Agency Flashcards
What are the basic elements that must be met in an agency relationship?
Capacity—Principal must have contractual capacity; the agent only needs minimal capacity.
Consent—Consent must be manifested by both principal and agent.
Formalities—Generally no writing needed unless required under Statute of Frauds.
What are the methods of formation for an agency relationship?
By action: Actual authority, Apparent authority, Ratification.
By operation of law: Estoppel, Statute.
What are the agent’s duties?
Duty of loyalty—Agent must disclose interests adverse to the principal.
Duty of obedience—Agent must obey all lawful instructions of principal.
Duty of care—Agent must act with reasonable care.
Duties under contract—Agent must comply with any terms of agency contract.
What are the principal’s duties?
Duty to compensate and reimburse—Principal must compensate agent and reimburse them for expenses and losses unless agent agrees to act gratuitously.
Duty to cooperate—Principal must cooperate with agent and help them carry out their agency functions.
Duties under contract—Principal must comply with any terms of agency contract.
What are the principal’s remedies?
Contract liability—Compensated agent can be held liable for damages based on breach of contract.
Tort liability—Agent subject to tort liability for damages resulting from misuse of principal’s property.
Recover profits or property—If agent breaches duty of loyalty and secretly profits.
Accounting action—Principal can bring to determine exact amount agent owes principal.
Withhold unpaid compensation—If agent has committed an intentional tort.
Termination—If agent breaches one of their duties.
What are the agent’s remedies?
Compensated agent can sue for breach of contract.
Agent has possessory lien on any money principal owes them.
How to determine if a principal is liable for an agent’s contracts?
Determine if agent acted with authority: Actual authority (express and implied), Apparent authority, Ratification.
Assess liability to third parties based on whether principal was disclosed, unidentified, or undisclosed.
What is the principal’s liability for an agent’s torts?
Analyze under Respondeat Superior—Principal may be vicariously liable for acts of employee within scope of employment.
Analyze under Apparent Authority—Principal is liable where agent appears to deal on behalf of principal.
