question 27

Director & Officer Authority

__________ may be (1) express or (2) implied.

Express authority manifests from:
(1) oral and written words,
(2) direct and definite language, or
(3) specific instructions.

Corporate bylaws, articles of incorporation, or the board of directors define actual express authority for an officer.

Answer 27

Actual authority

Question 28

Director & Officer Authority

Actual authority may be (1) express or (2) implied.

Express authority manifests from:
____
____
____

Corporate bylaws, articles of incorporation, or the board of directors define actual express authority for an officer.

Answer 28

(1) oral and written words,
(2) direct and definite language, or
(3) specific instructions

Question 29

Director & Officer Authority

Actual authority may be (1) express or (2) implied.

Express authority manifests from:
(1) oral and written words,
(2) direct and definite language, or
(3) specific instructions

___________ define actual express authority for an officer.

Answer 29

Corporate bylaws, articles of incorporation, or the board of directors

Question 30

Director & Officer Authority

Actual authority may be (1) express or (2) implied.

Express authority manifests from:
(1) oral and written words,
(2) direct and definite language, or
(3) specific instructions

Corporate bylaws, articles of incorporation, or the board of directors define actual express authority for _______ .

Answer 30

An officer

Question 31

Director & Officer Authority

Actual authority may be (1) express or (2) implied.

Implied authority allows an agent to take actions _______ based on the agent’s reasonable understanding of the objectives. An officer has implied authority to perform tasks necessary to carry out the officer’s duties by virtue of the position.

Answer 31

necessary to achieve the principal’s objectives

Question 32

Director & Officer Authority

Actual authority may be (1) express or (2) implied.

Implied authority allows an agent to take actions necessary to achieve the principal’s objectives based on the agent’s reasonable understanding of the objectives. An officer has implied authority to perform tasks _____ by virtue of the position.

Answer 32

necessary to carry out the officer’s duties