Agency

Question 1

Agency generally

Answer 1

Agent does things on principal’s behalf and principal directs agent’s acts.

Question 2

Agency Liability –Generally

Answer 2

If there’s a valid agency, principal can be liable to 3rd party for agent’s actions re torts & contracts

Question 3

Forming Agency Relationship:

3 requirements for agency relationship

Answer 3

Need to have ABC:

Assent: both parties assent for agent to work for principal

Benefit: Agent agrees to work on principal’s benefit

Control: Agent agrees to work subject to principal’s control

(don’t need consideration)
–if one party denies creation of agency relationship, ct will look to manifestations of assent (words, letter, etc)

Question 4

Principal

Answer 4

Right to control result or ultimate objectives of A’s work.

Can be anyone with legal capacity: individual, employer, etc.

Question 5

Agent

Answer 5

Anyone who has minimal capacity (including minor)

Minimal Capacity: Must be able to assent to relationship, perform tasks on behalf of principal, be subject to principal’s control.

Question 6

Formalities for Creating Agency Relationship

Answer 6

Assent, Benefit, and Control.

–Don’t need consideration or writing.

Question 7

Types of Agents

Answer 7

–Servants/Ees: ER has the right to control agent’s physical conduct of work.

–I/C: Principal doesn’t have control or right to control agent’s physical conduct of work.
(I/C tends to have own tools, can work for others, etc).

Relevant bc principals tend to be more liable when they have more control

Question 8

Terminating Agency Relationship

Answer 8

Either party can terminate agency relationship unilaterally.

Question 9

Liability of Principals to 3rd Parties re: Contracts

General Liability/Rule

Answer 9

Principal is liable for ks that an agent enters on behalf of the principal when the principal authorized the agent to enter into k. (in other words, when agent acted with legal authority)

Question 10

Liability of Principals to 3rd Parties re: Contracts

Legal Authority: 4 types

Answer 10

1. Actual Express Authority
2. Actual Implied Authority
3. Apparent Authority
4. Ratification

(note actual vs apparent: actual there is communication between P and A. Apparent, communication between P and 3rd P)

Question 11

Liability of Principals to 3rd Parties re: Contracts

Actual Express Authority

Answer 11

look to communication between P and A

Created when principal uses words (written or spoken) to convey authority to the agent.

Needs to be Subjective and Objective Intent:

• -subjective-agent must believe that he’s doing what the principal wants him to do
• -objective-belief must be rsbl

Authority terminates when agent has actual knowledge that principal died. Terminates immediately when agent dies.

(generally A can’t delegate without express authorization)

Question 12

Liability of Principals to 3rd Parties re: Contracts

Actual Implied Authority

Answer 12

look to communication/conduct between P and A

Created when Principal uses written/spoken words, OR OTHER CONDUCT, to convey authority to agent to take whatever steps are necessary to achieve P’s objectives.

Result: Agent has actual implied authority (unless express instructions to contrary) to act within general business custom to achieve that goal.

(generally A can’t delegate without express authorization)

Question 13

Liability of Principals to 3rd Parties re: Contracts

Apparent Authority

Answer 13

look to communication between P and 3rd P

Created when P (through written or spoken words) caused 3rd P to rsbly believe that the principal agrees to have acts done on the principal’s behalf by the agent.

3rd p’s belief can be based on: past dealings betwn P and A; trade customs; industry stds etc.

(can’t be apparent auth if undisclosed P. Then, look to detrimental reliance)

Question 14

Liability of Principals to 3rd Parties re: Contracts

Ratification

Answer 14

There’s no pre-act communication to consider.

Ratification requires:

1. P has knowledge of all material facts of K and
2. P then accepts K’s benefits.

Question 15

Liability of Principals to 3rd Parties re: Contracts

Termination of Authority

Answer 15

Revocation/renunciation (as soon as either party gives notice to other party)

Agree to terminate

Change of circumstances –cause A to rsbly believe that P no longer consents to A acting on P’s behalf.

Passage of time (rsbl)

P’s death or suspension of powers

P’s loss of cpacity –automatic upon NOTICE

A’s death–automatic

Statute mandates end of authority.

Question 16

Liability of Principals to 3rd Parties re: Torts

Vicarious Liability generally and EE-ER

Answer 16

Vicarious Liability: P can be liable for the tortious acts of his A.

Requirements for Vicarious Liability to apply:
1. P has sufficient CONTROL (so that EE-ER) +
2. Tort happened when A was acting within scope of employment.
control = control manner and means

Scope of Employment:
Detour (liable) vs. frolic (not liable, significant deviation)

Question 17

Liability of Principals to 3rd Parties re: Torts

Vicarious Liability I/C

Answer 17

Principal not vicariously liable for torts committed by I/C

EXCEPTIONS:

1. Task inherently dangerous OR
2. P negligent in hiring incompetent I/C OR
3. P retains control over some of the tasks of IC and the tort occurs within those tasks.

Question 18

Liability of Principals to 3rd Parties re: Torts

P’s direct liability for A’s Intentional Torts

Answer 18

Generally, P not liable for Intentional Torts bc not within scope of employment

Exceptions:

• -A has actual authority or P’s ratification (i.e. this is the type of task that A was hired to do)
• -Negligence in selecting, supervising, or controlling A
• -Nondelegable Duties (super important responsibility)

Question 19

A’s Liability: Contract Liability

Answer 19

A’s liability to a party to a contract:

–Disclosed P: A doesn’t become party to k if he enters into it on P’s behalf and party knows P existence and identity

–Partially Disclosed P: A becomes party to k when 3rd P knows of P’s existence but not identity

• -Undisclosed P: If A binds P to the k and 3rd P doesn’t even know P exists, P and A are both parties to k.
• *****3rd P liability to undisclosed P: liable unless A fraudulently concealed ( = did so bc knew 3rd P wouldn’t work with P) P’s existence OR k expressly excludes P
• ****Undisclosed P’s liability to 3rd P: liable if the 3rd P detrimentally changes position bc of A without actual authority and P knew of A’s conduct and didn’t take rsbl steps to notify 3rd p.

–If A lacks power to bind P to k, then A’s breached his warranty of authority

Question 20

A’s Liability: Tort Liability

Answer 20

A is liable to the 3rd party for negligent and intentional conduct but not liable for P’s authority.

Question 21

A’s fiduciary duties to P

Answer 21

Even if A unpaid, A owes P:

1. Duty to exercise rsbl care
2. Duty to obey rsbl instructions
3. Duty of Loyalty
   
   • • Agent can’t usurp business opportunities
   • -Agent can’t take in secret profits
   • -Agent can’t compete directly with P

Question 22

Liability of Principals to 3rd Parties re: Contracts

Estoppel

Answer 22

(I believe this only applies when there’s an undisclosed P. P can still be held liable to the 3rd party for the k IF): Applies when 3rd p justifiably induced to make a detrimental change in position bc that 3rd p believed that the transaction was entered into for P and P failed to take rsbl steps and use ordinary care.