Agency

Question 1

Examples of principal-agent relationships

Answer 1

(1) Employer-Employee
(2) Named agents (e.g. talent agent)
(3) Partner-Partnership
(4) Officer/Director-Corporation

Question 2

A principal may be liable for the actions of an agent in respect to

Answer 2

contracts or tort claims

Question 3

3 Components of an Agency relationship

Answer 3

(1) Assent (manifest assent from both parties)
(2) Benefit (agent works for benefit of principal)
(3) Control (agent works subject to control of principal)

ABCs

No consideration is required

Question 4

When one or more parties disclaim creation of agency relationship, courts look to

Answer 4

manifestations of assent (factually dependent, need not be in writing / official)

Question 5

In order to be a Principal, a person or entity must have

Answer 5

legal capacity (excludes minors or those incapacitated)

Common: Employer, corporation, partnership

Question 6

Factors likely to make a relationship one of employer-agent

Answer 6

(1) Giving employees tools
(2) Paying employee on structured pay period
(3) Directing ways in which employees perform tasks

Question 7

A person or entity can be an agent if

Answer 7

they have minimal capacity (minors may be agents)

Question 8

To have minimal capacity an agent must

Answer 8

(1) Assent to the agency relationship
(2) Perform tasks on behalf of principal
(3) Be subject to principal’s control

Question 9

Characteristics of an independent contractor

Answer 9

(1) Maintain high level of independence
(2) Free to work for other people
(3) Paid on fixed fee
(4) Typically own their own tools

Question 10

An agency relationship may be terminated

Answer 10

unilaterally by either party principal or agent

OR reasonable passage of time or change in circumstances

Question 11

Principal is bound to a contract when

Answer 11

(1) principal has authorized the agent to enter into K, and
(2) Agent acted with legal authority

Question 12

4 types of authority

Answer 12

(1) Actual Express
(2) Actual Implied
(3) Apparent
(4) Ratification

Principal to agent = actual authority
Principal to 3rd party = apparent authority

Question 13

Actual express authority requires

Answer 13

Subjective intent (agent believes that he is doing what principal wants him to do) AND Objective intent (the belief was objectively reasonable)

Look to written or spoken words conveying authority

Question 14

Termination of actual authority happens

Answer 14

immediately at death of the agent

or

when the agent has knowledge of the principal’s death

Question 15

Actual implied authority may be discerned through

Answer 15

words or conduct which conveys authority to the agent to take whatever steps are necessary to achieve the principal’s objectives

Question 16

Actual implied authority grants an agent the right to

Answer 16

act within business customs or general trade usage

Question 17

A principal may create apparent authority of an agent by

Answer 17

words, written or spoken, that cause a 3rd party to REASONABLY believe that the principal consents to having acts done on principal’s behalf by the agent (may be done through past dealings)

Note: Apparent authority may exist when no actual authority exists

Question 18

Ratification requires

Answer 18

(1) Principal to have knowledge of material terms of the contract, and
(2) The principal to then accept the contracts benefits

Note: Ratification does not require a pre-act communication but MUST happen before the third party withdraws

NOTE: Must also be TIMELY and have legal capacity to ratify

Question 19

3 types of principals

Answer 19

(1) Disclosed principal
(2) Partially disclosed principal
(3) Undisclosed principal

Question 20

Disclosed principal means

Answer 20

the 3rd party:
(1) knows the agent is acting on behalf of the principal and
(2) the identify of the principal

Result = 3rd party and Principal are parties to the contract

Question 21

Partially disclosed principal means

Answer 21

the 3rd party:
(1) knows the agent is acting on behalf of the principal but
(2) does not know the identity of the principal

Result = 3rd party, Principal, and Agent are parties to the contract

Question 22

Undisclosed principal means

Answer 22

the 3rd party:
(1) does not know the agent is actin non behalf of the principal and
(2) does not know the identity of the principal

Result = 3rd party and agent are parties to the contract

Question 23

Sufficient control is measured by

Answer 23

whether the principal controls, or has the right to control, the physical conduct (manner and means) of agent’s performance

Question 24

Vicarious liability for a principal requires

Answer 24

(1) Principal has sufficient control over the agent’s conduct such that agency relationship is employer-employee, and
(2) The tort was committed while the agent was acting within the scope of the their employment

Question 25

A principal is generally not liable for independent contractors UNLESS

Answer 25

(1) Task is inherently dangerous
(2) Principal was negligent in hiring the independent contractor
(3) The principal retains control over certain tasks and the tort occurs within those tasks

Question 26

To determine scope of employment ask

Answer 26

(1) Did agent indent do benefit the principal
(2) Was agent’s conduct the kind the agent was hired to perform
(3) Did tort occur “while on the job”

Question 27

Frolic v. Detour

Answer 27

Frolic = significant deviation (outside scope of employment)

Detour = minor deviation (within scope of employment)

Question 28

Principals are generally not liable for the intentional torts of employees except when

Answer 28

(1) Conduct occurred within the general space and time limits of employment
(2) Agent was motivated in some part to benefit the principal
(3) The act is of a kind that the agent was hired to perform

Question 29

An agent (even if unpaid) owes a principal the duty

Answer 29

(1) to exercise reasonable care
(2) to obey reasonable instructions
(3) of loyalty

Question 30

Duty of Loyalty warrants that an agent may not

Answer 30

(1) Usurp a business opportunity
(2) Take in secret profits
(3) Compete in competing business with principal

Question 31

A principal may be estopped from denying liability if

Answer 31

the principal failed to take reasonable steps and use ordinary care to inform a third party of the lack of authority

Note: an undisclosed principal may not rely on instructions to an agent to reduce authority if a third party reasonably believed the agent would have such authority had the principal been disclosed

Question 32

Principal and Agent may be liable for fraudulent concealment if

Answer 32

either had notice the 3rd party would not have entered into K if had known P’s identity

Question 33

Duties Principal owes Agent include

Answer 33

(1) duty to deal fairly and in good faith
(2) compensate as expressly or impliedly agree
(3) Duty not to interfere
(4) Duty to indemnify (if within scope and with actual authority)

Question 34

Principal’s remedies for breach by an agent include

Answer 34

Injunction, breach of contract action, tort action, recision, restitution, terminating of relationship, forfeiture of compensation

Question 35

If the agent lacks the power to bind the principal (e.g. no actual or apparent authority) but discloses the principal’s identity, then a breach of

Answer 35

the implied warranty has occurred, and the agent is liable to the third party

Question 36

If the agent had the authority to bind the principal to the contract, even if the principal was undisclosed, then

Answer 36

both the principal and the agent are parties to the contract with the third person

Question 37

Once the third party discovers the existence of the principal (previously undisclosed or unknown), the election of remedies doctrine requires the third party to

Answer 37

choose to hold liable either the principal or the agent

Question 38

A principal can be vicariously liable when an agent is acting with apparent authority and

Answer 38

commits a tort and their appearance of authority allowed them to do so