Agency

Question 1

What are the 2 parties necessary for an agency relationship?

Answer 1

An agent, and a principal

Question 2

is a principal liable for the actions of their agent?

Answer 2

Yes, for contracts and torts, so long as a valid agency relationship exists

Question 3

What are the 3 requirements for creating an agency relationship?

Answer 3

1) assent between both parties
2) benefit: agent works for the benefit of the principal
3) control: the agent agrees to work subject to the principal’s control

Question 4

If one of the parties disclaims that an agency relationship exists, what will a court do?

Answer 4

the court will look to see if there are any manifestations of assent sufficient enough to create an agency relationship

Question 5

who can legally be a principal?

Answer 5

any person/entity that has legal capacity (i.e., no minors or mentally incapacitated parties)

Question 6

Who can legally be an agent?

Answer 6

any person/entity that has minimal capacity (more open than legal capacity. Minors can serve as agents)

Question 7

what counts as minimal capacity for becoming an agent?

Answer 7

The person/entity must be able to:
1) assent/consent to the relationship
2) subject to the principal’s controls
3) perform the tasks on behalf of the principal

Question 8

is consideration or a writing needed to form an agency relationship?

Answer 8

No, neither are required

Question 9

What are the two big cateogories of agents?

Answer 9

1) independent contractors
2) employees/servants

Question 10

Are principals more liable for the actions of an employee or an independent contractor?

Answer 10

employee. The more control a principal has over an agent, the more liable they are for the actions of that agent

Question 11

how is an agency relationship terminated?

Answer 11

Either party can terminate the relationship unilaterally

Question 12

What are the 2 requirements for a principal to be liable for an agent entering into a contract on their behalf?

Answer 12

1) the principal authorized the agent entering into the contract
2) the agent acted with legal authority

Question 13

What are the 4 kinds of legal authority an agent can have?

Answer 13

1) ratification
2) apparent authority
3) actual express authority
4) actual implied authority

Question 14

how do you differentiate between apparent authority and the two types of actual authority?

Answer 14

If the communication is between the principal and their agent, that’s actual authority

If the communication is between the principal and a third party, that’s apparent authority

Question 15

Is intent necessary for actual express authority to be given to an agent.

Answer 15

Yes, there must be objective and subjective intent.

Question 15

what is actual express authority?

Answer 15

a communication between principal and agent where the principal uses clear and definite words, spoken or written, to convey authority to do specific things/follow specific instructions onto agent

Question 16

what is objective intent in relation to actual express authority?

Answer 16

The agent has an objectively reasonable belief that they’re acting on behalf of the authority given to them by the principal

Question 17

Does death terminate actual express authority?

Answer 17

Yes. If the agent dies, the actual express authority terminates.

If the principal dies, the authority terminates when the agent gains actual knowledge of the death

Question 17

what is subjective intent in relation to actual express authority?

Answer 17

agent must believe that what they’re doing is what the principal wants them to do

Question 18

what is actual implied authority

Answer 18

communication between principal and agent where the principal uses words, spoken or written, or other conduct, to tell the agent to take any steps necessary to achieve the principal’s objectives

Question 19

how is apparent authority given?

Answer 19

communication between the principal and third party where the principal, through spoken or written words, causes the third party to reasonably believe that the principal consents to the agent acting on their behalf

Question 20

how is ratification given?

Answer 20

There’s no communication between the parties before the act is done. The principal has knowledge of the contract they’re getting into, and the principal accepts the contract’s benefits.

ex. Your servant goes to a liquor store and buys you a bottle of wine. You have not authorized them to do so. Servant brings it back to you. If you accept the bottle of wine, knowing the contract the servant entered into the buy the wine, you’ll be liable to pay the bill as you’ve ratified their conduct.

Question 21

does the principal’s identity need to be disclosed for a valid agreement to be made?

Answer 21

No

Question 22

If a principal’s identity is not disclosed, how does that affect their liability for an agent’s actions?

Answer 22

If the third party doesn’t know that the agent is working for someone, then the principal isn’t liable.

If the third party knows that the agent is working for someone, even if the third party doesn’t know the specific identity of the principal, the principal is still liable.

Question 23

Under tort law, is a principal liable for the tortious actions of their agent?

Answer 23

Yes, if the conduct was committed within the scope of the agent’s employment

Question 24

Under tort law, is a principal liable for the tortious conduct of an independent contractor they hired?

Answer 24

Typically no, unless one of the 3 exceptions applies:
1) inherently dangerous activity
2) principal was negligent in hiring the contractor
3) the principal maintained control over certain tasks, and the tortious conduct occurred within the scope of one of those tasks

Question 25

How do you determine if an agent’s tortious conduct occurred within the scope of their employment?

Answer 25

Depends on if it was a frolic or detour. A detour is a minor deviation from an assigned path, and any conduct falls within the scope of employment

A frolic is a significant deviation from the assigned path, and any conduct won’t fall within the scope of employment

Question 26

Under tort law, is a principal liable for intentional torts committed by an agent?

Answer 26

Typically, no, unless one of the 3 exceptions apply:
1) the act is of the kind that the principal hired them to perform
2) the conduct occurs within the general space and time of the employment
3) the agent was motivated at least in part to benefit the principal

Question 27

what is estoppel?

Answer 27

Applys when a third party is justifiably induced into making a detrimental change in position.

Estops a principal from denying the existence of an agency relationship or an agent’s authority with respect to a transaction entered into by the agent with a third party

Question 28

what are the elements of estoppel, and when does it allow a third party to stop a principle from claiming that they’re not liable for their agent’s actions?

Answer 28

A third party is justifiably induced by an agent to make a detrimental change in position because that third party believed the agent’s principal entered into the transaction and the principal either:
1) Intentionally or carelessly caused the belief; or
2) the principal knew of the third party’s mistaken belief but failed to take reasonable steps to notify them of the facts.

Question 29

Can apparent authority be established when the principal is unknown to the third party?

Answer 29

No. If the third party doesn’t know who the principal is, there is no apparent authority.

Question 30

when is actual authority (either implied or express) revoked?

Answer 30

When the principal directly tells the agent that they no longer have their authority

Question 31

when is apparent authority revoked?

Answer 31

When the principal tells the third party that the agent is no longer authorized to act on the principal’s behalf

Question 32

when is an agent liable for deals/contracts they enter into on behalf of the principal?

Answer 32

If the principal is partially disclosed (3rd party knows there’s a principal but doesn’t know exact identity), then the agent becomes a party to the contract and liable on it

If the principal is undisclosed (3rd party doesn’t know the agent is an agent for someone else), then the agent is liable on the contract