Agency Flashcards
Forming agency relationships
- test for existence is objective
- does not need to be contractual, there is no requirement of consideration (technically work without pay)
Agent’s Duties to Principal
- Duty of Loyalty
- Obey reasonable actions
- Act with reasonable care and skill
- Duty to Account
- Keep principal informed
Duty of Loyalty
agent’s acts for principal’s benefit - not for agent’s own benefit at principal’s expense
* no conflicts of interest
* maintain confidentiality
Duty to Account
segregate funds and keep good records
Principal’s Duties to Agent
- Honor agreements
- Compensate Agent (if agreed upon)
- Reimburse Agent
- Indemnify agent
- Inform agent of known risks
Indemnify agent
for contract or tort liability agent incurs by acting on a principal’s behalf (unless unauthorized)
I ASK YOU TO STRONG-ARM YOUR FRIENDS INTO SELLING THEIR BASKETBALL TICKETS TO MY BUSINESS. YOU ARE MY AGENT, MUST YOU DO THIS?
No because it is unreasonable instructions - “the boss made me do it” is not an excuse
YOU GET QUOTES FROM TWO LUMBER PROVIDERS. ONE OF THE PROVIDERS ANTICIPATES THAT IF THIS VENTURE GOES WELL YOU MAY BE BUILDING MORE BOOTHS. HE OFFERS TO GIVE YOU AN ALL EXPENSE PAID WEEK OF SKIING AT VAIL IF YOU BUY LUMBER FROM HIM. SHOULD YOU DO IT
this is a conflict of interest, called kickback – to clear this you must go straight to principal and have full disclosure
I DIDN’T SAY ANYTHING ABOUT THE TYPE OF BOOTH I WANTED, SO YOU HASTILY NAIL SOME LUMBER TOGETHER TO MAKE A BOOTH. THE FIRST PERSON THAT COMES TO BUY TICKETS IS INJURED WHEN SHE LEANS ON THE BOOTH’S COUNTER, DO YOU OWE A DUTY?
Yes, lack of reasonable care
I HAVE A COUPLE OF GOOD SOURCES FOR OBTAINING TICKETS. I GIVE YOU MY SOURCES CONTACT INFO BUT YOU USE THEM TO GET YOUR FRIENDS TICKETS
This is violating a duty of loyalty and violation to keep principal informed
How does an agent get the power to act for the principal?
- actual express authority
- actual implied authority
- Apparent Authority
- Ratification
Actual Implied Authority
principal’s authorization of the agent is implied from parties’ conduct or position granted to agent
Test based on questions of fact (implied authority)
- Was the agent doing the sort of activity that would be expected of a person in that role?
- Was the agent doing something that helped accomplish the goals of the agency?
- Did the principal know about and not do anything to stop the agent’s acts?
- Was the agent acting reasonably in an emergency?
Apparent Authority
words or conduct by the principal to a third party that cause the third party to reasonably believe that the agent has authority to act for the principal, even if principal has not actually authorized the agent to so
When does the agency relationship end?
- goal of the agency is accomplished
- parties agree to terminate
- death of either the principal or agent
- either party always has the power to terminate the agency on their own, but not always the right to do so
Apparent authority of the agent will continue until…
the principal gives notice to the third parties that the agency has terminated
Ratification
occurs when a principal voluntarily decides to honor an agreement, even though the agent was not authorized to enter the agreement
Disclosed Principal
third party knows that the agent is working for a principal, and knows who the principal is = agent is not liable on contract
Disclosed Principal (excpetion)
If agent does not disclose identity or fact of the principal to the third party, or if principal doesn’t exist at time of deal, the agent is personally liable
Agent can either be _____ or ______
an employee or independent contractor
Nearly all employees are _____ of their employers
agents
An independent contractor is not an ____ but is sometimes an _____
not an employee but is sometimes an agent (realtor, lawyer)
When does the principal have more obligations (i.e wages, benefits)
when the agent is an employee
Employee vs. Independent Contractor
- employer’s right to require compliance with instructions
- extent of any training provided by employers
- degree of integration of the worker’s services into the business of the employer
- requirement that the services be provided personally by worker
- extent to which the worker hires, supervises, and pays assistants
- existence of a continuing relationship
2 ways a principal may be liable for an agent’s tort
- Respondeat Superior
- Direct Liability
- Joint and several liability and idemmnification
Respondeat Superior
only for employee/employer relationships not independent contractor
* employer is liable when employee commits tort within the scope of employment
For respondeat superior, consider whether the agent was:
- acting on work time
- acting at the work location
- motivated by the employers interests
Direct Liability
for both employees and independent contractors
- principal is directly liable for agent’s tort if the principal authorized the tortious conduct
Negligent Hiring or Supervision
principal will be directly liable if principal was negligent in hiring agent
Joint and Several Liability and Idemnification
In certain situations where several tortfeasors have caused damages to a plaintiff, courts can hold all of the tortfeasors jointly and severally liable for plaintiff’s injuries
