agency Flashcards
When does an agent have the power to bind the principal to a K?
An agent has the power to bind the principal to a contract when the agent acts with actual or apparent authority
Actual authority
Actual authority exists when the principal makes a manifestation that causes the agent to reasonably believe that the agent is authorized to act on the principal’s behalf
Apparent authority
Apparent authority exists when a third party reasonably relies on manifestations by the principal concerning the agent’s authority to act on the principal’s behalf
Undisclosed principal
A principal is an undisclosed principal if the third party has no notice of the principal’s existence
A’s liability for a K with an undisclosed P
An agent who enters into a contract on behalf of an undisclosed principal becomes a party to the contract and is liable on it
Partially disclosed principal
A principal is partially disclosed if the third party has notice of the principal’s existence but not the principal’s identity.
A’s liability on K with partially disclosed P
Unless the agent and third party agree otherwise, an agent who enters into a K on behalf of a partially disclosed principal becomes a party to the contract.
Requirements for ratification
The requirements for ratification are
1. the principal must ratify the entire contract
2. the principal and the third party must have legal capacity to enter into the contract
3. the ratification must occur before the third party withdraws from the contract; and
4. the principal must know the material facts of the transaction
vicarious liability
the doctrine of vicarious liability asserts that a principal is liable for the acts of an agent, even though the principal is innocent of fault and not directly liable for any tort or crime
respondeat superior
under the doctrineof respondeat superior, a principal may be vicariously liable for a tort committed by an agent acting within the scope of their employment
When does an employee act within the scope of their employment
An employee acts within the scope of their employment when either performing work assigned by the employer or engaging in a course of conduct subject to the employer’s control
Employee acting outside scope of employment
When an employee acts independently of any intent to serve any purpose of the employer, the employer may escape liability
requirements for apparent authority
For apparent authority to exist, a third person must believe that the agent acted with actual authority, and such belief must be reasonable and traceable to a manifestation by the principal
When is P liable on a K
A principal is subject to liability on a contract if the agent acted with actual or apparent authority to bind the principal
how is express actual authority created
express actual authority can be created by oral or written words, clear direct and definite language, or specific detailed terms and instructions
Requirements for express actual authority to exist
For express actual authority to exist, the principal’s manifestation must cause the agent to believe that they are doing what the principal wants, and the agent’s belief must be reasonable
Implied warranty of authority
An agent purporting to be acting for a principal gives an implied warranty of authority to the third party. If the agent lacks the power to bind the principal, then a breach of implied warranty has occurred, and the agent is liable to the third party
liability when A enters into K for undisclosed P with authority
If the agent had the authority to bind the principal to the contract, both the principal and agent are parties to the contract with the third person
Election of remedies doctrine
Once a third party discovers the existence of a principal, the election of remedies doctrine requires the third party to choose to hold either the principal or agent liable. They may only recover against one of these parties
Partially disclosed P
A principal is partially disclosed if the third party has notice of their existence, but not their identity
Liability for A in a partially disclosed P contract
Unless the agent and third party agree otherwise, an agent who enters into a contract on behalf of a partially disclsoed principal becomes a party to that contract.
P’s liabiltiy if they ratify a K
If the principal ratifies an agent’s action, the principal is bound just as if the action had been authorized, even if the agent acted without authority
Implied actual authority
implied actual authority allows an agent to take whatever actions necessary to achieve the principal’s objectives, based on the agents reasonable understanding of them
How can an agent avoid becomming liable to a principal’s contract
In order to avoid becoming liable on the contract, the agent needs to enter into the contract on behalf of a disclosed principal, disclose that principal to a third party, and not agree to become a party to the contract
What if the agent lacks power to bind the principal
If the agent lacks the power to bind the principal, then a breach of implied warranty has occured, and the agent is liable to the third party for breach
Vicarious liability
Vicarious liability asserts that a principal is liable for the acts of an agent, even though the principal is not directly responsible
Respondeat superior
A principal can be liable under the doctrine of respondeat superior when the agent comits a tort while acting within the scope of their employment
tort liability when agent acts with apparent authority
a principal can also be vicariously liable when an agent is acting with apparent authority and commits a tort and their appearance of authority allowed them to do so. The third party must believe that the agent was acting with actual authority and that belief must be reasonable and traceable to a manifestation made by the principal
When is a principal directly liable for harm caused by their agent
A principal is directly liable to a third perosn harmed by an agent’s conduct when the principal is negligent in selecting, supervisign, or controlling the agent.
