Agency

Question 1

General rule for binding P to contract

Answer 1

An agent has the power to bind the principal to a contract when the agent acts with actual or apparent authority. Or inherent authority/estoppel

Question 2

Actual Authority

Answer 2

Two types:
Express Actual
Implied Actual

But for both, actual authority exists when the principal makes a manifestation that causes the agent to reasonably believe that the agent is authorized to act on the principal’s behalf.

Question 3

Express Actual Authority

Answer 3

Principal directly tells the agent that he has the authority to take certain actions

Question 4

Implied Actual Authority

Answer 4

Based on the agent’s reasonable understanding of the principal’s instructions/conduct

Question 5

Apparent Authority

Answer 5

Based on the principal’s manifestations to the third party. If the third party reasonably believes the agent has authority to act (based on the principal’s
conduct), the agent will have the power to bind the principal.

Note: If the principal is undisclosed, there cannot be apparent authority

Question 6

Undisclosed Principal

Answer 6

A principal is an undisclosed principal if the third party has no notice of the principal’s existence.

Question 7

Un

Question 8

Unidentified Principal/Partially Disclosed

Answer 8

Third party knows that the agent is working on behalf of a P, but does not know the identity of the P.

Here, the agent, third party and P are parties to the contract. But the P can only be held liable if 1. the agent had authority to bind them or 2. the principal ratified the K

Question 9

Ratification

Answer 9

Even when A did not have authority to bind P, the P may be liable if they ratify.

There are four requirements for ratification: (i) the principal must ratify the entire contract; (ii) the principal and the third party must have legal capacity to enter into the contract; (iii) the ratification must occur before the third party withdraws from the contract; and (iv) the principal must know the material facts of the transaction.

Question 10

Vicarious Liability of Principal for Acts of Agnet

Answer 10

The doctrine of vicarious liability asserts that a principal is liable for the acts of an agent, even though the principal is innocent of fault and not directly guilty of any tort or crime.

Question 11

Respondeat Superior

Answer 11

Under the doctrine of respondeat superior, a principal may be vicariously liable for a tort committed by an agent acting within the scope of his employment. The principal is liable despite the absence of tortious conduct by the principal.

An employee acts within the scope of employment when either
1. performing work assigned by the employer, or
2. engaging in a course of conduct subject to the employer’s control.

When an employee acts independently of any intent to serve any purpose of the employer, the employer may escape liability.

Question 12

Terminating an agency relationship

Answer 12

Either P or A can terminate agency relationship unilaterally or by operation of law.

Question 13

Agency termination by parties

Answer 13

The agency relationship may be terminated by the parties if:

(a) The agent or principal manifests to the other the desire to cease the
agency relationship (termination is effective when the other party
receives notice of the termination);

(b) The express terms of the agency expire (e.g., principal expressly hires
agent for 6 months); OR

(c) The purpose of the agency relationship is fulfilled

Question 14

Agency termination by operation of law

Answer 14

(a) The agent or principal dies (some jurisdictions require that the party
receive notice of the other’s death);

(b) The agent or principal loses capacity (some jurisdictions require that the
party receive notice of the other’s incapacity); OR

(c) The agent materially breaches a fiduciary duty owed to the principal.

Question 15

An agent’s apparent authority….

Answer 15

A principal is vicariously liable for a tort committed by an agent with apparent authority when the agent’s appearance of authority enables her to commit a tort or conceal its commission. Such torts include fraudulent and negligent misrepresentation, defamation, tortious institution of legal proceedings, and conversion of property.

**can be a alt to employer liabiltiy

For apparent authority to exist, a third person must believe that the agent acted with actual authority, and such belief must be reasonable and be traceable to a manifestation by the principal.