Agency Flashcards
Define “agency relationship.”
Legally binding arrangement in which one party (agent) acts on behalf of another (principal).
What elements are not necessary for an agency relationship to exist?
Capacity and Consideration.
Define agent.
One who acts on behalf of another (the principal)
Define principal.
One who appoints an agent to act on his or her behalf.
Define “general agent.”
Agent who is given general authority for the principal, i.e., not limited to specific transactions.
List the requirements for creation of an agency relationship.
Principal with capacity and, if agent’s contracts must be evidenced by a record, a record of creation.
Define independent contractor.
One who is doing work for another but whose actions and schedule are not directly controlled by that party. Example: a lawyer handling one case for a client.
Define “special agent.”
Agent who is limited in time and/or scope of agency; could be agency for a specific task.
Define “power of attorney.”
A name for a written document that creates an agency relationship.
What acts by the operation of law can lead to the termination of an agency relationship?
Death or insanity of principal or agent;
Bankruptcy (of the agent if it impairs his duties, of the principal if the agent no longer desires the relationship);
Change of law;
Loss or destruction of subject matter.
What actions by a party can lead to the termination of an agency relationship?
Fulfillment of purpose; Lapse of time; Occurrence of a specified event; Mutual agreement; Act of one party (exception: agency coupled with an interest).
What is the basis of an agency relationship?
Consent of the Parties.
What terminates actual authority?
When an agent is fired; when an agent quits, when an agent breaches his or her fiduciary duty
List the requirements for creation of an agency relationship.
Principal with capacity and, if agent’s contracts must be evidenced by a record, a record of creation.
List the duties of a principal to an agent.
To comply with the agency agreement;
To reimburse reasonable expenses;
To indemnify;
To compensate for physical injury.
List the agent’s duties of loyalty.
No competition;
No conflict of interest;
No appropriation of business opportunities;
No disclosure of confidential information.
What types of authority are terminated by operation of law, i.e, death or bankruptcy?
Express, Implied (Actual), and Apparent Authority
List the duties of an agent to a principal.
Obedience; Reasonable Care; Accounting; Notification; Loyalty.
What types of authority are terminated by unilateral act, “You’re fired” or “I quit”?
Express and Implied or Actual Authority
List the three types of authority through which agency power can arise.
Express;
Implied (Customary, Incidental, Emergency);
Apparent.
Define “apparent authority.”
Authority that comes through the way an agent appears to third parties; Principal holds agent out with authority.
List the two types of actual authority.
Express and implied authority.
Define “lingering apparent authority.”
Authority of terminated agent to continue binding the principal through the principals failure to terminate agent through proper actual and constructive notice.
Define “apparent agency/ostensible agency.”
An agency relationship that exists by appearance to third parties that an agency relationship exists.
Define “undisclosed principal.”
Contract situation in which third party only knows and believes contract is with the agent; is unaware of existence or identity of principal.
Define “disclosed principal.”
Contract situation in which third party is aware of the existence and identity of a principal.
Define “partially disclosed principal.”
Contract situation in which third party is aware of the existence of a principal but not the principal’s identity.
List the elements of apparent authority.
Principal holds agent out;
Agent acts within scope of apparent authority;
Third party reasonably relies.
Define “vicarious liability.”
Liability of principal for torts of agent in master/servant relationship when torts are committed by agent with authorization of scope of employment.
Describe the concept of respondeat superior.
“Let the master answer;” doctrine that holds principal liable, in certain circumstances, for the torts of the agent.
Define “frolic and detour.”
Acts and conduct by the agent outside the scope of employment that are done while the agent is supposed to be working for the principal.
Define “independent contractor.”
Agent who acts on behalf of a principal but who retains control over schedule and is not controlled daily by principal.
List the situations in which the principal has liability for the torts of his or her agent.
Directs the tort;
Failure to properly supervise;
Negligent hiring and/or retention.
Define “scope of employment.”
Measure for determining when a principal is held liable for the torts of an agent.
List the forms of the principal-agent relationship
Master-servant (principal usually liable for agent’s torts);
Employer-independent contractor (principal usually not liable).
Describe the master/servant relationship.
Type of relationship in which principal controls the activities of the agent; principal has liability for agent’s torts in this relationship.
Who is liable for the agent’s torts if the principal is at fault?
Liability of a principal.
Does a principal have the right to control the method and manner of an agent’s work?
Yes, if a master-servant relationship exists.
No, if an independent contractor relationship exists.
Describe vicarious (respondeat superior) liability.
Principals may be liable though blameless if:
Master-servant relationship exists; and
Agent acts within scope of employment.
