Agency

Question 1

Creation of Agency Relationship (ABC)

Answer 1

A - Assent: principal and agent manifest assent to relationship

B - Benefit: agent provides some benefit to principal

C - Control: agent agrees to be subject to principal’s control

Question 2

Independent Contractor vs Employee

Answer 2

IC - high level of independence, free to work for others, paid a fixed fee, typically owns their own tools

E - Right to control agent’s physical conduct of work (manner and means)

Question 3

Capacity for Principal vs. Agent

Answer 3

Principal - legal capacity to enter into K

Agent - minimal capacity (ability to assent, provide benefit, and be subject to control)

Question 4

Fiduciary duties owed by agent to principal

Answer 4

Duty of loyalty

Duty of care

Duty of obedience

Question 5

Actual implied authority

Answer 5

Communication between P and A

Can act within business custom or trade usage

Can take whatever actions necessary to achieve P’s objective

Question 6

Apparent authority

Answer 6

communication between P and third party

Third party reasonably believes that P consents to have A act on P’s behalf

Question 7

Objective and subjective standard for actual authority

Answer 7

A actually believes that she has authority to act for P

A’s belief is reasonable

Question 8

Death and termination of authority (agency)

Answer 8

P’s death - A’s authority is terminated when A learns of P’s death

A’s death - A’s authority is automatically terminated

Question 9

Respondeat Superior

Answer 9

P liable for acts done by (1) employee, who is (2) acting within the scope of employment

Question 10

Agent’s K liability (disclosed)

Answer 10

disclosed principal - if A had authority, then only P and third party are parties to K. If A did not have authority, then breach of implied warranty of authority and A is liable on K.

partially disclosed (existence but not identity) - A and third party are parties to K. If A had authority or P ratifies, then P is also a party

undisclosed - parties are third party and agent. P will only be party to K if A had authority to enter and estoppel.

Question 11

When will an employer be liable for conduct by independent contractor?

Answer 11

• Task is inherently dangerous

-negligent in hiring

-P retains control over IC’s actions

Question 12

Frolic v. Detour

Answer 12

Frolic - significant deviation, employer does not remain liable

Detour - de minimis deviation, employer remains liable

Question 13

Ratification

Answer 13

(1) P has knowledge of material terms of K
(2) P then accepts the K’s benefits
(3) ratify entire contract
(4) p has legal capacity
(5) timely ratification

Question 14

Estoppel Authority

Answer 14

If P fails to correct or take reasonable steps to inform third party of lack of A’s authority

Question 15

Principal’s K liability

Answer 15

If Agent acted with authority, or if P thereafter ratifies K, then may be bound

Question 16

Will A still be liable on the K if A discloses identity and existence of principal, but had no authority to enter into K?

Answer 16

Yes, even though the general rule is that full disclose of the existence and identity of the principal relieves A from personal liability on the K, there is an exception when A does not have authority to enter the K. This is a breach of the implied warranty of authority.