Agency Flashcards
Agency - Elements (Concept)
- Fiduciary relation
- One person (Agent) consent to act on behalf of another (ppal)
- affecting relations with 3rd parties
- Written when SOF
Agency - Creation Methods (6)
1) Express authority
2) Implied authority (Inherent)
3) Apparent authority
4) Estoppel
5) Ratification
6) Necessity
Agency - Creation by Express Authority - Gral
- Affirmative appointment of agent
- Can be gral or special - depending on the scope (Single transaction or area of repsonsibility
Agency - Creation by Express Authority - SOF situations (4)
1) Real estate (purchase, sale, appointment of broker)
2) Over 1 year of duration
3) At will contract (if indefinite duration it can also be oral)
4) Sales representative ( specially for compensation)
Agency - Creation by Express Authority - “Factor”
- Commercial agent
- Possess goods and sell them as if his own - transfer all ownership rights
Agency - Creation by Express Authority - “Del credere agent”
Personally guarantees obligation from ppal
Agency - Creation by Express Authority - Limitations for 3rd party action
- 3rd party duty to investigate if agent with enough authority
- If party knows about restriction on authority then it bars recovery beyond restriction
Agency - Creation by Implied/Inherent Authority - Gral
- As result of extension of express auhtority or status of agent
- Consequence of action by agent carrying authority
Agency - Creation by Implied/Inherent Authority - Requirement of action by agent
- Usual and Necessary
- to carry out express authority
- Determined in relation to relationship with ppal (i.e. spouse to bound marital community) and prior dealings
Agency - Creation by Implied/Inherent Authority - Specific examples/cases (4)
1) Business manager: day-to-day decisions on best interest of the company
2) Sales person: make representations and warranties
3) Delivery person: to receive payment
4) Purchase agent: disburse ppal’s funds
Agency - Creation by Apparent Authority -Gral
- When actions/manifestations of the ppal
- Cause 3rd person mistaken belief agent has authority to act
- Even w/o express or implied authorization
Agency - Creation by Apparent Authority - Standard for 3rd party belief
Reasonable person
Agency - Creation by Estoppel - gral
- Similar to apparent as based in ppal’s actions/manifestation
- BUT caused from omission to rebut mistaken belief - i.e. Ppal fails to notify 3rd party of termination of agency and that agent no longer has auhtority
Agency - Creation by Ratification - Gral
- As exception to rule that ppal is not bound by unauthorized acts
Agency - Creation by Ratification - Effects (2)
1) Cures lack of authority
2) Relates back to original contractual date
Agency - Creation by Ratification - Types (2)
1) Express ratification
2) Implied ratification: when agent receives benfits
Agency - Creation by Ratification - Requirements (4)
1) Ppal to have knowledge of all material facts and ratify fully
2) Agent represent to 3rd party that he was acting on behalf of ppal
3) Ppal must have had exist at time of contract
4) Once ratified neither ppal nor 3rd party can withdraw or unilaterally rescind
Agency - Creation by Necessity
- Case of emergency
- i.e. family member consenting for medical assitance
Agency - Capacity - Infant rules
- As agent: Ok to make ppal liable, however he can avoid contract liability with ppal
- As ppal: Can dismiss agent’s contract UNLESS it is for necessities
Agency - Capacity - Disclosure rule
- Agent has to disclose of ppal incapacity
- if not he can be personally liable
Agency - Business entities rules
- Corps usually act through agents
- All gral partners are deemed agents, and all partners in LLP
Agency - Business entities rules - Promoter - rules
- In relation to creation of business entity
- Not liable if parties agree that specific performance will be by future entity AND novation is made after formation
Agency - Liabilities to 3rd parties - Possible types
1) Contractual
2) Tort
3) Criminal
Agency - Liabilities to 3rd parties - Contracts - Ppal’s liabliity
- When agent has authority OR later ratification
Agency - Liabilities to 3rd parties - Contracts - Agent’s liabliity - Gral Rule
Not liable IF fully disclose agency AND ID of ppal
Agency - Liabilities to 3rd parties - Contracts - Agent’s liabliity - Exception Gral Rule of no liability (4)
1) Ppal undisclosed/unidentified/lacked capacity
2) Misrepresents scope of authority
3) Deals for himself
4) “Del credere” agent
Agency - Liabilities to 3rd parties - Contracts - Agent’s liability - Ppal “undisclosed” Rules
- Makes both agent and ppal liable to 3rd party who can recover only from 1 of them
- Ppal can still enforce contract agaisnt 3rd party (unless expressly excluded from)
- EVEN if 3rd party would not have contracted with him UNLESS agent intentionally concealed ppal
- Ppal can use all dfenses available for agent
Agency - Liabilities to 3rd parties - Torts - Agent’s liability -
- Always for OWN torts
Agency - Liabilities to 3rd parties - Torts - Ppal’s liability
- Respondeat superior
- When in the scope or course of agency and employment
- If sue by 3rd party - potential impleader to agent
Agency - Liabilities to 3rd parties - Torts - Ppal’s liability - Respondeat Superior - Exception
- If agent deviates enough for scope/course of agency as to not have enough “NEXUS” with ppal business
- on a “frolic of its own”
- No liability of ppal
Agency - Liabilities to 3rd parties - Torts - Ppal’s liability - Special rules for Independent contractors - Gral rule
Gral rule: Ppal not liable IF - no control or supervision on the means/manners/details of work
Agency - Liabilities to 3rd parties - Torts - Ppal’s liability - Special rules for Independent contractors - Exceptions to gral rule
PPal liable when when works involves UNREASONABLE RISK of harm to the public (“dangerous activity”) - public policy reason for ppal not to delegate liability
Agency - Liabilities to 3rd parties - Torts - Ppal’s liability - Negligent Selection
Potential liaiblity for appointment, EVEN when is agent selecting sub-agents
-i.e. someone w/violent record, failure to check references
Agency - Liabilities to 3rd parties - Criminal
NEVER imputed to ppal unless participation in crime
Agency - Agents Duties (2)
1) Fiduciary - Good faith - HOLT + disclosure + avoid conflicts of interests AND avoid delegation without permission
2) Reasonable Care
Agency - Agents Duties - “Shop rights doctrine”
- Both ppal and agent have non-exclusive right to use invention or improvement created during agency UNLESS agent hired as inventor
Agency - Agents Duties - Fiduciary duty - Good faith HOLT
1) Honest dealing
2) Obedience
3) Loyalty
4) Trust of principal is followed
Agency - Agents Duties - Fiduciary duty - Avoidable conflicts of interest
1) no self-dealing
2) no secret profit or advantage
3) No commingling of funds
Agency - Agents Duties - Act with Reasonable Care - Application (2)
1) Obey reasonable order
2) Inform ppal of all relevant facts
Agency - Agents Duties - Imputation of Information rule
Knowledge of act of agent is imputed to ppal if within agent’s auhtority
Agency - Agents Duties - Act with Reasonable Care - Gratuitous agent rule
- No obligation to perform BUT If began, can not be Negligent
Agency - Agent’s liability Gral rule if exceeds scope
- To ppal for dx from 3rd party claims minus benefit created
- To 3rd party for breach of warranty of authority
Agency - Ppal’s Duties (6)
1) Reimburse business expenses
2) Indemnify for liability
3) Provide safe workplace
4) Compensation (unless agreed otherwise)
5) Assumption of risk abolished (indemnify for agent’s injury in performance of duties)
6) Fellow servant rule (compensation from work-related injuries, even if cause by other employee)
Agency - Ppal’s Duties - Assumption of risk abolished
Ppal liable for for employee’s personal injury in performance of duties
Agency - Termination - Types (2)
1) Voluntary
2) Involuntary: ISIS
Agency - Voluntary Termination (3)
1) By completion (task or date) /agreement/breach of authority
2) By revocation (ppal)/renunciation (agent) - with required notice (as personal service contract)
3) At any time for “at will employees”
Agency - Involuntary Termination - ISIS
1) Incapacity/death of ppal (unless POA draft to survive)
2) Source of agency supply destroyed (i.e. for apple sell rep of flooded orchard)
3) Illegality of agency agreement due to later regulation
4) Subject matter of agency destroyed (i.e. apple sell rep when crop destroyed by winter freeze)
Agency - Involuntary Termination - ISIS - Rule on 3rd party for termination of agency due to incapacity/death
Doesnt affect 3rd party if not given any notice
Agency - Termination - Irrevocability case
When authority WRITTEN and COUPLED with interest in property
- i.e. ppal gives mortgage to bank with right to sell in case of default
Agency - Termination - Notice requirements
- To avoid ppal liability to 3rd parties for agent’s acts after express/apparent authority terminated - Can be actual or constructive
Agency - Termination - Actual Notice
For past costumers or 3rd parties w/previous dealings
Agency - Termination - Constructive Notice
- To general 3rd parties - Can be done by publication in local newspaper or trade journal
