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NY Agency & Partnership > Agency > Flashcards

Agency Flashcards

1
Q

What is agency law?

A
  • It is concerned when the agency third pty relationship becomes binding on the principal
  • it is a fiduciary relationship of trust & confidence
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2
Q

Who can be a principal?

A
  • Manifested in many different ways, including:
    • individual - human person
    • business organization
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3
Q

What are the types of principals?

A
  1. Disclosed principals
  2. Partial disclosed principals (a.k.a. - unidentified principals)
  3. Undisclosed principals

NOTE - classification will determine who is liable on the K the agent makes

  • generally agents not bound personally on trans. with 3rd pty when acting for principal in the scope of the agency & clear that they are doing so
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4
Q

What factors help to distinguish between the types of principals?

A
  • does the 3rd pty know of the existence of the agency
  • does the 3rd pty know of the identity of the principal
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5
Q

What is a disclosed principal?

A
  • The 4rd pty knows the existence of the agency AND
  • The identity of the principal
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6
Q

Define partially disclosed (unidentified) principal)?

A
  • 3rd pty knows there is an agency AND
  • 3rd pty does not know the id of the principal
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7
Q

Define undisclosed principal?

A
  • 3rd pty does not know neither
    • there is an agency
    • the id of the principal
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8
Q

What are the types of agents?

A
  1. General agent
  2. Special aget
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9
Q

Define general agent

A
  • Authority to conduct a series of transactions on behalf of the principal

Example:

A is hired by P to manage his department store; A will have numerous responsibilities in connection with that position and is given the authority to execute all of them.

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10
Q

Define special agent

A
  • Limited grant of authority
    • usually one trans or a small series for a particular purpise
  • Auctioneer is a special agent

EXAMPLE:

A home seller engages a real estate agent to sell his home but to perform no other tasks on his behalf; the agent is a special agent because his responsibility is to complete only one specific transaction.

A real estate agent may create fiduciary duty and liability issues when the agent unwittingly becomes the agent of both the buyer and seller in a transaction.

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11
Q

Define subagent

A
  • an agent of the agent
  • EXCEPTION
    • Can also be agent of the principal if the principal told the agent to hire a subagent
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12
Q

What are the requirements for creating an agency

A
  1. Both ptys have to specifically assent (voluntary relationship)
  2. Agent must agree to act on behalf of the principal
    1. ​compensation not necessary
  3. Agent must act under the control of the principal
    1. more control principal exercises over agent work, the more likely the principal will be liable for the agent’s torts (doctrine of respondot superior
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13
Q

HYPO

Pierre, upset that he just lost a ton of money at the gambling tables, calls his financial advisor and complains that his retirement fund is losing money and promptly hangs up. The advisor then calls his trader and tells him to sell Pierre’s IBM stock and buy energy futures. In this situation, what is the relationship created between Pierre and the advisor? What is the relationship created between the advisor and the trader?

A
  • The advisor is an agent for Pierre
    • Pierre is bound what the advisor does
  • The trader is a subagent for the advisor
    • unless Pierre authorized the subagent
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14
Q

What are the different relationships between principals & agents?

A
  • Employer - Employee or Master-Servant
  • Independent contractor (non-employee)
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15
Q

Define employer

A

Employer/master

  • A principal who employs an agent
    • controls the agent OR
    • has the right to control the agents physical conduct
  • Tells the employee/servant
    • what to do
    • how to do it
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16
Q

Define employee

A

Employee/servant

  • An agent employed by the employer/master to perform services in his affairs
    • physical conduct is controlled OR
    • subject to the right of control by the princioal
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17
Q

Note for emploer/emploee

A
  • more restricitive subset of agents
  • all master/servants are principal/agents
  • not all principal/agents are master/servants
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18
Q

Define independent contractor

A
  • can be an agent
  • Issue - Is he also an employee/servant
    • Look @ whether P has the right to control how A does what he does
      • Not an agent - can’t bind prin in tort
        • thus vicarious liability comes in if emplyee/servant
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19
Q

What factors help determine whether an agent is a servant/employee vs an independent contractor?

A
  1. extent of control that the principal exerts on how the agent performs his work
  2. whether the agent is engaged in a distinct occupation/business from that of the principal
    • more distinct, more likely to be independent contractor
  3. is the type of work the agent is doing is customarily done under the supervision of the principal
  4. the skill required in the agent’s occupation
  5. who supplies the tools & the place of work
  6. the length of the time the agent is engaged by the principal
  7. whether the agent is paid by the job or by the hour
    • job = more master/servant; hour = more like independent contractor
  8. whether the principal or agent intend to create an employment relationship
  9. whether the principal is in the same business having the agent work
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20
Q

What are the duties of a principal to an agent?

A
  • Principal obligated for (absent an agreement):
    • compensation for the services rendered
      • even if no compensation, remedy under restitution law
    • principal must indemnify agent for any liability that results from his good faith performance of duties
    • reinburse aganet for expenses incurred during scope of agency
21
Q

Example of duty of principal to agent

A

EXAMPLE:

Employees of an accounting partnership were indicted for various activities that they were engaged in on behalf of partnership. They argued they were acting in good faith performance of their duties on behalf of partnership when they were engaged in the activities in question. The court determined that because they were conducting the performance of their duties in good faith, even though they were currently under criminal indictment for that, the employer could and would be responsible under law to indemnify them.

22
Q

HYPO

The Great Star Steam Ship Line’s ship, the S.S. Shining Star, was hit by a tidal wave in the Pacific Ocean, causing a number of shipping containers owned by Mega-Mart Stores to fall off and be lost at sea. Mega-Mart brought suit for the loss of the merchandise, and Great Star, in turn, sought indemnification from Pearlstone Investments, the owner of the ship. Was Great Star’s action proper?

A
  • Assuming Great Star is an agent of Pearlstone & assume they acted in good faith in securing the containers then they would have to be indemnified by Pearlstone
23
Q

What are the duties of the agent to the principal?

A
  • fiduciary duty is only during the pendency of the agency
  • Duty of care (absent an agreement contrary):
    • perform the K & render services w/reasonable care
    • agent must indemnify principal for the loss cased by agent’s wrongful behavior or failure to act w/reasonable care
  • Duty of loyalty: (common breaches are)
    • agent usurps (uses) the principal’s property on behalf of the agent, rather than principal’s own interest
    • if the agent goes into competition with the principal
24
Q

What are non-compete agreements between agent and principal?

A
  • Extension of the agent’s duty not to compete with the principal
    • must be for a reasonable time
    • w/in a reasonable scope afte the relationship ends
25
Q

What remedies does a principal have if the agent breaches his duties?

A
  • Breach of duty of loyalty
    • principal does not need to suffer a loss to recover
    • principal entitled to the profits of a disloyal agent
    • punitive damages may be award but only in rare cases
      • need malice or bad faith
26
Q

What are the types of authority an agent can have?

A
  • Actual authority
  • Apparent aithority

Authority covers whether the principal is bound on Ks that the agent makes on his behalf

27
Q

Define actual authority

A
  • CREATION
    • Manisfestation from the principal to the agent of the principal’s request that the gaent act on behalf of the principal in a particualr way
      • Look at objective perspective of the agent
28
Q

What are the types of actual authority?

A
  • Implied authority
    • to take action necessary or incidental to achieving the principal’s objective
  • Express authority
29
Q

What is the Equal Dignity Rule? for acutal authority

A
  • If the K the agent is entering into for the principal needs to be in writing for the SOF, the agency agreement must also be in writing

EXAMPLE:

If the contracts the agent is entering into on behalf of the principal involve the sale of an interest in real property (which must be in writing under the Statute of Frauds), then the agent’s grant of authority to enter into these real estate contracts must also be in writing to be enforceable.

30
Q

Define apparent authority

A
  • Arises based on the Principal’s manifestation made to a 3rd pty
  • Used to expand an actual limitation of authority
  • Can be communicated to 3rd pty by appinting the agent to a particular position

EXAMPLE:

Peter, the President of a corporation, appoints Adam to the position of General Manager, and says to Adam that while a General Manager normally can do X, Y, and Z, he can only do X and Y, not Z. In this situation, Adam has no actual authority to do Z. However, Adam will have apparent authority to do Z as long as the position communicates that authority to a third party and it is reasonable for the third party to think so under those circumstances.

31
Q

HYPO

A general building contractor contacts the local business manager of a major glass manufacturer about the manufacture and installation of glass walls for a new office building. The manager informs the contractor that he has several panes from a canceled order sitting in a salvage yard available for a significant discount, but only if the contractor pays in cash. The contractor agrees but soon finds the glass is defective. If the contractor sues the glass manufacturer for damages, will the court find that the manager acted with authority to bind the glass manufacturer?

A
  • General bus contractor - 3rd pty
  • glass manufacture - principal
  • business manager - agent

May be apparent authority coming from the business manager’s position

32
Q

What liability does the agent have to 3rd ptys?

A

Only in a situation involving an undisclosed or partially disclosed principals

33
Q

Tort liabilities

A
  • Respondeat superior (vicarious liability)
    • agent’s tort against a 3rd pty will creat liability for the principal
    • agent is still resposible for its own torts as well
  • Vicarious liability triggerred
    • agent must be that elevanted status as an employee/servant
    • Employee/servant must have been acting in scope of employment
34
Q

What is the scope of employment for vicarious liability?

A

Scope of Employment Test

  • employee performing tasks assigned in a course of conduct subject to the employer’s control;
  • torts committed to & from work, outside scope of employment
    • However, if employer provies the car & directs & supervise driving, then they have enough control
35
Q

What is the difference between a frolic vs a detour?

A
  • If on a frolic (substantial deviation) = outside scope of employment
  • detour (insubstantial deviation) = w/in the scope
  • NOTE - most jurisdictions allow the employee to reenter scope of employment

EXAMPLE:

Employee is asked to make deliveries on the East Side and starts out on the West Side. It is easy for Employee to drive directly to the East Side and then return. However, Employee here takes a direct route to the East Side, makes the delivery, but then on the way back, instead goes 15 blocks north to visit family. This side-stop is not authorized. Either on the way there or on the way back, Employee runs a traffic light, hits a car, and injures someone—this is negligence. There is no liability for the Employer here because this frolic or substantial deviation takes Employee out of the scope of employment. This is not because the 15 blocks is too long a distance to be a detour, but rather because side stops of any kind are not authorized.

36
Q

When are principal’s liable for the torts of independent contractors?

A
  • Independent contractors generally do not trigger vicarious liability EXCEPT:
    • inherently dangerous activity
      • judged by the consequences of the activity not the accident
    • if there is an non-delegable duty
37
Q

Is there vicarious liability for intentional torts?

A
  • employer not generally liable for the intentional torts of employees
  • EXCEPTION
    • the attempt of the employee to serve the interest of the master/employer
38
Q

HYPO

Kevin works as a stocker at the local A&P market. He erroneously believes a group of teenagers are attempting to steal some extremely expensive cuts of meat. After telling the teenagers to stop, he grabs the two teenagers and slams them into the glass meat case, causing severe physical injury to both. Will A&P be liable for Kevin’s actions?

A

If we assume enough control of A&P over Kevin, then can argue he was trying to serve is master. Does not matter whether A&P authorizes him to do so or to never use violence. A&P can have a cause of action against Kevin as well

39
Q

Can the agent delegate its duties to the principal to perform personal services to another?

A
  • Generally no
    • Agent can create subagents but that is not a delegation of duties
40
Q

What is the rule for ratification between an agency and a principal?

A
  • Ratification - the retroactive creation of an agency
  • Permits:
    • principal to correct situations creating a lack of authority
    • conduct outside scope of employment
  • Principal will not be bound by the agent
41
Q

How do you ratify a principal/agent relationship?

A
  • Principal must know all the material facts concerning the transaction
    • including that the agent acting w/o P’s authority
  • principal must have been able to authorized the act at the time the unauthorized act happened
  • Can be:
    • expressed
      • the principal agrees to be bound on the unauthorized conduct through written or spoken words
    • impied
      • occurs when the principal knowingly accepts the benefits of the unauthorized K
  • Equal Dignity Rule
    • if K needs to be in writing based on SOF then prin/agent relationship need to be in writing
42
Q

HYPO

Green, an attorney for Dallas, used his power of attorney to purchase an annuity for the benefit of Flo, a nurse who had taken care of Dallas when all else had failed. The power of attorney did not explicitly authorize gifts. However, Dallas, with all her faculties intact had orally approved the transaction. Will that oral directive act as a valid ratification?

A
  • People:
    • Green - agent
    • Dallas - principal
    • Flo - 3rd pty
  • It was an express ratification by Dallas & had all his facalities so long as no writing was required
43
Q

How to terminate an agency relationship?

A
  • Both principal & agent has the power to terminate the relationship @ any time
    • HOWEVER, the you may not have the right to terminate & thus by terminating be liable for dmages
  • Terminate apparent authority
    • principal must notify all ptys with whom the agent has dealt with as agent (actual notice)
    • principal must provide constructive notice to everyone else
  • Termionate actual authoutiy
    • fire the agent
44
Q

Recap: 1

Dina authorized Hal in writing to buy a diamond pendant for her. Subsequently, Hal signed a written contract with Sam for a $100,000 diamond pendant. Dina died on October 2. Hal learned of Dina’s death on October 5. Sam learned of Dina’s death on October 10. Mort was appointed executor of Dina’s estate on October 15. Sam has a cause of action against Mort as executor of the estate only if the contract for the pendant was made between Hal on Dina’s behalf and Sam on:

A) October 1.

B) October 5.

C) October 10.

D) October 15.

A

A) October 1

45
Q

Recap: 2

Applicants were asked to analyze issues arising out of a broken arm suffered by Bobby, a young camper, while playing softball on a wet field at Golden Sunshine Camp. Camp counselors opted not to postpone the previously-scheduled game.

What is the camp’s potential liability?

A
  • People
    • Bobby - 3rd pty
    • Camp counselors - agent
    • Golden SDunshine Camp - principal
  • Look to see if camp was acting as a employer/master
    • if so then this triggers vicarious liability so long as the camp counselor’s were acting w/in the scope of their employment
  • Feels like an employer/employee relationship & it was w/in the scope
    • depending on the K between counselors & camp, the camp may have a CoA against the counselors
46
Q

Recap 1. Name the three main requirements for the creation of an agency:

A
  • both have to specifically assent
  • agent must agree to act on behalf of principal
  • agent must be under the control of principal
47
Q

Recap 2. Describe the two duties that an agent has to a principal”

A
  • Duty of care
    • perform the K & tender services with reasonable care
    • indemnify the principal for agent’s wrongdoing or unreasobale care
  • Duty of loyalty
    • agent gors into competition with the principal
    • agent not to usurprincipal’s property on behalf of the agent
48
Q

Recap 3. When is an agent liable to a third party on contracts entered into on behalf of the principal?

A

In situations invloving undisclosed or partially disclosed principals

49
Q

Recap 4. What are the requirements for respondeat superior?

A

NY Agency & Partnership (5 decks)

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