Agency Flashcards
What is agency?
a fiduciary relationship that results from:
1) consent by the principle for the agent to act
2) agent acting on behalf of the principle
3) the agent is subject to the control of the principle
What is an agent
A person who acts on behalf of a principle and is subject to the control of the principle
how is agency formed?
when the intent is manifested that one person shall act on behalf of another, subject to that person’s control, agency is created
Ratification
principle acknowledges that the agent did not have authority to act on the principle’s behalf, but the principle is okay with the turn out
Types of authority that prove agency
1) express/real authority granted
2) implied authority- usually rests on agent has always done something a certain way, so there is no reason why the agent shouldn’t continue
3) apparent authority- where the principle holds the agent out as an agent
Can agency be terminated by either party?
Yes, courts do not like the concept of involuntary servitude, so either party can end the agency at any time
Creditor-debtor relationships
May be construed to be agency if the creditor exercises enough control over the debtors business so as to create a hierarchy of power and control
actual authority
Principle gave the agent the authority to act on principle’s behalf explicitly
implied authority
actual authority that is circumstantially proven which the principle actually intended the agent to have to the power needed to carry out the duties
determining whether implied authority existed
look for whether the agent reasonably believes based on past conduct of principle that the principle wants the agent to act a certain way
EX: mill street church case: brother didn’t have actual authority to hire his brother but had implied authority based on past dealings
apparent authority
when the principle acts in a certain way that implies to a 3rd party that the agent has authority to do something. If a 3rd party reasonably prudent person is led to believe that the agent has authority, then the agency relationship has likely been formed
Watteau v. Fenwick
Humble sold his business to Fenwick, but is still the manager and has his name on the door. Although he is no longer supposed to buy certain items from 3rd party, he does so anyways. An undisclosed principle (fenwick) is liable for the acts of his agent done on his account (humble)
2nd Rest. 194
an undisclosed principal is liable for the acts of his agent done on principals behalf if the acts are usual or necessary
2nd rest. 195
an undisclosed principal who entrusts management of his business to an agent is liable for the transactions that are usual to business done on the principal’s account
Agency by estoppel
If a principal negligently or intentionally causes a 3rd party to believe his agent has authority, the principal is estopped from denying the agent
torts within Master-servant relationship
master is liable for the torts of his servant committed in the scope of employment
Master-Servant relationship
relationship is created when the servant has agreed to work on behalf of the master and is subject to the master’s control of the physical conduct of the servant (the way the job is performed)
agent type- independent contractor
one who as agreed to act on behalf of the principal but not subject to control over how the job is done
non-agent independent contractor
one who operates independently and simple enters into arm’s-length transactions with others
Control test for agency
does the principal exert such control over the functioning of the agent relationship with 3rd parties that it amounts to principal liability for torts
Scope of employment
conduct is considered within the scope of employment is it is at least in part to serve the master. Criminal and tortious acts may be within scope if they are expected by the principal. Must show that the plaintiff’s conduct was interfering with the servant’s ability to perform his duties.
EX: nightclub bouncer
Scope of employment factors to consider
1) time, place, purpose of act
2) similarity to acts the servant is authorized to perform
3) whether act is commonly performed by the servant
4) extent of departure from normal methods
5) reasonable to expect such acts would be performed
Liability for inherently dangerous activities
a landowner will be liable for acts of an independent contractor if the work is inherently dangerous
inherently dangerous activity
activity that can only be carried out safely by the exercise of special skill and involves grave risk of danger to person or property
ultra-hazardous activity
an activity that involves serious risk of harm to the person, land, or chattels of others which cannot be eliminated even with care
Servant liability to master
a servant is liable to master if he takes advantage of his servant relationship for his own gain. Agent has the duty to act solely for the benefit of the master
