Agency

Question 1

Principal’s liability for torts committed by its agent

Answer 1

Principal will be liable for torts committed by its agent if there was a principal-agent relationship and the tort was committed by the agent within the scope of that relationship

Question 2

Requirements of principle-agent relationship

Answer 2

1) assent-must be an informal agreement between the principal, who has capacity, and the agent
2) benefit-agent’s conduct must be for the principal’s benefit
3) control-principal must have the right to control the agent by having the power to supervise the manner of the agent’s performance

Question 3

Liability for sub agents

Answer 3

Principal will be liable for a sub agent’s tort only if there was assent, benefit, and control between the principal and the sub agent tortfeasor.

Typically the principle does not assent to the sub agent’s help and does not have the right to control the sub agent. Therefore no vicarious liability.

Question 4

Liability for borrowed agents

Answer 4

The principal will be liable for a borrowed agent’s tort only if there is assent, benefit, and control between the borrowing principal and the borrowed agent.

Typically the borrowing principle does not assume any right to control the borrowed agent. Therefore there is no vicarious liability for a borrowed agent’s tort.

Question 5

Key distinction between an agent and an independent contractor

Answer 5

No right to control an independent contractor because there is no power to supervise the manner of its performance.

Therefore no vicarious liability for an independent contractor’s torts.

Question 6

Exceptions for vicarious liability for independent contractors

Answer 6

1) independent contractor commits a tort while engaged in ultrahazardous or inherently dangerous activity
2) you hold out an independent contractor with the appearance of agency you will be estopped from claiming non-vicarious liability.

Question 7

Test for determining whether within scope of principal agent relationship

Answer 7

1) was conduct within the job description (if so likely inside the scope)
2) frolic is a new and independent journey, therefore outside the scope of agency. Detour is a mere departure from an assigned task and therefore within the scope of agency.
3) if the agent, even in part, intended to benefit the principal, their actions are inside the scope of agency.

Question 8

Vicarious liability for intentional towards

Answer 8

As a rule intentional towards are generally outside the scope of the agency-principal relationship.

Question 9

Exceptions to the general rule for intentional torts

Answer 9

Intentional torts are within the scope if the conduct was:

1) authorized by the principal
2) natural from the nature of employment
3) motivated by desire to serve the principal

Question 10

Liability of principal for contracts entered by agents

Answer 10

Principal is liable for contracts entered into by its agents only if the principal authorized the agent to enter the contract.

Question 11

Four types of authority

Answer 11

1) actual express authority
2) actual implied authority
3) apparent authority
4) ratification

Question 12

Actual express authority

Answer 12

Can be oral and even private.

If the contract itself must be in writing so must the express authority to enter into the contract.

Question 13

Revocation of actual express authority

Answer 13

Express authority will be revoked by:

1) unilateral act of either the principal or the agent, or
2) death or incapacity of the principal.

Principal gives the agent a durable power of attorney actual express authority survives death or incapacity of the principal.

Question 14

How to construe actual express authority

Answer 14

Actual express authority is narrowly tailored to the actual words used to express the authorization.

Question 15

Actual implied authority

Answer 15

Authority which the principal gives the agent through conduct or circumstance taking one of the following forms; necessity, custom, prior acquiescence by the principal.

Question 16

Implied authority by necessity

Answer 16

There is implied authority to do all task which are necessary to accomplish and expressly authorized task.

Question 17

Implied authority by custom

Answer 17

There is implied authority to do all tasks which are customarily performed by persons with the agent’s title or authority.

Question 18

Implied authority by prior acquiescence by the principal

Answer 18

There is implied authority to do all task which the agent believes to have been authorized to do from prior acquiescence by the principal.

Question 19

Apparent authority

Answer 19

Two-part test:

1) principal cloaked agent with the appearance of authority and
2) third party reasonably relies on appearance of authority

Question 20

Ratification

Answer 20

Authority can be granted after the contract has been entered if:

1) principal has knowledge of all material facts regarding the contract, and
2) principal excepts its benefits.

Ratification cannot alter the terms of the contract.

Question 21

Agent’s liability on a contract

Answer 21

Principal is liable on its authorized contract and therefore as a rule an authorized agent is not liable on authorize contracts unless, undisclosed principle.

Question 22

Undisclosed principle

Answer 22

If the identity of the principle is concealed or the fact of a principal-agent relationship is concealed authorized agent may nonetheless be liable at the election of the third-party.

Question 23

Duties agents owe

Answer 23

1) duty of care
2) duty to obey instructions that are reasonable
3) duty of loyalty to the principal

Question 24

Duty of loyalty

Answer 24

1) self-dealing: agent cannot receive a benefit to the detriment of the principal
2) usurping the principal’s opportunity
3) secret profits: making a profit at the principal’s expense without disclosure

Question 25

Remedies for breach of duty of loyalty

Answer 25

Principal may recover losses that are caused by the breach and may take away profits made by the breaching agent.