Agency Flashcards
What are the elements of an agency relationship?
- Principal (P) manifests assent to an Agent (A)
- A acts on P’s behalf,
- A’s actions are subject to P’s control,
- A manifests assent or otherwise consents.
How can an agency relationship be created?
- Expressly (orally or in writing)
- Implied by P’s conduct
- By third-party misinterpretation
Does an agency relationship require consideration?
No.
Who can be a Principal?
Must have contractual capacity.
Minors/incompetents cannot be Principals.
Who can be an Agent?
Minimal capacity required
Minors and incompetents can be Agents
Unincorporated associations cannot be Agents.
What are the types of Principals?
- Individual: Any person with intent to delegate control.
- Employer: Has the right to control the physical conduct of an employee’s performance.
- Corporations, Partnerships, and Entrepreneurs.
What are the types of Agents?
- Employee: Paid regularly, works under P’s direction, integral to business.
- Independent Contractor: Controls own work methods.
- Gratuitous Agent: Works without compensation (affects enforceability of contract).
- Subagent: Appointed by an Agent to perform Agent’s duties.
How do courts determine if someone is an Employee or Independent Contractor?
Key Factor: Principal’s control over the manner and means of work.
Other factors:
- Structured pay period?
- Tools provided by Principal?
- Work integral to Principal’s business?
- Specialized skill level?
What is actual authority?
Authority P gives A to act on P’s behalf
Can be express or implied.
What is express actual authority?
Oral or written statements from P to A
Must be clear, direct, and definite.
What is implied actual authority?
Authority A reasonably believes necessary to carry out P’s objectives.
Includes:
- Customary business practices.
- P’s acquiescence to prior acts
- Acts necessary to perform express authority.
Can an Agent delegate their authority?
Generally, no; unless P expressly authorizes delegation.
What is apparent authority?
When a third party reasonably believes A has authority based on P’s conduct.
How can apparent authority be created?
- P’s past dealings with A.
- Industry customs.
- P’s written statements.
- P appointing A to a position (e.g., VP, GM).
How can actual and apparent authority be terminated?
- By agreement.
- Revocation by P or renunciation by A.
- Change of circumstances (e.g., bankruptcy, death, disaster).
- Passage of reasonable time.
When is a Principal bound by an Agent’s actions?
When A acts with actual or apparent authority
When P ratifies A’s act.
What is ratification?
P affirms a previously unauthorized act.
Must be entire transaction.
P must have knowledge of material facts.
When is a Principal estopped from denying agency?
When a third party reasonably relied on an agency relationship to their detriment.
When is a Principal vicariously liable for an Agent’s torts?
Under respondeat superior, if:
- A is an employee, and
- A was acting within the scope of employment.
What constitutes an act within the ‘scope of employment’?
- Assigned work or conduct subject to P’s control.
- Act intended to benefit P.
- Time and space limits of employment.
When is an intentional tort within the scope of employment?
If the act is related to employment (e.g., bouncer using force).
What is the ‘Frolic and Detour’ doctrine?
- Frolic: Major deviation → Outside scope of employment.
- Detour: Minor deviation → Within scope of employment.
Are Principals liable for Independent Contractors?
Generally, no.
Exceptions
- Negligent hiring.
- Nondelegable duties (e.g., inherently dangerous activities).
Is an Agent liable when acting for a Disclosed Principal?
No, unless A exceeds authority.
Is an Agent liable when acting for a Partially Disclosed Principal?
Yes, unless contract states otherwise.
Is an Agent liable when acting for an Undisclosed Principal?
Yes, but P is also liable if discovered.
What is an Agent’s implied warranty of authority?
A is personally liable if A falsely claims authority.
When is an Agent personally liable for torts?
Always, for their own negligent or intentional acts.
What are the Agent’s duties to the Principal?
- Duty of care.
- Duty of loyalty (no conflicts, no secret profits).
- Duty of obedience.
- Duty to inform P of relevant information.
What are the Principal’s duties to the Agent?
- Duty to compensate (unless gratuitous).
- Duty to reimburse for expenses.
- Duty to indemnify for losses in scope of agency.
What remedies does a Principal have for an Agent’s breach?
- Injunction.
- Breach of contract action.
- Tort action.
- Rescission, restitution, or accounting.
