Agency

Question 1

Elements of agency

Answer 1

1. Fiduciary duty
2. Which results from manifestation of consent
3. By one person to another
4. That other shall act on their behalf and subject to their control, and
5. Consent by other so to act

Question 2

Consent

Answer 2

Expressly or impliedly agree to enter into relationship

Question 3

Control

Answer 3

Agent subject to principal’s control

Question 4

Acting on behalf

Answer 4

Agent must be acting on behalf of P, generally understood as primarily for benefit of principal

Question 5

Methods of creation

Answer 5

Agreement by parties: writing not required

Apparent authority: principal holds another out as agent to third-party

Ratification: principal agrees retroactively to be bound by previous unauthorized acts of agent

Question 6

Termination of agent’s actual authority

Answer 6

Agency relationship can end by act or agreement of parties OR by operation of law

Question 7

Reasons for termination by parties

Answer 7

1. Party desires to terminate
2. Expiration: express terms of agency expire
3. Purpose fulfilled: agency relationship’s purpose has been fulfilled

Question 8

Reasons for termination by operation of law

Answer 8

1. Agent or principal dies
2. Agent or principal loses capacity
3. Agent materially breaches fiduciary duty owed to principal

Question 9

Rights and duties of Agent to Principal

Answer 9

Loyalty: fiduciary duty, fairness

Obedience: agent must obey principal’s lawful instructions and interpretation must be reasonable

Care: agent must carry out agency with reasonable care judged in light of community standards

Notify: must notify principal of all agency-related matters

Question 10

Rights and duties of principal to agent

Answer 10

Compensation: unless agents agrees to act gratuitously

Reimburse: must indemnify agent for all expenses and losses incurred in carrying out duties

Cooperation: principal must cooperate with agency to help carry out agent functions

Question 11

Agent and principal liability

Answer 11

One generally not liable for other unless they have made other person their representative and given other person power to bind them

Question 12

To determine if P bound by A’s act

Answer 12

1. Did agent have actual authority?

YES: bound, A not liable if within scope

NO: apparent or ratification authority?

Apparent: P bound, A liable if beyond scope

Question 13

Actual authority

Answer 13

When agent reasonably believes P wishes A to act; express or implied

Express: writing or oral
Implied: reasonably believes they have based on P’s actions or incidental to further complete task/transaction

Question 14

Termination of apparent

Answer 14

Lapse of time, changed circumstance, happening of event

Question 15

Liable for apparent authority when

Answer 15

Even when A lacks actual, P can be held liable for agent’s act if apparent

1. P holds A out as having authority to act on P’s behalf, and
2. P’s conduct causes 3rd party to reasonably rely on agent’s appearance of authority

Question 16

Ratification

Answer 16

Where A purports to act on behalf of P but lacks authority, P may still be bound if subsequently ratifies

Question 17

Ratification reqs

Answer 17

1. A purported to act on P’s behalf
2. P has knowledge of material facts of act
3. P affirmed agent’s conduct

Question 18

Liabilities of A and P to 3rd parties

Answer 18

Upon establishment of valid K, entered by A with 3rd party, liabilities vary depending on if P was disclosed to 3rd party

If undisclosed, both A and P liable and either can enforce otherwise only P

Question 19

P’s liability for A’s torts

Answer 19

May be liable for unintentional torts committed by agents acting as employees or servants

Reqs: (a) employer-employee relationship, and (b) committed within scope

Question 20

P’s liability for independent contractor torts

Answer 20

Generally not liable and turns on P/employer’s right to control manner and method by which person performs

Always liable where (a) inherently dangerous, or (b) knowingly hires incompetently