Agency Flashcards
When is an agency relationship created? What are the three components?
An agency relationship is created when one (principal) manifests intent that another (agent) act on his behalf and be subject to his control
Three components (ABC):
1.Assent—agent (A) and principal (P) must manifest assent through words or conduct;
2.Benefit—A agrees to work on behalf of P and for P’s benefit; and
3.Control—A’s actions are subject to P’s control
Who can be in an agency relationship?
Any individual or entity with capacity to possess rights and incur obligations can be a P;only minimal capacity is required to be an A.
When is an agency relationship terminated?
Either party may unilaterally terminate the agency relationship
Generally A’s authority may be revoked by P, by agreement, changed circumstances, passage of time, A’s death, or P’s death or incapacity after notice to A; P’s incapacity or death may not terminate A’s durable power of attorney.
Limitations—if A’s power is coupled with an interest in the subject matter of the power, P’s death or termination does not revoke A’s authority
When is a principal liable to a 3P for acts of an agent?
P is contractually liable to a third party (3P) for acts of an A with actual or apparent authority.
What are the four forms of authority where P can be liable for A’s actions?
Actual authority—P causes A to reasonably believe A has authority to act
* Express—through written or spoken words
o A must reasonably believe (subjective) she is doing what the P wants her to do (objective); P’s actual contrary intent is ineffective
* Implied—allows A to take whatever reasonable steps are necessary to achieve P’s objective, within the accepted business practice or custom
o By position—can arise by P placing A in a position that has authority to act (e.g., VP)
o By acquiescence—when P accepts or stays silent
Apparent authority—P causes a 3P to reasonably believe the A has authority to act
* 3P’s reasonable belief can bind P based upon past dealings, trade customs, etc.; an A without authority acting in the ordinary course of business can bind P if 3P lacks notice
* Inherent authority from placing A in a position of the type that has authority (e.g., VP)
* Imposter without authority can bind P if P is negligent in creating appearance of authority
Ratification—with knowledge of material facts, P affirms the contract made on P’s behalf
Estoppel—P may be barred from denying an agency relationship or A’s authority if 3P detrimentally relied and P’s negligence caused the belief or P failed to correct the mistake
When is an agent liable for their own actions as an agent?
Disclosed principal—if 3P had notice and knew the identity of the P, A is not liable
*Partially disclosed (unidentified) principal—if 3P had notice but did not know P’s identity, A is liable
*Undisclosed principal—if 3P did not know of agency relationship at all, A is liable
* Warranty of authority breached if A lacks the power to bind P; A liable for damage.
What is respondent superior?
P may be vicariously liable for the tortious acts of A committed within the scope of employment.
When is an agent an employee and not an IC?
P has the right to control the manner and means of A’s performance (unlike an independent contractor), e.g., provides tools, structures pay, directs the way the agent is to complete the tasks
When is a principal liable for IC’s actions?
P can be liable for independent contractor torts when:
* P retains control over the item/task
* P hires independent contractor to perform nondelegable tasks
* Independent contractor has apparent authority
* P is negligent in selecting, training, or supervising independent contractor
When is an employee acting within the scope of employment?
Performing assigned work or acting subject to P’s control
Exceptions:
Frolic (not a minor detour)
Commuting (unless in company vehicle or on employer errand)
Use of physical force, unless it was necessary to complete the assigned task
Intentional torts, unless acting for P’s purpose and closely connected to the task
A acts independent of P’s purpose or benefit (including criminal or personal conduct)
When is a principal directly liable for agent’s actions?
Authorizing or ratifying tortious conduct of A
*Negligent selecting, training, or supervising A
*Delegating a non-delegable duty (legal responsibility remains with P)
What are the duties of an agent?
1.Duty of loyalty to work only for P’s benefit and to not compete, usurp P’s business opportunitynor take secret profits
2.Duty of reasonable care to perform with reasonable diligence and skill
3.Duty of obedience to obey reasonable instructions
4.Duty of notification and accounting—must keep P informed and account for funds
