Agency Flashcards
What is an agent?
An agent is a person who is authorized and agrees to act on behalf of and subject to the control of another.
Why does agency matter?
- Principles are vicariously liable for their agents’ actions that are within the scope of the agency relationship.
- Agents owe fiduciary duties to their principal.
What are some types of agency relationships?
- Employer and employee
- Lawyer and Client
- Broker and client
How is an agency relationship created?
Assent, Behalf, Control
the principal manifests assent to have the agent act on the principal’s behalf and under the principal’s control and the agent manifests assent or otherwise consents to act.
T or F: Parties must enter into a written contract to form an agency relationship.
False. A written contract is not necessary to create an agency relationship.
As long as there is assent from both the principal and agent, the agent acts on behalf of the principal and that principal is under the control of the agent, there is an agency relationship.
T or F: If a party declares “I am not your agent,” this declaration is sufficient to always negate the finding of an agency relationship between you and this party?
False, actual intent to enter into an “agency” relationship or to be an agent is not necessary to create an agency relationship.
This means that agency relationship can arise by implication and actions, regardless of the parties’ intent.
Any kind of manifestation of assent.
Do you have to use the words “agents” or “principal” in a written agreement for there to be an agency relationship?
NO. Whether a relationship is characterized as agency in an agreement between parties or in the context of industry or popular usage is not controlling. RTA 1.02
Example, I can write I’m the manager of x and exhibit my assent to be x’s manager and x agrees. Plus that I’m acting on behalf of x and x is under my contorl. Then, in this example, there is an agency relationship even though I didn’t use the word agency in the agreeemnt.
Legal Consequences of agency
- Vicarious liaiblity
- Duty of Loyalty: acting in the benefits of the principal.
Yost v Wabash College
- There is neither evidence that wabash assented to such an arrangement nor evidence that the local fraternity manifested assent to take action on behalf of wabash.
- Local fraternity does not represent the college and there are no assents between the two.
- There is no agency relationship, so the actions of the local fraternity and its members cannot be imputed to wabash under a theory of vicarious liability.
Does agency relationship exists between franchisor and franchisee?
Depends. An agency relationship is more likely when the purported principal’s authority encompasses the problem before the court.
Duties Principals and Agents owe to each other
Principles’ Duties:
- Performance of Contract Obligations
- Indemnification
- Good faith and fair dealing.
Agent’s duties:
- Performance of contract obligations
- Duty of Care
- Duty of Competence
- Duty of Diligence
- Duty of Disclosure
- Duty of Loyalty.
What is duty of loyalty?
- a duty not to communicate confidential informaiton of the principal for the agent’s own purposes or those of a third party.
- a duty not to compete with the principal in any matter within the scope of the agency relationship and
- a duty not to act as an adverse party to the principal in a transaction connected with the agency relationsihp.
- a duty not to acquire a material benefit from a third party in connection with transactions on behalf of the principal.
Remedies for a breach of duty of loyalty
1) Damages
2) Disgorgement of profits
What does disgorgement of profits mean?
Disgorgement is an equitable remedy requiring a party who profits from wrongful acts to give up any profits they made as a result of that illegal or wrongful conduct.
Food Lion Inc. v Capital Cities
Employees are agents of their employer
Employees owe a duty of loyalty to their employer while under their employment
Reporters breached their duty to their employer by promoting the interests of their other employer (ABC) to the detriment of Food Lion with “the requisite intent to act against the interests of Food Lion.
Non-compete agreements
Employers are subject to applicable legal requirements to protect themselves from competition with their former employees by requiring a non-compete agreement as a condition of employment.
Non-compete is reasonable as long as they are 1. Limited in time, space and scope of work.
Does doing a side-project violate the duty of loyalty?
Yes, because the duty of loyalty requires that the agent put the principal’s interest first. And doing side projects would compete.
The agent should negotiate in his contract with the firm about his ability to consult during off hours.
What is Express Actual Authority
P manifests to A that it wishes A to so act
What is implied actual authority?
Covers all things necessary or incidental to exercise to express actual authority
What is apparent authority
Even in the absence of actual agency relationship or actual authority, if a third party reasonably believes - based on manifestations by the principal - that the Agent is authorized to act on their behalf then principal may be liable for A’s acts.
When does actual authority created?
Actual Authority is created by a principal’s manifestation to an agent that as reasonably understood by the agent, expresses the principal’s assent that the agent take action on the principal’s behalf.
How does one manifest assent?
A person manifests assent or intention through written or spoken words or other conduct.
What is the scope of actual authority?
An agent has actual authority to take action designated or implied in the principal’s manifestations to the agent and acts necessary or incidental to achieving the principal’s objectives, as the agent reasonably understands the principal’s manifestations and objectives when the agent determines how to act.
What are some elements to constitute implied authority?
Ex. the housing and transportation issues of workers are well within the implied authority of the company because these are necessary components of sub-company’s recruitment process.
It was “essential to the success” of sub-company’s hiring process of workers with housing.
