Agency

Question 1

First Assess type of relationship

Answer 1

Agent/Servant OR Independent Contractor

Question 2

Agent/Servant Relationship

Answer 2

Q: is the employer L under the theory of Respondeat Superior?

Respondeat Superior–if the acts of the agent/servant are the proximate cause of the injury to 3rd party and such acts were within the scope of employment, then the aggrieved party has an action against both the master and servant (aka principal/agent). This is known as VICARIOUS LIABILITY. employer = passive wrongdoer.

Question 3

Scope of Employment

Answer 3

employer must exercise reasonable care when an employee is acting outside scope of employment, IF the employee is on employer’s premises or is using the chattel of the employer.

Determining whether within scope–an employee is acting within the scope when he acts with the intent of furthering the employer’s business purpose.

Question 4

Vehicles and Traffic Law

Answer 4

if the agent’s neg act occurred while driving the principal’s car, discuss Vehicle and Traffic Law Sec 388 which imposes VICARIOUS L on the owner of a motor vehicle for the negligence of a driver who had PERMISSION

Question 5

Independent Contractor

Answer 5

is employed by the principle to achieve a certain result. The contractor is NOT under the principal’s immediate control, direction or supervision in relation to the details of the work. The independent contractor is subject to the control of his employer only as to the result.

Question 6

L re Independent Contractor

Answer 6

Generally employer is NOT L, EXCEPT:

(1) where the work being done by the ind contractor is deemed inherently dangerous (blasting, scaffolding)
(2) where the O interferes with the contractor’s work
(3) Negligent hiring
(4) Of work creates a danger to a business invitee

Question 7

Intentional Torts of an Employee

Answer 7

an employer is vicariously L for the intentional torts of their employee if the employee acted within the scope of their employment and the employer knew or should have known that the employee’s potential to commit intentional torts (forseeability) (neg acts are always foreseeable).

However, even if the employee was not acting within the scope of their employment, the employer would still be L if the employee was on the employer’s premises when they committed the foreseeable intentional tort.

Question 8

Punitive Damages

Answer 8

if the employer is responsible for an intentional tort , defamation, or sexual harassment of employee, they will be responsible for punitive damages, but only if:

(1) employer consented, participated, or ratified
(2) the employer was neg in retaining the employee (forseeablity)
(3) the tort was in furtherance of the employer’s recognized business practice, OR
(4) the employee was part of mgmt or was a high level employee

Question 9

Real Estate Broker–Procure Customer

Answer 9

absent a power of atty, the broker is auth only to procure a customer but is not auth to bind the principal by K

Question 10

Real Estate Broker–Earning Commissions

Answer 10

In the absence of any agreements to the contrary, a broke is deemed to have earned his commission when he produces a buyer ready willing and able to make the purchase upon all the terms and conditions set forth by the principal

Question 11

Real Estate Broker–Subsequent events

Answer 11

Subsequent events, such as the bad faith of the buyer or seller or the destruction of the property will not extinguish brokers right to his commission UNLESS the agreement has provided otherwise. The broker’s agreement is separate from the land sale agreement.

Question 12

Real Estate Broker–No Guarantee to Consummate

Answer 12

Broker does not guarantee the consummation of the deal, rather undertakes to tender a ready willing and able buyer

Question 13

Real Estate Broker–Licensed Prior to Closing

Answer 13

IF the broker must sue to collect his fee, a condition precedent is that he must be licensed in NY prior to closing. However, an atty may engage in the brokering of real estate w/o a license if he is registered in Albany prior to closing.

Question 14

Real Estate Broker–No Specific Performance

Answer 14

A broker may not demand that seller bring an action for specific performance against buyer. The broker is not in privily of K with the buyer/seller.

Question 15

Real Estate Broker–No Interference

Answer 15

a broker may not interfere in problems between buyer/seller

Question 16

Real Estate Broker–Seller Along Frustrating

Answer 16

A broker may have a legal right to take action against seller, if the seller alone is frustrating sale

Question 17

Real Estate Broker–Exclusive Right to Sell

Answer 17

An “exclusive right to sell” means that no matter who makes the sale within the per of exclusivity, the broker earns his commission, even if it is the seller alone who makes the sale.

Question 18

Real Estate Broker–Exclusive Agency

Answer 18

An exclusive agency is a designation by the seller that the broker is the only person, other than O, who can sell the property, but if the seller sells the property independent of the broker he does not owe his commission

Question 19

Capacity to be a Principal

Answer 19

(1) Competent Person–any competent person can be a principal, including an infant
(2) Legal Entity–can be a principal (eg corp or partnership)
(3) General Rules of Capacity–the principal warrants the capacity of the agent. One who knowingly allows another to act as his agent is held to guarantee the competency of the agent.

RULE: an infant principal can avoid a K made by an adult agent, who then becomes personally responsible. An adult principal cannot avoid Ks made by an infant agent.

Question 20

Capacity to be an Agent

Answer 20

(1) COMPETENCE–any competent person or entity, including infants (except infants of tender years), may act as an agent.
(2) CAPACITY–the agent draws his capacity from his principal and guarantees the capacity of his principal.
(3) WRITING REQ–there are three times that an Agent’s authority MUST be in writing to bind the Principal
- when the agent’s authority involves the conveyance of real property. Exception: licensed broker or licensed atty registered in Albany.
- When an agency K by its terms is NOT performed w/in one year
- Power of atty

Question 21

Creation of an Agency Relationship (6 ways)

Answer 21

BY APPOINTMENT

(1) Express oral or written agreement
(2) Implied by conduct

OTHER THAN BY APPOINTMENT

(3) By ratification–Pose of Agency
(4) Operation of Law–Estoppel
(5) Apparent Authority–Agency by Estoppel
(6) Agency by Necessity

Question 22

Termination of Agency Relationship BY AGREEMENT

Answer 22

may be terminated by an act or agreement of the parties.

• Ex if the agency is of a specified duration, it will terminated upon stated date;
• Ex if the agency is at will it will terminate whenever one party wants it to;

Question 23

Termination of Agency Relationship BY OPERATION OF LAW

Answer 23

(1) DEATH OF PRINCIPAL–post mortem acts of agent do not bind the estate
(2) DEATH OF AGENT

(3) INCAPACITY OF EITHER PARTY
-Judicial decree–if determined by judge insanity terminates the agency and is binding on both principal and 3rd parties
No judicial decree–if the insanity is non-judicial incompetency, then it will not be binding upon third parties who deal with the agent w/o knowledge of his incapacity, and such innocent third parties will be protected and will be able to proceed against the principal but, the principal may be able to obtain indemnification from the agent for whom his own insanity does not constitute a factor.

(4) BANKRUPTCY–bankrupcy and insolvency of principal terminates an agency. However, if it is the agenct who is bankrupt, then the principal may revoke the agency if the agent’s state affects his ability to carry on the agency.

Question 24

Agency Coupled with an Interest

Answer 24

If an agency is coupled w/ and interest in the subject matter, then the agency is irrevocable during its term and none of the grounds specified under the termination by operation of law of an agency will apply. Agency terminates either on payment to the agent or if the subject matter is destroyed.

RULE: when possession, title or a lien, plus authority to sell is given to another to satisfy some obligation, it is an irrevocable agency coupled with an interest.

Question 25

Fiduciary Relationship–Fiduciary

Answer 25

an agent is a fiduciary with the duty of good faith and loyalty and must account for his acts to the Principal.

Question 26

Fiduciary Relationship-Loyalty

Answer 26

an agent must act in accordance with the highest principals of loyalty, fidelity, and fair dealings.

Question 27

Fiduciary Relationship-Diligence

Answer 27

An agent must use care, skill, and diligence

Question 28

Fiduciary Relationship-Authority

Answer 28

An agent must act in accordance with his authroity and obey instructions, and all of these rules apply to the agent, whether or not he is being compensated for his services.

Question 29

Fiduciary Relationship-Disclosure

Answer 29

An agent must disclose info to his principal if such info in any way affects the actions in which the agent is involved.

Question 30

Fiduciary Relationship-Profit

Answer 30

the agent may not deal in the subject matter of his agency on his own account or for his own benefit. He may not make a profit at the principal’s expense and he may not make a secret profit.

Question 31

4 Situations in which a DISCLOSED principal is L on Ks

Answer 31

(1) ACTUAL Authority–expressly authorized by the principal. Actual auth is that which is granted explicitly or in writing to the agent.
(2) IMPLIED ACTUAL authority–implicitly auth by principal. Implied actual auth is customary auth and must be consistent w actual auth. It is actual auth circumstantially proved with the principal intended the agent to possess.
(3) APPARENT AUTH–Apparent auth is that which a principal holds his agent out as possessing or which a principal allows his agent to present that he possesses. Principal is estopped from denying that authroity.
- Principal’s Act–apparent auth created only by the action or neg of the principal. It is a result of principal’s consent. The 3rd parties’ reliance on the agent must always be caused by the principal’s act and not the agent’s act
- Principal’s Intent–even if the act is expressly NOT auth by the principal, manifestation to 3rd parties are determinant, not the principal’s secret intent.
(4) Ratification–Unauthorized initially, but subsequently ratified by principal in its entirety.

Question 32

Principal’s RATIFICATION of agent conduct (2 ways)

Answer 32

(1) here, the facts will give a (partially) disclosed principal-agent relationship. The 3rd person knows they are dealing with an agent, but the identity of the principal may or may not be known.

RULE: P may ratify unauth acts of A prior to the 3rd party disaffirming the agreement, and then enforce against the 3rd party.

(2) Here, the facts will have an undisclosed P where the A exceeds her auth. The 3rd party thinks the A is the P.

RULE: P cannot ratify the unauth acts in order to enforce against the 3rd party b/c there was not appearance of agency.

Question 33

Undisclosed Principal

Answer 33

A party to a transaction is considered an undisclosed P if, at the time of the transaction by the agent, the 3rd party has no notice that the agent is acting for anyone. As a reult of the absence of notice, the third party deals with the A as though the A was the P.

Question 34

Undisclosed Principal–Ratification

Answer 34

is not possible b/c there is no appearance of agency

Question 35

Undisclosed Principal–Principal Unknown

Answer 35

If the 3rd party knows there is a P but does not know who they are, both the P and the A are directly bound to the 3rd party.

Question 36

Undisclosed Principal–Identity becomes Known

Answer 36

if the identity of the P becomes known, the 3rd party may enforce his rights against the P and A.

Question 37

Undisclosed Principal–CPLR 3002(a)

Answer 37

states: where causes of action exist against an A and an undisclosed P, commencement of an action against either or recovery of a judgment against either which is unsatisfied, does not bar an action against the other. If the judgment is satisfied by the agent, then it is deemed an election of remedies so that a subsequent suit against the undisclosed P may not be maintenance. Therefore, maintenance of a cause of action or recover of judgment against an agent, so long as such judgment remains unsatisfied, is not deemed an election of remedies. Therefore, the 3rd party may still proceed against the undisclosed P.

Question 38

Undisclosed Principal–Identity Known

Answer 38

If a P’s identity is known and the A contracts as an A, then only the P is bound, if the A acted within the scope of his auth. If the A exceeds actual auth but acted with apparent auth, the principal is still bound but the agent also becomes L to the 3rd party for the breach of the warranty of Auth.

Question 39

Undisclosed Principal–Duty to Disclose

Answer 39

if a 3rd party asks the A if he is an A and the A knows the 3rd party will not deal w/ their principal, the A must answer truthfully or she is guilty of fraud in the inducement and the 3rd party may cancel the K.

Question 40

Agent is L to Third parties when:

Answer 40

(1) Lacks legal capacity–when P is an incompetent or minor and the A does not disclose this fact.
(2) Ks in own name–A Ks in his own name (eg undisclosed P)
(3) Personal Guarantee–where A personally guarantees act of P
(4) Tort–for a tort
(5) Improper Representation–if he improperly holds himself out to represent someone when he does not.