Agency Flashcards
Agency
The fiduciary relationship that arises when two persons agree that one (the agent) will act on behalf of and under the control of the other (the principal).
2 objectives of agency law: (1) To minimize the divergence of interest between the principal and the agent. (2) To avoid disadvantaging third parties who deal with agents rather than directly with principals.
Agency may be terminated at any time by either the agent or the principal, regardless of any putative attempt to contract it away.
Formation
(1) Intent
a. mutual manifestation is sufficient (no contract required)
b. may be manifested orally, by a writing, or implied through conduct
c. no intent to create agency required—only intent to do acts giving rise to agency d. question of fact
(2) Capacity of Parties
a. Principal must be able to give legally binding consent (remember void/voidable rules)
b. Anyone can be an agent, but liability is coextensive with capacity.
Categories
The manner in which an agent can bind a principal is dependent on the nature of the agency. At any given time an agent must fit into one of three categories, but these are fluid based on circumstances. The category of the agency is strongly linked to the amount of control exercised by the principal over the agent.
(1) Servants—principal has right of direct control—may bind principal in tort (respondeat superior) but generally not in contract
(2) Non-servant agents—some control—may bind principal in contract within the scope of the agency
(3) Independent Contractors—very little control—may not bind principal in tort or contract.
Disclosed Principal
one whose identity is known by a third party who has notice that the agent is not acting on the agent’s own behalf.
a. principal bound to contract
b. third party bound to principal
c. agent has no liability on contract
Partially Disclosed Principal
one whose identity is not known by a third party who has notice that the person with whom he is dealing is an agent. a. principal bound to contract
b. third party bound to principal
c. agent has secondary liability to third party
Undisclosed Principal
one whose identity is not known by a third party with no notice that the agent is acting on a principal’s behalf.
a. principal bound to contract
b. third party bound to principal
c. agent has secondary liability to third party
General Agent
one who conducts a series of similar transactions involving a continuity of service is a general agent. Third parties are not, in each case, required to inquire into the agent’s authority. NOT one with general authority to act for principal in all matters!
General agents bind principals to agreements within nature of agency even if outside the scope of their authority.
Special Agent
one authorized to conduct a single transaction or a series of transactions not involving a continuity of service. Third parties are under a duty to ascertain the extent of the agent’s authority.
Special agents generally cannot bind the principal outside the scope of their actual or apparent authority.
Co-Agents
two or more agents acting for the same principals
a. no rights or obligations between co-agents
b. each agents rights and duties flow directly from the principal
Sub-Agent
one agent authorized to take on a delegated duty from another agent.
a. to bind principal, subagent must act within subagent’s power to bind agent and agent’s power to bind principal LEMME SEE THEM BALLS
b. primary relationship is with agent, but principal and subagent owe each other usual duties
Agent’s Agent
one agent unauthorized to take on a delegated duty from another agent
a. no duties between principal and agent’s agent
b. no principal liability for acts of agent’s agent.
Power/Authority of Agent to Bind Principal
An agent’s power is a legal consequence of the agency relationship itself. An agent’s authority is a limit on that power, established by the principal.
Agency authority must always derive from some manifestation by the principal. Agents cannot create their own authority.
Express Authority
manifestation by principal to agent
Implied Authority
authority which, though not expressed to the agent, is reasonably necessary to carry out express authority.
Apparent Authority
manifestation from the principal to a third party (probably creates liability irrespective of reliance)
Estoppel
no agency exists but third party is foreseeably and reasonably justified in relying on appearance of agency and actually does rely (reliance required, remedy based on reliance not lost expectation).
Inherent Agency Power
(neither apparent nor actual authority)—agent may bind principal to third part without notice of “secret” limits on agent’s authority.
Emergency Authority or Power
unforeseen emergency empowers agent to act to prevent some substantial loss.
Ratification
later supplying authority where none existed at the time one person purported to act for another
a. purported principal must have had capacity for action at the time.
b. third party must have believed purported agent was authorized
c. ratifying person must be in possession of all material facts d. ratification must be complete
e. ratifying person must make effective affirmance (i.e. unequivocal, before third party disaffirms
Restitution
where third party performed to the benefit of purported principal, third party may be able to recover in quantum meruit.
Agent’s Warrant of Authority
Aside from contract liability, agents may also bear liability to third parties based on misrepresentations relating to their authority.
(1) Breach of Warranty of Authority
(2) Nonexistent Principal
Agent’s Duties to Principal
a. duty of care (breached through negligence)
b. duty of loyalty (breached through self-dealing)
c. duty to disclose all facts pertinent to transactions within the relationship
d. exclusivity in the subject matter of the agency relationship
e. exercise of reasonable care
Duties of Principal to Agent
a. duty to disclose risks the agent might encounter
b. liable to agent for any injury caused by principal’s negligence (subject to usual defenses)
c. duty to reimburse for expenses incurred on principal’s behalf.
d. duty to indemnify agent
e. duty to furnish opportunity for work
f. duty to keep and render accounts
g. duty of good conduct
h. duty to pay compensation (treble wages for failure to pay salary)
i. duty to not interfere with commission income.
Methods of Termination
a. Agreement of the parties
b. Unilateral renunciation/revocation
c. Expiration of reasonable time (if no time for expiration stated)
d. Accomplishment of the objective
e. Loss or destruction of the subject matter
f. Death or incapacity of the agent or principal
Some Duties Survive Termination
a. durable duty of loyalty prevents unfair competition (e.g. use of trade secrets)
b. BUT non-compete agreements are not favored and must be “reasonable as to time, place, and activity;” supported by valid consideration; and protecting a valid proprietary interest.
Termination of Irrevocable Agencies(Not True Agency)
a. agency coupled with an interest
b. ex.: proxy (normally an agency) given as security is irrevocable until loan is repaid.
Notice
To what extent will what an agent knows, or has notice of, be imputed to the principal?
NOTICE = NOTIFICATION + KNOWLEDGE
Notification
if agent has or appears to have authority to receive notifications for the principal, such notification will be imputed to the principal
Knowledge of Notice
An agent’s knowledge is imputed to the principal if the agent is under a duty to disclose, or has actual authority to act on behalf of the principal.
Admissions of Notice
statements of part’s agent or servant concerning a matter within the scope of agency/employment are considered admissions of the principal.
Servant
(1) an agent employed by the principal (master) to perform services over which the master has a right of physical control, whether or not that right is exercised.
(2) whether an agency exists and whether the relationship is one of master-servant is a question of fact.
Respondeat Superior
for vicarious liability to attach, first show that a master-servant relationship, then show the tort occurred within the scope of employment
Right of Control(Respondeat Superior)
chief factor in establishing the master servant relationship evidenced by
a. right to exercise control
b. method of payment (salary v. piecework)
c. furnishing of equipment;
d. right to fire e. language describing the relationship as “independent contractor” is some evidence, but not dispositive
Deviation/Frolic and Detour
when a deviation is slight and not unusual, conduct will likely be within scope of employment.
Servant’s unauthorized guests
if servant is authorized to invite guests, master is liable for servant’s tort injuring guest; if guest is trespasser, no master liability.
Use Of Instrumentally not furnished by the master
issue is whether the instrumentality is authorized, expressly or impliedly, by the employer. (e.g. Servant’s use of his personal car does not preclude liability).
Unauthorized intentional torts
master is not normally liable for servant’s willful acts, unless the willful act is at least partly in furtherance of the master’s business.
Conduct Ratified
A master is liable for torts committed outside the scope of employment if the master ratifies the conduct.
Servant Disregards Instructions
master may still be liable, unless servant uses means radically different and increases the risk of harm.
Servant misunderstands instructions
master may be liable. viii. Incidental acts—if acts are done partly for servant and partly for master, the master may be liable.
Incidental acts
if acts are done partly for servant and partly for master, the master may be liable.
Smoking
though usually outside the scope, if a master is aware of a servant’s smoking, he may be liable for negligence if smoking increased risks that the injury would occur. Where the on-th-job smoke break benefits employer, it is within scope of employment.
Omission
clearly within scope of employment.
Libel and slander
SC law applies respondeat superior to both.
Assault and battery
if employment is such as to likely bring the servant in conflict with others, assault and
False imprisonment
SC corps have frequently been held vicariously liable for false imprisonment
Trespass and conversion
can be within the scope of employment (e.g. improper repossessions)
Owner in car
When car’s owner is in the car, creates a rebuttable presumption that driver is owner’s servant.
Masters may be liable for even those torts of servants outside the scope of employment if
a. employer intended the consequences of conduct;
b. the employer was negligent or reckless in hiring or supervising;
c. the conduct violated a non-delegable duty of the employer, involved inherently dangerous work, or otherwise gave rise to direct liability on the part of the employer as a matter of law
d. the servant purported to act or speak on behalf of the principal-master, and there was reliance upon apparent agency;
e. the employer, though not a master, retained control over the performance of the task that caused the injury; or
f. the employer ratified or adopted the tort.
Volunteer Services
because agency does not require a contract, one who volunteers services may still be a servant of one accepting such services.
Borrowed Servants
A person may be the servant of two masters. A person directed or permitted by his master to perform services for another may become the servant of such other in performing the services. The issue is which master was in control of the details of the work at the moment of the actionable events?
Negligence of Servant’s Servant
A master is NOT liable for the negligence of one hired by his servant when the hiring was:
a. not reasonable necessary to get the job done but simply a matter of the servant’s convenience; or
b. not expressly or impliedly consented to by the master; or
c. not brought about by an emergency or unforeseen contingency.
Joint and Several Liability
the master and servant may be joined; their liability is joint and several. By settling with the servent, you release the master where the master’s sole basis for liability is vicarious
