Agency

Question 1

Agency Relationship

Answer 1

An agency is a fiduciary relationship where the agent and principal voluntarily consent that the agent will act for the benefit of the principal and subject to the principal’s control.

Question 2

Actual Authority

Answer 2

An agent acts with actual authority when the agent reasonably believes, based on the principal’s manifestations to the agent, that there is authority to act on the principal’s behalf. Actual authority can be expressed or implied.

Question 3

Apparent Authority

Answer 3

An agent acts with apparent authority when the principal holds the agent out as having authority to act and such conduct causes a third-party to rely on the agent’s appearance of authority when dealing with the agent.

Question 4

Ratification

Answer 4

A principal may ratify the agent’s unauthorized conduct if the principal had knowledge of all material facts, agent acted for the benefit of the principal, and the principal affirmed the entire transaction.

Question 5

Agent’s Personal Liability

Answer 5

Generally, an agent will not be personally liable if acting within scope of authority. An agent will be liable if the conduct was unauthorized or the principal was undisclosed to the third-party.

Question 6

Undisclosed Principal

Answer 6

If the principal is undisclosed or unidentified to the third-party, either the principal or the agent can be liable under the contract if the agent had authority to enter into the contract.

Question 7

Respondeat Superior

Answer 7

Under the doctrine of respondeat superior, a principal will be liable for torts committed by an agent if an agency relationship existed and the agent’s commission of the tort was in the scope of employment.

Question 8

Intentional Torts by Employees

Answer 8

A principal will be liable for intentional torts if the agent’s conduct was a natural incident of the agent’s duties, the agent was acting for the principal’s benefit, or the principal authorized or ratified the conduct.

Question 9

Independent Contractor Liability

Answer 9

Generally, a principal will not be liable for acts of independent contractors. A principal will be liable if the contractor was engaging in inherently dangerous activities, nondelegable duties have been delegated, or the principal negligently selected an incompetent independent contractor.

Question 10

Indemnification of Agent

Answer 10

The principal can recover against the agent for indemnification if the agent acts beyond their authority.

Question 11

Agent’s Fiduciary Duties

Answer 11

An agent is the fiduciary of the principal and owes the duty to act with reasonable care and skill; the duty to act loyally for the sole benefit of the principal; and the duty to act obediently within the principal’s control.