Agency Flashcards
Liability of Principal for TORTS of Agent (Vicarious Liability)
2 Part Test: Principal will be liable for torts committed by its agent if:
- (1) There is a PRINCIPAL-AGENT RELATIONSHIP, and
- (2) The tort was committed by the agent w/in the SCOPE of that relationship
Principal-Agent Relationship Requires:
- Assent = Agreement between Principal & Agent
- Benefit = Agent’s conduct MUST be for principal’s benefit
- Control = Principal MUST have the RIGHT to control the agent by having POWER to SUPERVISE the manner of its performance
TORTS–Sub Agents
- Principal will be liable for sub-agent’s tort ONLY IF there is:
- Assent
- Benefit
- Control
- BETWEEN Principal AND Sub-Agent
Usually no assent or right to control
TORTS–Borrowed Agents
- Principal will be liable for a borrowed agent’s tort ONLY IF there is:
- Assent
- Benefit
- Control
- BETWEEN Borrowing Principal and Borrowed Agent
Usually no right to control (borrowed) (even if assent and benefit exists)
TORTS–Agents vs. Indep. Contractors
KEY Distinction:
-There is NO right to control an independent contractor b/c there’s NO POWER TO SUPERVISE
W/out control there can be no VL for indep. contractor’s torts
EXCEPTIONS:
- Inherently dangerous activities AND
- Estoppel = If you hold out your indep. contractor w/appearance of agency you will be prevented from denying liability
“In this case”
USE THIS PHARSE
- General Rule
- Exception
- In this case
TORTS–Scope of Principal-Agent Relationship Factors
- Was conduct w/in job description?
- Frolic (new indep. journey) vs. Detour (mere departure)
- Did agent intend to benefit the principal
Intentional TORTS
Are generally OUTSIDE the SCOPE
EXCEPTIONS:
- Authorized by Principal or
- Natural from nature of employment or
- Motivated by a desire to serve the principal
Liability of Principal for K Entered by Agents
One Test: Principal is liable for K entered into by its agent ONLY if the principal AUTHORIZED the agent to enter the K
4 Types of AUTHORITY:
- Actual Express
- Actual Implied
- Apparent Authority
- Ratification
K–Actual Express Authority
Actual express authority can be ORAL and even private
EXCEPTION:
-IF K itself MUST be in writing then express authority MUST also be (SOF; K involving sale of land)
WILL BE REVOKED BY:
- Unilateral act of either the principal or the agent, or
- Death or incapacity of the principal
EXCEPTION:
-Durable Power of Atty.
Actual Express Authority = Narrowly construed
K–Actual Implied Authority
Authority which the principal gives the agent thru CONDUCT or CIRCUMSTANCE:
(1) Necessity
- Which are necessary to accomplish an expressly authorized task
(2) Custom
- Which by custom are performed by persons w/the agent’s title or position
(3) Prior acquiescence by the principal
- Done this for 25 years
K–Apparent Authority
2-Part Test: (1) Principal CLOAKED agent w/appearance of authority and (2) 3rd Party reasonably RELIES on appearance of authority
-NOT REAL
K–Ratification
Authority can be granted AFTER the K has been entered if:
(1) Principal has KNOWLEDGE of all material facts regarding the K, and
(2) Principal accepts its BENEFITS
EXCEPTION:
-Ratification CANNOT ALTER the terms of the K
General Rules of Liability of K
Gen Rule = the PRINCIPAL is liable on its AUTHORIZED K, and therefore as a rule:
-An authorized agent is NOT liable on its authorized Ks
EXCEPTION =
-The undisclosed principal…AUTHORIZED AGENT MAY NONETHELESS be liable at the ELECTION of the 3rd Party
Duties Agent Owes to Principal
In return for reasonable compensation and reimbursement of expenses, agents owe principals:
- Duty of Care
- Duty to Obey Instructions
- Duty of Loyalty
- Self dealing
- Usurping the principal’s opportunity or
- Secret profits
Remedies:
-Principal MAY = recover losses that are caused by the breach AND may disgorge profits made by breaching agent as well
