Agency Flashcards
What are the three types of Agency Relationships?
- Express Actual Authority
- Implied Actual Authority
- Apparent Authority
When does an Agency Relationship exist?
If there is:
- Assent (agreement by principal and agent);
- Benefit (agent acts to benefit the principal); AND
- Control (principal exerts any amount of control over the agent).
When does an Agency Relationship terminate?
(when the agent no longer has authority to act)
- When the principal/agent manifests to the other that the relationship is terminated;
- A specified term of the agent’s authority expired;
- Upon the death of the principal or agent (no notice required under common law);
OR
- Upon the incapacity of the principal or agent.
When does Express Actual Authority exist?
When the principal, through words, has explicitly told the agent that he is entitled to act.
When does Implied Actual Authority exist?
When the principal’s words or actions lead the agent to reasonably believe the agent has authority.
What situations create actual implied authority?
- The agent believes he is entitled to act to carry out his express authorized duties;
- The agent has acted similarly in prior dealings;
OR
- It is customary for agents in that position to act in that way.
When does Apparent Authority exist?
When:
- The principal, through words, actions, or inactions, “holds out” another person as the principal’s agent;
- A third-party reasonably believes that the person has authority to act on behalf of the principal; AND
- The third party’s mistaken belief is traceable to the principal’s manifestations of the person as the principal’s agent.
What situations create apparent authority?
- Principal negligently allows a person to appear to have authority as the principal’s agent;
- Principal gives the agent a position/title indicating that the agent has the authority of that position/title;
OR
- An agent’s actual authority terminates, but the agent continues to act with a third-party that the principal knows the agent has dealt with in the past AND the third-party does not have notice that the agency relationship has been terminated.
Apparent Authority is not applicable during what circumstances?
- If the third-party has actual knowledge that the agent did NOT have authority;
- The contract/transaction was not within the ordinary usages of business;
OR
- If there is an partially disclosed or unidentified principal
How does a principal ratify a contract?
When the principal:
- Has knowledge of all material facts or contract terms; AND
- Thereafter manifests assent (approval) of the same through words or conduct.
When does an agent NOT have personal liability for contracts entered into with a third-party on behalf of the principal?
When the agent BOTH:
- Fully discloses the principal he is acting on behalf of; AND
- Agent had actual authority OR apparent authority, even if the apparent authority was not based on actual authority.
Level of control:
Employee
vs.
Independent Contractor
Employee: Employer controls manner/means of the employee’s performance of work.
Independent Contractor: A person NOT controlled or subject to control with respect to performance (may or may not be an agent).
Tort Liability:
Employee
vs.
Independent Contractor
Employee: Employer IS vicariously liable for negligent acts of employee (within scope or employment).
Independent Contractor: Principal/employer is generally NOT liable for torts committed by a contractor.
What determines whether a person is an Independent Contractor or Employee?
Whether the principal had the right to control the manner and method in which the job is performed.
When is an employee deemed to be acting within the scope of their employment?
When:
- Performing work assigned by the employer;
OR
- Engaging in a course of conduct subject to the employer’s control.
** Conduct is not outside the scope merely because an employee disregards the employer’s instructions.
What is respondent superior?
An employer’s vicariously liable for an employee’s negligent act (torts) if the employee was acting within the scope of employment.
When is an employee deemed to be acting outside the scope of their employment?
When an employee’s tort:
-Occurs within an independent course of conduct;
AND
- Is not intended by the employee to serve any purpose of the employer.
When is an employee’s intentional tort considered within the scope of employment?
When the act was:
- Specifically authorized by the employer;
- Driven by a desire to serve the employer;
OR
- The result of naturally occurring friction from the type of employment.
When will a principal be liable for torts committed by an Independent Contractor?
If:
- The contractor is engaged in an inherently hazardous activity;
- The duty owed by the principal is non-delegable;
OR
- Through the doctrine of estoppel (The principal holds the contractor out as his agent to a third-party, they reasonably relied on the agent’s skill, and the third-party suffered harm as a result.)
What fiduciary duties does an agent owe to the principal?
- The duty of care – to use reasonable care
- The duty of loyalty – to act solely and loyally for the principal’s benefit
- The duty of obedience – to obey all reasonable instructions
When is a principal liable for contracts entered into by an agent?
When the agent has:
- Express actual authority (even if the agent was mistaken about having actual authority as long as the agent reasonably believed they had express actual authority to enter into the contract);
- Implied actual authority (even if the agent was mistaken about having actual authority as long as the agent reasonably believed they had actual authority to enter into the contract);
OR
- Apparent authority.
What is an unidentified principal?
When the third-party to a contract entered into by an agent knows that the agent is entering into the contract on behalf of a principal, but does not know who the principal is.
What is an undisclosed principal?
When the third-party to a contract entered into by an agent doesn’t know that the agent is entering into the contract on behalf of a principal.
What is ratification?
When the principal adopts and accepts liability for a contract entered into by another person who did not have authority to enter into the contract.
