AGENCY

Question 1

Agency Relationship

Answer 1

In an agency relationship, the agent has the power to bind the principal and act on his behalf and under his control.

Principals may be bound to contracts or liable in tort for certain actions by their agent.

Question 2

Creating the Agency Relationship

Answer 2

(ABC)

An agency relationship is created mutual Assent for the agency to act for the principal’s Benefit, and under the principal’s Control.

Either party may unilaterally terminate the agency relationship.

Question 3

Agent Authority

Answer 3

Principals are only bound by the authorized actions of their agent.

Agents can bind their principals by acting under actual authority (express or implied), apparent authority, or if their initially unauthorized actions are later ratified by the principal.

Question 4

Agent Liability for Torts

Answer 4

Agents will be liable in lieu of the principal where they have committed an intentional tort (generally), or if their actions were outside the scope of employment.

Question 5

Agent Liability for Contracts

Answer 5

An agent will be bound to contracts with third parties if they were not authorized to enter into them and their actions were not ratified by the principal, or if they were acting on behalf of an undisclosed principal.

Question 6

Difference between Implied and Apparent Authority

Answer 6

Implied authority is when the AGENT believes that they had authority (from past course of conduct, etc.)

Apparent authority is when the THIRD PARTY believes that the agent had authority (based on an action by the PRINCIPAL).

Question 7

Actual Express Authority

Answer 7

Under the Restatement of Agency, an agent acts with actual express authority when the principal directly requests the agent to act on his behalf.

Question 7

Actual Implied Authority

Answer 7

Under the Restatement of Agency, an agent acts with actual implied authority when the principal’s conduct, either from past course of conduct custom, or necessity, lead the agent to believe that they were authorized to act on behalf of the principal.

Question 8

Apparent Authority

Answer 8

Under the Restatement of Agency, an agent possesses apparent authority to bind a principal in contract when the PRINCIPAL’S overt actions led a third party to reasonably believe that the agent had authority.

Question 9

Ratification

Answer 9

Ratification allows a principal to retroactively authorize an agent’s previously unauthorized actions, thus binding the principal to the contract.

To ratify an agent’s unauthorized actions, the principal must have had knowledge of the contract terms OR accepts the contract benefits.

Question 10

Independent Contractors

Answer 10

Principals are generally not vicariously liable for the actions of independent contractors, unless the contractor was performing an inherently dangerous activity (demolition) or was negligently selected/hired.

Generally, an employee is an independent contractor where the principal has little to no manage or control over their actions.

Question 10

Scope of Employment/Agency

Answer 10

Principals are vicariously and jointly liable for the torts committed by their agent during the course and scope of their employment/agency.

An employee/agent is acting within the scope or course of their agency/employment if they are acting in furtherance of their principal’s interests on their principal’s instruction, even if there was a minor deviation (detour) from the employment.

An employer is not vicariously liable where the employee has substantially deviated (frolicked) from the course of employment.

An employer is also not vicariously liable for the intentional torts by their employee, with exceptions.

Question 10

Respondeat Superior (Principal Tort Liability)

Answer 10

Under respondeat superior, vicarious liability is imposed upon a principal for the torts committed by their agent within the scope and course of their agency/employment.

Agent and principal (employer and employee) are JOINTLY liable.

Question 11

Intentional Torts by the Employee/Agent

Answer 11

Under respondeat superior, a principal is not vicariously liable for the intentional torts committed by their agent, with some exceptions.

(BAN — “intentional torts are BANned”)

A principal may be vicariously and jointly liable for their agent’s intentional torts if the agent was (1) acting for the principal’s Benefit, (2) the principal Authorized the action, or (3) the tort arose Naturally due to the nature of the employment (bouncer).

Question 12

Indemnification

Answer 12

A principal can recover from the agent for indemnification if the agent is acting beyond their authority.

Question 13

Principal Contract Liability

Answer 13

In general, principals are bound by the authorized actions by their agents.

The principal alone is bound to a contract in which their agent was authorized to enter into.

If the agent was not authorized to enter into a contract on behalf of the principal, the agent alone will be liable.

If the agent was authorized to act but the principal was not disclosed to the third party, the agent alone will be liable.

If the agent was unauthorized to act but the principal ratified their actions by accepting the benefit of the contract, the principal alone will be liable.