Agency Flashcards
Agency relationship exists when
P authorizes an A to act on her behalf and be subject to P’s control.
Formation of P-A relationship requires
(Agreement, Benefit, Control)
- Agreement between P and A that (1) A’s conduct is for P’s Benefit, and (2) P has right to Control A.
**Parties must have capacity to contract, agreement need not be in writing
P’s duties to A
Owes all duties imposed by their K (compensation). IF P is in breach, A may
- Terminate agency
- Seek damages
- Seek lien for money due
A’s duties to P
- Duty of care (act as reasonably prudent person in like circumstances)
- DOL (A must put P’s interests above his own. No self-dealing, usurping P’s bus. opp., making secret profits)
- Duty of obedience
- Duty to communicate
*If A breaches, P can discharge A, withhold comp., seek remedies
A is personally liable for K’s with third parties in following cases
- A is acting with no authority from P
- P’s existence and identity is undisclosed or unknown
- All parties intend that A be treated as a party to K
P’s liability for A’s contracts general rule
A’s actions will bind the P if A was acting under the actual or apparent authority to act for the P. Types of authority:
- Actual express
- Actual implied
- Apparent
P’s liability for A’s Ks: Actual express authority
Exists if it was specifically granted to A by P (can be oral but must be written if SOF applies).
P’s liability for A’s Ks: Actual implied authority
Allows A to take whatever actions are reasonably necessary to achieve P’s goals, based on A’s reasonable understanding of P’s manifestations and objectives.
*look at comms between P and A
*implied authority by position: president, VP, treasurer. These positions all carry implied authority to carry out certain duties
P’s liability for A’s Ks: Apparent authority
Results when P causes a 3P to reasonably believe that A has authority to act. If 3P reasonably believes A has authority to act, P will be bound to K. (analysis centers on what occurred between P and 3P)
- 3P’s reasonable belief, court will consider trade customs, industry standards, or A’s position
P’s liability for A’s Ks: Apparent authority sub rules
- Notice requirement: where A’s actual authority terminated, she continues to have apparent authority until 3P’s receive actual or constructive notice of termination
- Written authority: if 3P relies on written authority of agent, A’s apparent authority not terminated.
- A exceeds authority: P may still be bound if A is in a position that would normally allow the agent to take such action or if P previously allowed A a similar excess of authority.
Ratification
Occurs when A takes action without proper authority and P subsequently engages in conduct that approves A’s action. P will be bound if:
- He has capacity
- Knowledge of material facts,
- Accepts A’s transaction
*A no longer liable if all above happens
P’s liability for A’s torts general rule
P may be vicariously and directly liable to a third party who is harmed by an A’s torts committed within the scope of the P-A relationship.
P’s liability for A’s torts: Respondeat superior (P vicarious liability)
An act is within the scope of the relationship if the conduct was of the kind A was hired to perform, tort occurred on job, or A intended his action to benefit P.
- Exception of frolics and detours: P not liable for torts committed while A is on a frolic (substantially deviating from the planned conduct such that she is acting for her own purposes). However,
P will still be liable if A is on a detour (small deviation from planned conduct that is still within scope of agency relationship).
P’s liability for A’s torts: Independent contractors
Principal is generally not liable for the torts of an independent contractor. However, P is liable for torts of IC when conduct involves:
- Extremely dangerous activity,
- Nondelegable duties,
- Negligent selection of IC,
- Estoppel where P held IC out as agent
P’s liability for A’s intentional torts
P is not liable for A’s intentional torts except where conduct was specifically authorized by the P; natural result from nature of appointment, or tortious act was motivated by desire to benefit P.
