Agency

Question 1

Agency

Answer 1

Fiduciary relationship that arises when one person (P) appoints another person (A) to act on the principal’s behalf and the agent consents to act subject to P’s control

Question 2

Creation - Capacity

Answer 2

P must have contractual capacity

A needs only minimal capacity - does not need contractual capacity

a minor can be an agent but not a principal

Question 3

Creation - formalities

Answer 3

Consent

writing
- Agency law does not require but SOF may
- Equal dignities rule - need writing when agent is to enter into certain contracts within the SOF or when agency agreement itself falls under SOF

no consideration required

Question 4

Modes of creating

Answer 4

Acts of parties
- actual, apparent, ratification

Operation of law
- estoppel
- statute

Question 5

Duties of A to P

Answer 5

Fiduciary duty to P

Duty of Care
- carry out agency with reasonable care
- sliding scale taking into account special skills, compensation

Duty of Loyalty
- undivided loyalty to P
- may not use position to profit themselves
- must act solely for benefit of P
- must refrain from dealing with P as adverse party or acting on behalf of an adverse party
- cannot compete with P
- cannot use P’s property for own purpose

Duty of Obedience
- obey all reasonable directions of P

Remedy
- wide range of contract, tort, and equitable remedies

Question 6

Duties of P to A

Answer 6

Duties imposed by the contract

reasonable compensation

reimbursement for expenses

cooperate with A and not unreasonably interfere with A’s performance

remedies
- contract remedy

Question 7

Types of authority

Answer 7

A can only bind P to a contract if acted with authority

• actual
• apparent
• ratified

Question 8

Actual authority

Answer 8

A reasonably believes they possess authority based on P’s dealings with A

Express or implied
- all or nothing - cannot be partially authorized

P’s words or conduct would lead a reasonable person in the A’s position to believe that the A has authority to act on P’s behalf

Question 9

Termination of Actual authority

Answer 9

• happening of an event
• lapse of a reasonable time
• change in circumstances
• A breach duty
• Either party terminations
• Operation of law - P’s death effective only when A has notice of it

Question 10

Implied Actual Agency

Answer 10

Incidental to express
arising out of custom
resulting from prior acquiescence
emergency measures
delegate authority of ministerial acts
pay of an accept delivery of goods
give general warranties,
manage investments

Question 11

Irrevocable agencies

Answer 11

Agency coupled with an interest or a power given as security and supported by consideration

Question 12

Apparent authority

Answer 12

P’s words or conduct leads a reasonable person in the third party’s position to believe that the agent has authority to act on the p’s behalf

Inherent authority
- derived solely from the agency relationship, P is bound even though no apparent or actual authority
- respondeat superior
- conduct similar to that authorized

Question 13

Ratification

Answer 13

A had not authority to act at the time of entering the contract, P will still be bound by A’s actions if P ratifies the contract

retroactive effect unless P lacked contractual capacity at time A entered agreement (then adoption)

Express or implied
- oral or written affirmation
- P accepts benefits of the contract
- silence if there is a duty to disaffirm or sue

Requirements
- P have knowledge or reason to know of all material facts of the contract
- accepts the entire transaction
- capacity

CANNOT BE USED TO ALTER THE RIGHTS OF INTERVENING PARTIES

Question 14

Liability: 3rd party v P

Answer 14

P liable to third party if A had actual, apparent, or ratified authority, otherwise not liable on the contract

Question 15

Liability: 3rd party v A

Answer 15

Disclosed P
- third party knows of P’s existence and identity
- P liable
- A not liable unless intended

Unidentified P
- knows there is a P but doesnt know who it is
- either P or A can be held liable

Undisclosed P
- does not know there is a P
- either P or A can be held liable

Question 16

Third party liability to P and A

Answer 16

Disclosed P
- Only P may enforce agreement

Unidentified or undisclosed
- either P or A may enforce

P cannot enforce is fraudulent misrep of P’s identity or if unforeseen increased burden on third party due to fact that performance is due to P and not A

Question 17

General liability of P for A’s torts

Answer 17

Vicarious
- respondeat superior or apparent authoirty
- jointly and severally liability

Direct liability for own negligence in hiring, retaining, or supervising

Question 18

Respondeat superior

Answer 18

P liability for torts of A committed within the scope of the employment

• generally not for independent contractor unless inherently dangerous activity, duty nondelegable, or knowingly selected an incompetent IC

Borrowed employees
- who has the primary right of contract has the liability

Question 19

IC v Employee

Answer 19

Employee - P retains right to control the manner in which an employee performs their work

if P has right to tell A how to achieve result - employee
if not - IC

If IC but P creates appearance of employer/employee relationship in which a third party relies - estopped from denying

Question 20

Intentional torts

Answer 20

Employer generally not liable

exceptions
- a natural incident of employee’s duties - force authorized or nature of work gives rise to hostilities
- employee promoting employer’s business or is motivated to serve employer
- specifically authorized or ratified by employer

Question 21

Apparent authority - Torts

Answer 21

P vicariously liable if A appears to deal on behalf of P and apparent authority enables A to
- commit a tort
- or conceal its commission