Agency

Question 1

What is agency?

Answer 1

The fiduciary relationship that arises when one person the principal appoints an agent to act on the principal’s behalf and the agent consents to act.

Question 2

How can consent be established to form an agency relationship?

Answer 2

May be established expressly (through written or oral statements) or by implication from the parties’ conduct.

Question 3

Does the appointment of an agent have to be in writing?

Answer 3

Generally no. However, the statute of frauds may require one.

Question 4

equal dignities rule

Answer 4

many states require agency agreements to be in writing when the agent is to enter into certain contracs within the statute of frauds, or when the agency agreement itself would fall within the statute of frauds.

Question 5

Is consideration necessary to form an agency relationship?

Answer 5

No.

Question 6

modes of creating agency relationship

Answer 6

agency relationship may be created by an act of the parties or by operation of law

Question 7

how are agency relationships created by operation of law?

Answer 7

• estoppel
• statute

Question 8

Agent’s Duties to Principal

Answer 8

(fiduciary duties of loyalty)

• duty of care
• duty of loyalty
• (duty of obedience) - this could probably fit under loyalty

Question 9

principal’s remedies for agent’s breach of duties

Answer 9

contract actions, tort actions, actions for secret profits, equitable actions for an accounting, imposition of a construtive trust, and withholding of compensation for intentional torts or intentional breaches of fiduciary duty.

Question 10

Do principals have fiduciary duties to agent?

Answer 10

No, but the principal has several obligations to an agent.

Question 11

three types of authority:

Answer 11

actual, apparent, and ratified.

Question 12

actual authority

Answer 12

authority that agent reasonably believes that they possess based on the principal’s actions towards them. What a reasonable person would think
express or implied

Question 13

what is implied authority?

Answer 13

the agent reasonably believes that they have this authority as a result of principal’s words or actions. This is a type of actual authority

Question 14

what is the basic theory of apparant authority?

Answer 14

when the principal holds out another as possessing authority and based on this holding out, a third party is reasonably led to believe that authority exists

Question 15

effect of ratification

Answer 15

agency relationship when an agent purports to act on behalf of a principal without any authroity at all, but the principal later approves the act and becomes bound.

Question 16

a principal may be vicariously liable for the torts of their agent under two theories

Answer 16

1. respondeat superior
2. apparent authority

Question 17

what is the difference between an independent contractor or employee?

Answer 17

With an employee, a principal usually keeps the right to control the way that the employee performs their work.

Question 18

factors to consider over whether the employer is liable for the employee’s torts:

Answer 18

1. was the conduct of the kind that 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?

Question 19

are intentional torts within the scope of employment?

Answer 19

Generally no.

Question 20

intentional torts WILL be viewed as within employment scope if:

Answer 20

1. natural incident of the employee’s duties
2. where the employee is promoting the employer’s business OR
3. specifically authorized or ratified by employer

Question 21

Questions to ask: Is a principal liable to a third party on a K entered into by an agent?

Answer 21

a. Did the ageny have actual or apparent authority at the time of the K or did the principal ratify the K later?

b. if so, the principal is liable on the K (but usually, the agent is not)

Question 22

Questions to ask: Is an employer liable for a tort committed by an employee?

Answer 22

a. was the tort committed by an employee in the scope of employment?

b. if so, the employer and employee are jointyl and severally liable to 3rd party.

Question 23

When is an agency relationship created?

Answer 23

When one person (the principal) manifests an intent that another person (the agent) act on his behalf and both parties consent to the agreement.

Question 24

When is a principal contractually bound to the actions of the agent?

Answer 24

When the agent acted with actual or apparent authority.

Question 25

When does apparent authority arise?

Answer 25

When the principal holds out the agent as having certain authority, causing third parties to reasonably believe the agent has such authority.