Agency Flashcards
Agency
A principal-agent relationship exists if there is (ABC):
Assent (agreement between the principal and the agent - must be voluntary, consensual, and have legal capacity),
A benefit (the agent’s conduct benefits or furthers objectives of the P’al) and
Control (the principal must have the right to control by having power to supervise manner and method in which the job is performed).
LIABILITY OF P TO 3P (contracts)
P’al will be liable for contracts entered into by A if A was authorized to contract on behalf of P’al.
AUTHORITY
EXPRESS / IMPLIED / APPARENT / RATIFICATION
a. Actual
i. Express – explicitly told to act (oral or written)
ii. Implied – given through conduct or circumstance. Authority is necessary to carry out his expressly auth duties, A acted similar in prior dealings b/t A-P (the agent reasonably believes he is authorized to do something based on prior acquiescence of the P’al and his silences implies authority), customary for A to act as such.
b. Apparent
i. P’al holds out the A as possessing authority.
ii. 3P reasonably relies on the agent’s appearance of authority.
LIABILITY OF A TO 3P
Generally, A not liable to 3P UNLESS:
a. Exceptions: (P’s existence and identity must be disclosed.
i. Non-disclosure of P’al to 3P – 3P can sue A and/or P’al
ii. Partial disclosure of P to 3P – same
iii. Agent lacked authority altogether – only A liable
When is P liable for A’s torts?
P’al is liable for torts committed by Employee if the tort is within the scope of the employment/relationship. (Vicarious Liability/Respondeat Superior)
Steps to determining if P is liable for A’s torts?
Ask is A an independent Contractor or Employee? P’al is not vicariously liable for torts of an independent contractor UNLESS:
(1) non-delegable duty (public policy) or (2) inherently dangerous.
i. TEST: Determine if there was a RIGHT TO CONTROL the MANNER OR METHOD in which job is performed?
1. Right to control - SIX factors considered: {TPPEDD}
a. Type of work
b. Pay rate
c. Period of employment
d. Supplier of Equipment
e. Degree of skill
f. Degree of supervision
ii. TEST: Determine whether it was within the SCOPE OF EMPLOYMENT:
1. THREE factors: {of the kind, on the job, benefit}
a. Was conduct of “the kind” the agent was hired to do;
b. Did the tort occur “on the job” (frolic vs. detour);
c. Was the conduct actuated at least in part to benefit the principal?
Alternative Liability Theories when Respodeat Superior doesn’t apply
A Principal will sometimes be liable for the torts committed by its agents even if conditions of Respondeat Superior are not satisfied. Three ways: Negligent hiring, special relationship/duty, apparent authority.
i. Negligent Hiring. P’al can be liable for the torts of an agent if they were reckless or negligent in the selection of the agent;
ii. Special Relationship. If the P’al has a special relationship with the injured party that imposed a special duty on the P’al to take care and protect against the risk that the Agent would harm the person; or
iii. Apparent Authority Theory. When the agent appears to deal or communicate on behalf of the P’al AND the agent’s appearance of authority enables the Agent to commit the tort AND Principal is only liable when the injured person’s reasonable belief in agent’s authority enables the agent to commit the tort.
LIABILITY OF P’AL TO 3P FOR INTENTIONAL TORTS
P’al is not liable for the intentional torts of their employees/agents UNLESS:
a. Conduct was natural consequence from the nature of the job;
b. Motivated to serve the P’al/employer; OR
c. Specifically authorized or ratified by the employer/P.
Duties of Agent to Principal
(1) Reasonable care,
(2) obey reasonable instructions,
(3) Duty of Loyalty, (no self-dealing, usurping opportunities or secret profits)
(4) Express contractual duties. If breached, P’al can recover losses and cause A to disgorge profits made due to the breach.
Remedies.
Contract remedies (if agent compensated);
Tort Remedies, constructive trust, action for secret profits, withhold compensation.
Duties of Principal to Agent
(1) Compensation,
(2) Cooperation,
(3) Indemnity/Contribution,
(4) Express contractual duties.
Remedies. Contractual remedies, possessory lien.
Termination of Agent/Principal Relationship
(1) By agreement,
(2) operation of law, (death/incapacity)
(3) Bankruptcy,
(4) Change in circumstances,
(5) Breach of duty.
Agency coupled with interest. An agency that is coupled with an interest in subject matter is irrevocable during the term and none of the grounds above will terminate.
