AGENCY Flashcards
Agency
The fiduciary relationship that arises when two persons assent to having one act on the other’s behalf and be under the other’s control
Agent
Person appointed to act on behalf of and subject to the control of another person, the “principal”
Is consideration required for an agency agreement?
No
What type of capacity is required for an agency agreement?
Principal
- Contractual
Agent
- Minimal
Whose consent is required for an agency agreement?
Principal
Agent
Who must agent act on behalf of?
Principal
Who must agent act under control of?
Principal
Is writing required for an agency agreement?
Land transactions only (Statute of Frauds)
Can an agency agreement be formed without its formal requirements?
Yes
- Act of parties (authority/ratification)
- TP estoppel
- Statute
What duties does Principal owe Agent?
(Not fiduciary)
Contractual duties Reasonable compensation Reimbursement for expenses Cooperation with Agent Not unreasonably interfere with Agent
What remedies may Agent exercise if Principal breaches his duties?
Contractual remedies
- Mitigate damages
Possessory lien
- Due amounts
- Compensation for services
What duties does Agent owe Principal?
Fiduciary Duties -
Contractual duties
Care: Reasonable prudence, competence, diligence
Loyalty: P’s interest above A’s
Obedience: Follow the P’s lawful instructions
What remedies may Principal exercise if Agent breaches his duties?
Contractual remedies
- Agent must be compensated
Tort remedies
Account for secret profits
Recover actual profits
Withhold compensation
- Intentional breach
- Intentional tort
Terminate agency
Actual Authority
The type of authority the principal grants to an agent, which exists regardless of the knowledge of any third party dealing with the agent
What is required for Agent’s actual authority?
Express -
- Exists when the agent reasonably understood that the principal’s words conferred on the agent the power to act on the principal’s behalf
Implied -
- Allows the agent to perform actions that are reasonably necessary, usual, and proper for accomplishing the task the principal has requested to be done
How can Agent’s actual authority be terminated?
Lapse of time
Specified event
Change in circumstances
Agent’s breach of fiduciary duty
Unilateral termination
Death of Principal/Agent
Lack of capacity
Delegation
An agent’s transfer of the agent’s authority to another, which generally is not allowed without express authorization from the principal
What is required for Agent’s apparent authority?
The type of authority that arise when a principal holds out or represents to a third party that the agent possesses authority, and the third party reasonably believes that such authority exists
What is required for ratification of Agent’s act?
1) Principal knew/should have known ALL material facts
2) Principal accepts ENTIRE transaction
- Express
- Implied (Accepting benefits/Silence/Enforcing lawsuit)
3) Principal has capacity
- Age
- Competency
Disclosed Principal
The type of principal whose existence and identity are known to the third party
Partially Disclosed Principal
The type of principal whose existence, but not identity, is known to the third party
Undisclosed Principal
The type of principal whose existence and identity are not known to the third party
What type of Principal may ratify Agent’s acts?
Second Restatement (Majority view)
- Disclosed
- Unidentified
Third Restatement
- Any
What are the exceptions to ratification of Agent’s acts?
Illegal performance
TP withdrawal
Material change towards TP’s position
When may Agent be liable to TP?
Principal is undisclosed
Principal is disclosed
- Contract intent for Agent’s liability
- Implied warranty
Principal is unidentified
- TP can elect defendant (if P/A objects)
Principal is identified
- TP can sue Principal (unless judgment satisfied)
When may TP be liable to Principal?
Principal is disclosed
- P can enforce contract vs TP
When may TP be liable to Agent?
Principal is undisclosed/unidentified
- NO fraud misrepresentation
- NO unforeseen increased burden on TP
Is Principal’s liability dependent on Agent’s liability?
Yes (joint and several liability)
What factors are used to determine whether agent is Employee or Independent Contractor (Respondeat Superior)?
1) Whether the work requires a greater skill level or specialized training;
2) Whether the agent has multiple clients or an independent business or distinct occupation separate from the principal’s business;
3) Whether the agent brings the agent’s own specialized tools to perform the work;
4) Whether the agent is paid by the job rather than a salary or ongoing hourly rate;
5) How many parties characterized the relationship in the agreement w/r/t the extent of control the principal exercises over details of the work; and
6) The actions of the parties to determine whether the principal controls the details of the agent’s work or has control over only the final result
What is required for Employee acting within his scope of employment (Respondeat Superior)?
Act similar/Incidental to authorized job
- NOT criminal act
Detour/Small deviation
- NOT frolic
- NOT car ownership
Motivated to serve Employer
- NOT Employee’s passenger invitation alone (outside scope of employment)
Ratified act
Intentional torts (generally NO)
- Natural incident
- Promoting Employee’s business
- Natural hostilities in Employee’s work
What is required for apparent authority?
1) Agent deals on Principal’s behalf
2) Agent committed/concealed tort
X retained Y to act as his agent. X did not have his representative present as he was still disabled from his injury. X solely agreed that Y must act for him only, and that Y may work under Z from time to time. Y refused to act because he did not provide anything in return and it was not in writing. Must Y act for X?
NO agency formed
- NO capacity (X: incompetent)
- NO consent from Y (only X)
- Y was to act on X’s behalf
- Y did not act under X’s control exclusively
- NO consideration required
- NO writing required (UNLESS land transaction - SOF)
Y agreed to act as X’s agent in sending a sold product. X failed to pay Y for the transfer. How may Y claim remedies?
X’s breach of duty (NOT fiduciary) (as principal)
- Breach of agency agreement
- Failure to pay reasonable compensation/reimbursement for expenses
Y’s remedies
- Contract remedies (X to mitigate damages owed by Y for its own breaches)
- Possessory lien (over due amounts from X)
Y agreed to act as X’s agent in selling clothes. Y decided to wear the clothes himself and show customers, although Y damaged them and took no responsibility. X has yet paid Y. How may X claim remedies?
Y’s breach of fiduciary duty of care (as agent)
- Y acted not as reasonable prudent person would in like position
- Y wore customer’s clothes
X’s remedies
- NOT contract remedies (Y is NOT compensated) => Withhold compensation
- Tort remedies (damages for vicarious liability)
- Terminate agency
Y agreed to act as X’s agent in selling clothes. Y decided to sell the clothes to one of his own companies and kept the profit for himself. X has already paid Y. How may X claim remedies?
Y’s breach of fiduciary duty of loyalty (as agent)
- Y engaged in self-dealing between himself + his own company
X’s remedies
- Contract remedies (Y is compensated) => Damages
- Tort remedies (intentional breach) => Damages
- Terminate agency
- Y to account for profits
Y agreed to act as X’s agent in selling clothes. X specifically instructed Y to sell them to young children. However, Y went ahead and sold them to mature adults. How may X claim remedies?
Y’s breach of fiduciary duty of obedience (as agent)
- Y disobeyed X’s instructions in selling to young children only (NOT mature adults)
X’s remedies
- Withhold compensation
- Tort remedies (negligence) => Damages
- Terminate agency
Y agreed to act as X’s agent in selling clothes in State A. X told Y that so long as Y can find any buyer willing to pay above $100, Y should sell. Y went ahead and found a buyer in State B who was willing to pay $200. X was unhappy about the fact that the buyer is outside of State A due to higher delivery expenses. The buyer paid the $200 and wants the piece of clothing. Is X liable to Buyer?
Yes
- Y’s contractual authority
- Actual (implied - Y’s reasonable belief based on X’s manifestations re ‘any’ buyer)
Y agreed to act as X’s agent in selling clothes in State A. Y went ahead and found a buyer in State B who was willing to pay $200. Y assumed that since X has negotiated with buyers across the country over the last few years, it was okay for Y to look for buyers outside of State A. X was unhappy about the fact that the buyer is outside of State A due to higher delivery expenses. The buyer paid the $200 and wants the piece of clothing. Is X liable to Buyer?
Yes
- Y’s contractual authority
- Actual (implied - X’s previous dealings with buyers outside State A)
Y agreed to act as X’s agent in selling clothes in State A. X authorised Y to sell only to buyers in State A. However, Y went ahead and found a buyer in State B. The buyer signed a contract with Y as ‘agent’ of X. X was unhappy about the fact that the buyer is outside of State A due to higher delivery expenses. The buyer paid the $200 and wants the piece of clothing. Is X liable to Buyer?
Yes
- Y’s contractual authority
- NOT actual (X authorised Y to sell in State A, NOT State B)
- Apparent (Buyer had reasonable belief Y had authority - Y signed contract as X’s agent) (Buyer relied on Y’s written authority)
X needed an agent to sell his clothes. X received a random email recommending Y as his agent. X then agreed that Y may act as X’s agent in selling clothes. X authorised Y to sell only to buyers in State A. However, Y went ahead and found a buyer in State B. X was unhappy about the fact that the buyer is outside of State A due to higher delivery expenses. The buyer paid the $200 and wants the piece of clothing. Is X liable to Buyer?
Yes
- Y’s contractual authority
- NOT actual (X authorised Y to sell in State A, NOT State B)
- Apparent (NO actual authority + X negligently hired Y as an imposter - recommendation based on random email)
X agreed that Y may act as X’s agent in selling clothes. X authorised Y to sell only to buyers in State A. However, Y went ahead and found a buyer in State B, in which he informed X who was content with it. Later, X was unhappy about the fact that the buyer is outside of State A due to higher delivery expenses. The buyer paid the $200 and wants the piece of clothing. Is X liable to Buyer?
Yes
- Y’s contractual authority
- NOT actual (X authorised Y to sell in State A, NOT State B)
- Apparent (NO actual authority + X knew of Buyer’s dealing)
X runs a concern venue. X was currently in hospital due to a recent leg injury. X agreed that Y may act as X’s agent in purchasing amp equipment for X’s concert venue. X authorised Y to purchase only from sellers in State A. However, Y went ahead and found a seller in State B who was willing to sell for less than the original price. Y mentioned that he was working for someone, but not X. X was unhappy about the fact that the seller is outside of State A due to higher delivery expenses, although X did not know about the purchase price. Later, X installed only some of the amp equipment and conducted festivals. Y is yet to pay the seller. Is X liable to Seller?
NO
- Y has NO contractual authority
- NOT actual (X authorised Y to sell in State A, NOT State B)
- NOT apparent (Y did NOT specify written authority to Seller)
- NO ratification (X should have known of ALL material facts of deal including purchase price by inquiring into deal, BUT X did NOT accept ENTIRE transaction as X used only some of amp equipment + X is NOT competent (injured))
X agreed that Y may act as X’s agent in purchasing amp equipment for X’s concert venue. X authorised Y to purchase only from sellers in State A. However, Y went ahead and found a seller in State B who was willing to sell for less than the original price. Y told Seller that he was working for X, but that he was actually only allowed to purchase in State A. X was unhappy about the fact that the seller is outside of State A due to higher delivery expenses, despite realising the discount that Seller was willing to give. Later, X installed the amp equipment and conducted festivals. Y is yet to pay the seller. Is X liable to Seller?
NO (Second Restatement - Majority view)
- X is disclosed + identified as principal => X can NOT ratify
Yes (Third Restatement - Minority view)
- Y has contractual authority
- NOT actual (X authorised Y to sell in State A, NOT State B)
- NOT apparent (Y did NOT specify written authority to Seller)
- Ratification (X knew ALL material facts of deal + X accepted ENTIRE transaction by installing ALL of amp equipment + X is competent)
- X is disclosed + identified as principal => X can still ratify
X agreed that Y may act as X’s agent in purchasing amp equipment for X’s concert venue. X authorised Y to purchase only from sellers in State A. However, Y went ahead and found a seller in State B who was willing to sell for less than the original price. X was unhappy about the fact that the seller is outside of State A due to higher delivery expenses, despite realising the discount that Seller was willing to give. Later, X installed the amp equipment and conducted festivals. However, since Y has yet to pay Seller, Seller wants to cancel the deal as he is concerned that acceptance of his discount will see revenue drop dramatically. Is X still liable to Seller?
NO
- Ratification (X knew ALL material facts of deal + X accepted ENTIRE transaction by installing ALL of amp equipment + X is competent)
- X’s ratification => Material change towards Seller’s position (lower revenue) + Seller’s withdrawal from deal => NO ratification => Y has NO contractual authority
Y agreed to act as X’s agent in selling clothes in State A. X told Y that so long as Y can find any buyer willing to pay above $100, Y should sell. Y went ahead and found a buyer in State B who was willing to pay $200. Y told Buyer that he was working for someone as his agent. X was unhappy about the fact that the buyer is outside of State A due to higher delivery expenses. The buyer paid the $200 and wants the piece of clothing. Is Y liable to Buyer?
No
- X is disclosed (NOT identified)
- NO contract intent for Y’s liability
Y agreed to act as X’s agent in selling clothes in State A. X told Y that so long as Y can find any buyer willing to pay above $100, Y should sell. Y went ahead and found a buyer in State B who was willing to pay $200. Y told Buyer that he was working for someone as his agent. X was unhappy about the fact that the buyer is outside of State A due to higher delivery expenses. The buyer paid the $200 and wants the piece of clothing. Buyer told Y he will sue Y, but Y refuses to pay. Is Y liable to Buyer?
Yes
- X is disclosed (NOT identified)
- Y refuses to be sued => Buyer can sue X or Y
Y agreed to act as X’s agent in selling clothes in State A. X told Y that so long as Y can find any buyer willing to pay above $100, Y should sell. Y went ahead and found a buyer in State B who was willing to pay $200. Y told Buyer that he was working for X as his agent. X was unhappy about the fact that the buyer is outside of State A due to higher delivery expenses. The buyer paid the $200 and wants the piece of clothing. Is Y liable to Buyer?
Yes
- X is identified
Y agreed to act as X’s agent in selling clothes in State A. X told Y that so long as Y can find any buyer willing to pay above $100, Y should sell. Y went ahead and found a buyer in State B who was willing to pay $200. Y told Buyer that he was working for X. X was unhappy about the fact that the buyer is outside of State A due to higher delivery expenses. Buyer received the clothing but has yet to pay the purchase price. Is Buyer liable to X or Y?
X
- X is disclosed => X can enforce contract vs Buyer
NOT Y
- X is disclosed => Y can NOT enforce contract vs Buyer
Y agreed to act as X’s agent in selling clothes in State A. X told Y that so long as Y can find any buyer willing to pay above $100, Y should sell. Y went ahead and found a buyer in State B who was willing to pay $200. X was unhappy about the fact that the buyer is outside of State A due to higher delivery expenses. Buyer received the clothing but has yet to pay the purchase price. Is Buyer liable to X or Y?
Y
- X is NOT disclosed => Y can enforce contract vs Buyer
NOT X
- X is NOT disclosed => X can NOT enforce contract vs Buyer
X agreed that Y may act as X’s agent in purchasing amp equipment for X’s concert venue to improve festival activity. Y was hired until X no longer required his services and that he would be paid on an hourly basis, rather than by full compensation. X authorised Y to purchase only from sellers in State A as Y did not have particular expertise in finding appropriate sellers across the country. However, Y went ahead and found a seller in State B who was willing to pay less than the original price. X was unhappy about the fact that the seller is outside of State A due to higher delivery expenses. Y has yet to pay Seller. Is X liable to Seller?
Yes
- Respondeat superior (X is jointly + severally liable to Seller for Y’s actions)
- Employer-employee relationship existed - X had right to control Y’s actions as employee (Y was hired to improve X’s business; Y was paid on-time compensation; Y was hired permanently; Y has NO particular skill/expertise)
- Y acted within his scope of employment (motivated to serve X)
X agreed that Y may construct X’s new company building of 50 stories based on Y’s substantial experiences. Y was hired for one year and was to be paid $100,000 once the building was constructed. One day, a pedestrian was walking by when Y was constructing the top floor and dropped a wrench on Pedestrian’s head. Pedestrian suffered injuries. Is X liable to Pedestrian?
Yes
- Respondeat superior (X is jointly + severally liable to Seller for Y’s actions)
- Y is NOT employee (Y was hired NOT to improve X’s business; Y was hired temporarily; Y was to be paid lump sum; Y had particular expertise)
- Y is independent contractor + engaged in inherently dangerous activity (constructing 50-story building)
- Y was acting within scope of employment (constructing building)
X is a banker. X was about to enter a major $1 million corporate deal, but X suddenly suffered a heart attack. X asked Y, his secretary, to negotiate the deal with the client. Eventually, Y negotiated the deal but gave false information that led to Client suffering damages. Is X liable to Client?
Yes
- Respondeat superior (X is jointly + severally liable to Seller for Y’s actions)
- Y was given non-delegable duty (banking)
- Y was acting within scope of employment (negotiating deal)
X agreed that Y may repair X’s toilet. X was recommended to use Y’s services based on an anonymous email. One day, Neighbour was in his garden and Y was repairing the toilet when it suddenly exploded and caused damage to Neighbour’s garden. Is X liable to Neighbour?
Yes
- Negligent hiring (X hired incompetent Y based on anonymous email) (X is liable to Seller for X’s actions, NOT Y’s actions)
- NO respondeat superior (X is NOT jointly and severally liable to Seller for Y’s actions)
- NO employer-employee relationship - Y is NOT employee (Y is NOT hired to further X’s business; Y has particular expertise; Y is hired temporarily)
- Y is independent contractor (NO dangerous activity; NO delegation of duty)
X agreed that Y may act as X’s agent in purchasing amp equipment for X’s concert venue to improve festival activity. X authorised Y to purchase only from sellers in State A as Y did not have particular expertise in finding appropriate sellers across the country. However, Y went ahead and contacted an upcoming indie rock band. Y assumed the band could derive more ticket revenue for X, although X only wanted hip hop artists to perform at his venue. Y has yet to pay Seller. Is X liable to Seller?
NO
- NO respondeat superior (X is NOT jointly + severally liable to Seller for Y’s actions)
- Employer-Employee relationship existed - X had right to control Y’s actions (Y was hired to improve X’s business; Y has NO particular expertise)
- Y did NOT act within scope of employment (hiring artists is NOT similar/incidental to purchasing amp equipment)
X hired Y to deliver his donuts to customers in the city. One day, Y was driving to deliver some donuts to a customer. Instead of taking the usual route, Y realised he left his baby son alone in his house. Y drove all the way back outside the city to the suburbs. On the way, Y suddenly crashed into a pedestrian without looking. Pedestrian suffered injuries. Is X liable to Pedestrian?
NO
- NO respondeat superior (X is NOT jointly + severally liable to Seller for Y’s actions)
- Employer-Employee relationship existed - X had right to control Y’s actions (Y was hired to improve X’s business; Y has NO particular expertise)
- Y did NOT act within scope of employment (Major deviation/Frolic - Driving on different route outside city to Y’s home vs Driving on usual route to Customer’s house)
X hired Y to deliver his donuts to customers in the city. One day, Y was driving to deliver some donuts to a customer. Y’s friend, Z, asked if Y could drop him off to a business meeting urgently. Y picked Z up and on the way, Y suddenly crashed into a pedestrian without looking. Z suffered injuries. Is X liable to Z?
Yes
- Respondeat superior (X is jointly + severally liable to Seller for Y’s actions)
- Employer-Employee relationship existed - X had right to control Y’s actions (Y was hired to improve X’s business)
- Y acted within scope of employment (Motivated to serve X in delivering donuts => Y’s unauthorised invitation of Z as passenger is NOT relevant)
X hired Y to deliver his donuts to customers in the city. One day, Y was driving to deliver some donuts to a customer. Y decided to take a detour by driving onto a farmer’s land, destroying his crops. Farmer was angry. Is X liable to Farmer?
NO
- NO respondeat superior
- Y did NOT act within scope of employment (Intentional damage to Farmer’s property)
X hired Y to cut some trees as part of X’s logging company. Y was cutting trees in a client’s garden when some of the branches fell on Neighbour’s garden and damaged his garage. Neighbour was angry. Is X liable to Neighbour?
Yes
- Respondeat superior (X is jointly + severally liable to Seller for Y’s actions)
- Employer-Employee relationship existed - X had right to control Y’s actions (Y was hired to improve X’s business)
- Y acted within scope of employment (Intentional trespass towards Neighbour’s garage - Natural incident to cutting trees)
X hired Y to send out flyers promoting X’s nightclub events. One day, Y was sending out flyers from his van that flew onto Neighbour’s garden. Neighbour was not happy. Is X liable to Farmer?
Yes
- Respondeat superior (X is jointly + severally liable to Seller for Y’s actions)
- Employer-Employee relationship existed - X had right to control Y’s actions (Y was hired to improve X’s business)
- Y acted within scope of employment (Intentional trespass towards Neighbour’s garden - Promoting X’s business)
X hired Y as a bouncer for X’s nightclub. One night, a drunk man tried to enter the club without showing his ID. Y hustled Man and Man fell down suffering a leg injury. Is X liable to Man?
Yes
- Respondeat superior (X is jointly + severally liable to Seller for Y’s actions)
- Employer-Employee relationship existed - X had right to control Y’s actions (Y was hired to improve X’s business)
- Y acted within scope of employment (Intentional battery - Natural hostility as part of X’s nightclub)
X agreed that Y may bake a cake for X’s sister’s wedding. X hired Y on a temporary basis having reviewed Y’s services. X’s sister prepared her wedding believing the cake would be excellent. Y baked the cake for her and X’s sister tried the cake. However, X’s sister suddenly suffered food poisoning. Is X liable to X’s sister?
Yes
- Respondeat superior (X is jointly + severally liable to X’s sister for Y’s actions)
- NO Employer-Employee relationship (Y was hired temporarily)
- Y is independent contractor
- X’s sister can assert TP estoppel (prepared wedding based on Y’s services)
- Y acted within scope of employment (served X by baking cake)
X hired Y, a college band, for a one-time performance at X’s music venue while X was on holiday during the morning. Y decided to perform in the evening and a neighbour complained that the music was too loud. Y intentionally did not tell X about the complaint. However, Neighbour later complained to X as well. Is X liable to Neighbour?
Yes
- NO respondeat superior
- Y is NOT employee (hired temporarily)
- Y did NOT act within scope of employment (Y performed in evening, NOT morning)
- Apparent authority existed
- Y acted on X’s behalf
- Y commited + concealed nuisance (trespass by noise)
