Agency

Question 1

Define Agency.

Answer 1

An agency relationship is a fiduciary relationship between a principal and agent, whereby the agent acts on the principal’s behalf and subject to the principal’s controll.

It arises when one person, the principal, manifests assent to another person, the agent, that the agent shall act on the principal’s behalf and be subject to the principal’s control, and the agent manifests assent or otherwise consents so to act.

Question 2

Define Principal.

Answer 2

A principal is a person who manifests an intention that another act on his behalf.

Question 3

Define Agent.

Answer 3

An agent is a person who acts on behalf of a principal.

Question 4

How does the law of Business Associations define “person”?

Answer 4

The person may manifest itself in many forms, including:

1. an individual;
2. an organization or association with the capacity to possess rights and incur obligations;
3. a government, political subdivision, or entity created by the government; or
4. any other entity that has the legal capacity to possess rights and incur obligations.

Question 5

What are four (4) consequences of entering an agency relationship?

Answer 5

The Four Consequences of Entering an Agency Relationship:

• Duties arise between the principal and agent;
• The agent has the power to bind the principal and act on his behalf without the principal having to act personally, but under the principal’s control.
• Liability is imposed on the principal for the agent’s actions within the scope of the agency.
• Knowledge of the agent is imputed to the principal.

Question 6

Describe Master-Servant agency relationships.

Answer 6

The Master-Servant relationship is the most common form of agency relationship, and it encompasses relationships between Employers and Employees.

An Employer and Employee have a master-servant employment relationship in which the master has the right to control the details of the physical conduct of the servant in the performance of the service, not only as to the result, but also as to the means to be used to achieve the result.

Question 7

What is respondeat superior?

Answer 7

Under the Doctrine of Respondeat Superior, a master is generally liable for his servant’s torts committed within the scope of his employment.

Vicarious Liability.

Question 8

Distinguish between a Master-Servant/Employer-Employee Relationship and an Employer-Independent Contractor Relatioship.

Answer 8

Like a Master-Servant/ER-EE relationship, the Employer-Independent Contractor relationship is also an employment relationship; however, the ER, unlike the master in the master-servant relationship, has no right to control the details of the performance of the independent contractor.

Question 9

How is an Agency Relationship formed?

Answer 9

An agency relationship is formed by the principal granting authority to the agent to act for him.

There must be some manifestation of the principal’s intention to grant authority. Such manifestation can be express or implied, verbal, or evidenced by conduct.

Question 10

What is a Power of Attorney?

Answer 10

A power of attorney is a written authorization enabling a person (agent) to act on behalf of another (principal).

A POA may take effect immediately upon execution or at a later date, upon the occurrence of some future event or contingency, such as the principal’s incapacity.

NOTE:

Although many states require certain formalities for the granting of a POA to be effective, South Carolina recognizes the oral grant of power, but emphasizes that “a power of attorney should be evidenced by an instrument in writing.”

However, a Durable POA in SC must be executed and attested with the same formalities as a will, and recorded at the appropriate county office.

Question 11

What is a springing power of attorney?

Answer 11

A POA that only takes effect upon some future event or contingency is called a springing power of attorney.

Question 12

What is the difference between a Durable POA and a General POA?

Answer 12

A POA is said to be Durable if the authority of the agent to make decisions for the principal continues to be effective even if the principal becomes incapacitated.

NOTE:

A POA in South Carolina is not presumed to be Durable unless the document granting the power especially authorizes such intent in writing.

NOTE:

A Durable POA in South Carolina must be executed and attested with the same formalities as a will, and recorded at the appropriate county office.

Question 13

What is the difference between a General POA and a Special POA?

Answer 13

A general POA grants an agent the authority to conduct all acts that a principal could ordinarily do.

A special POA grants an agent the authority to conduct only certain acts on behalf of the principal that are specified in the grant of authority.

For example, a Health Care Power of Attorney grants the attorney-in-fact specific authority to make health care decisions on behalf of the principal.

• In South Carolina, the power is durable and the document authorizing the power must substantially follow the form set forth in the statutes.

Question 14

What are the required elements of the Agency Relationship?

Answer 14

Required Elements of the Agency Relationship

• A valid agency relationship requires capacity, intent, and an agreement.
• Both parties must assent to the agency.
• A principal may be liable for unauthorized actions of his agent if the agent acts with apparent authority.
• The agent must agree to act on behalf of the principal. If the agent is compensated, it is primarily to advance the interests of the principal.
• The principal possesses the right to control the conduct of the agent

Question 15

What constitutes “capacity” with regard to a principal in an agency relationship?

Answer 15

Capacity – Principal

• Any person who has capacity to effect his own transactions has capacity to appoint an agent to act on his behalf.
• An incompetent may not act as a principal.
• A minor generally cannot act as a principal except when contracting for necessaries.
• A corporation may act as a principal only as to matters within its corporate powers.

Question 16

What constitutes “capacity” with regard to a agent in an agency relationship?

Answer 16

Capacity – Agent

• Generally, anyone with minimum mental capacity may act as an agent.
• Accordingly, both minors and incompetents may act as agents.
• The agent will be endowed with the same capacity as the principal.
• One may not be an agent for two adverse parties to a transaction unless both parties are fully advised and give their consent.

Question 17

What may be offered as proof as to the existence of an agency relationship?

Answer 17

Proof of Agency

• Existence of an agency relationship may be established by circumstantial evidence.
• Relevant factors include the situation of each party and their words and actions.
• The existence of an agency relationship is ordinarily a question of fact for the jury, and the burden of proof rests with the party asserting the relationship.

Question 18

If you are driving a vehicle belonging to someone else, are you acting as their agent?

Answer 18

Presumption of Agency in Motor Vehicle Operation:

• At Common Law, the owner of a motor vehicle is NOT presumed liable for the negligent use of the vehicle by another.

SC RULE:

South Carolina follows the common law rule whereby ownership of a vehicle does NOT raise a presumption of vicarious liability.

Question 19

What is the Family Purpose Doctrine?

Answer 19

Many states impose vicarious liabilty upon the owner of a motor vehicle for the negligent or willful misconduct of an immediate family member arising out of such family member’s permissive use of a motor vehicle.

SC Courts recognize the Family Purpose Doctrine when the following elements are proven:

1. The defendant is the head of the family;
2. the defendant owns, furnishes, and maintains the vehicle;
3. the vehicle is for the general use and convenience of the family;
4. the family member has general authority to operate the vehicle for those purposes; and
5. the family member was negligent in the use of the vehicle.

Question 20

What are the three (3) types of principals?

Answer 20

Types of Principals:

1. Disclosed - a principal is disclosed if, at the time of the transaction, the 3rd Party has notice that the agent is acting for a principal and has notice of the principal’s identity;
2. Undisclosed - If the 3rd Party has no knowledge of the existence or identity of a pricipal, the principal is undisclosed; and
3. Partially Disclosed - a partially disclosed principal is one whose existence, but not identity, is known to the 3rd Party.

Question 21

True or False:

An agent who enters into a contract for an undisclosed or partially disclosed principal is personally liable on the contract.

Answer 21

TRUE.

An agent for a fully disclosed principal does not ordinarily incur personal liabilty on a contract; however, an agent who enters a into a contract for an undisclosed or partially disclosed principal is personally liable on the contract.

Question 22

What are four (4) types of agents?

Answer 22

Types of Agents:

1. General Agent - is employed by a principal to transact all of his buiness of a particular kind; the authority of a general agent to perform all things usual in the line of business in which he is employed cannot be limited by any private order or direction (secret instructions) not known to the party dealing with him.
2. Special Agent - is employed by the principal specifically for one transaction; has no authority to bind his principal beyond the terms of the specific authority conferred upon him by the agreement for employment. Types of special agents are:
   
   1. Real Estate Agents - may either be an agent or a broker licensed by the state to conduct sales of real property;
   2. Salespersons - are agents to sell chattels and warrant goods under the UCC, although he usually may not modify terms of a sale.
   3. Auctioneers - a special sales agent with authority to sell goods within the auction’s terms, usually to the highest bidder. He is an agent of the seller, and as a result, warrants title to the goods.
3. Subagents - are persons entitled to do work for the original agent in the relationship and as a consequence, a new agency relationship is created with the original agent becoming the principal to the subagent; where a principal has authorized his agent to appoint subagents, the subagent has the same responsibilities to the principal as the original agent does. Any breach of duty by the subagent will be imputed to the agent. If the subagent has been appointed without the principal’s authority, no agency relationship exists between the principal and the subagent.
4. Gratuitous Agents - an agent who agrees to perform all the duties of an agent without compensation.

Question 23

What is the test employed by SC to determine whether a person is an independent contractor or an employee?

Answer 23

When making a determination of whether a particular person is an employee or an independent contractor, SC Courts focus on the issue of control – specifically whether the purported employer had the right to control the claimant in the performance of his work.

The court examines four (4) factors that serve as a means of analyzing a work relationship as a whole:

1. Direct evidence of the right or exercise of control;
2. furnishing of equipment;
3. method of payment; and
4. right to terminate employment.

Although the SC Supreme Court had previously held that the showing of any one factor was sufficient to establish an employment relationship, the Court more recently stated that all four factors must be examined in an evenhanded manner.

Question 24

What is the rule regarding imputed knowledge of a servant to a master in South Carolina, and what are its exceptions?

Answer 24

Imputed Knowledge:

In South Carolina, knowledge of the acts and conduct of a servant are imputed to the master when the servant is operating within the scope of his employment.

For knowlege to be imputed, the agent must have a duty to speak to his principal about the specific item of knowledge.

Exceptions:

A majority of states recognize exceptions to the rule that an agent’s knowledge is imputed to his principal.

South Carolina recognizes exceptions in situations where:

1. an agent is representing a 3rd person and is privy to professional confidences;
2. an agent’s knowledge is acquired while acting for himself or for a 3rd person and not for the principal;
3. the knowledge is such that, according to human nature and experience, the agent is certain to conceal it;
4. the agent is acting adversely to his principal’s interests; or
5. the agent plans to defraud his principal or a 3rd person, and disclosure would defeat his purposes.

Question 25

What are the duties of a principal to his agent?

Answer 25

Duties of Principal to Agent:

• Duties begin when the agency relationship is created and end when the agency relationship is terminated.
• Absent an agreement to the contrary, the principal is obligated to his agent to:

1. compensate the agent for services rendered, either for an agreed-upon amount or for the reasonable value of those services;
2. reimburse the agent for reasonable expenses incurred by the agent in the scope of his agency;
3. indemnify and exonerate the agent for any liabilty that results from his good-faith performance of his duties;
4. cooperate with the agent in the performance of his duties; and
5. exercise due care toward the agent.

Question 26

If a principal breaches his duties to his agent, what remedies are available for that agent?

Answer 26

Agent’s Remedies for Principal’s Breach:

• The agent may seek the usual remedies available for breach of an agency contract;
• The agent retains a lien on any property of the principal of which he has lawful possession;
• The agent may set off any money owed to him by the principal against monies collected on behalf of the principal;

Principal’s Defenses:

• the statute of frauds;
• illegality;
• the agent’s disobedience; or
• the agent’s contributory negligence (such as in defense of a tort claim).

Question 27

What are the duties of an agent to his principal?

Answer 27

Duties of Agent to Principal:

[Fiduciary Duties]

• Duty of Care - absent an agreement to the contrary, the agent is obligated to show a duty of care to the principal, with a duty to:

1. perform the contract and render services with reasonable care;
2. obey the principal in all reasonable directions, outside of illegel or unethical orders;
3. act only within the scope of his actual authority;
4. act with the care, competence, and diligence normally exercised by agents in similar circumstances, and if the agent is possessed of a higher level of skill, to exercise that level of skill; and
5. indemnify the principal aganst loss caused by the agent’s wrongful behavior or failure to act with reasonable care.

• Duty of Loyalty - the agent has a duty of loyalty to the principal arising from the fiduciary character of the relationship; an agent who acts for his one benefit instead of that of the principal is said to be self-dealing.
• An agent must prefer the interests of the principal to his own or others in acting for the principal.
• An agent may not usurp a business opportunity belonging to the principal. A business opportunity is one that is so closely related to the principal’s business that it could be deemed incidental to that business. An employee may take personal advantage of a business opportunity ONLY IF the employer knows and consents.
• Under the duty of confidentiality, an agent may not use confidential information obtained from the principal to the detriment of the principal, even if the information is not obtained through his agency.
  
  • An ex-employee may use skills learned on the job in later employment and may solicit former customers so long as he does not reveal confidential information in violation of any contract restrictions.
• Duty to Account - an agent has a duty to account for money or property received for the principal and to keep the principal’s assets separate from his own.
• Duty of Candor - an agent must fully disclose to the principal any facts relevant to the agent’s duties that he reasonably believes the principal might want to know.

Question 28

Can an employee prepare to enter into competition against his principal once his employment ends and set up his own business?

Answer 28

An employee may, while still employed, prepare to enter into competition once his employment ends by setting up his own business, so long as he does not take away from his employer’s business by soliciting customers or key employees.

Question 29

When does the agent’s duty not to compete with the principal end?

Answer 29

The duty not to compete ends upon termination of the agency relationship; therefore, noncompete agreements are often necessary.

Question 30

How are non-compete agreements recieved by South Carolina Courts?

Answer 30

In South Carolina, noncompetition agreements are critically examined and construed against the employer. Such agreements will only be enforced when they are:

1. necessary for the protection of the legitimate interest of the employer;
2. reasonably limited in operation with respect to time and place;
3. not unduly harsh and oppressive in curtailing the legitimate efforts of the employee to earn a livelihood;
4. reasonable from the standpoint of sound public policy; and
5. supported by valuable consideration.

Question 31

What is the Dual Agency Rule?

Answer 31

When an agent acts for more than one principal in negotiations between multiple principals, the transaction is voidable by either principal, unless both principals have prior knowledge of the representation and give their consent.

South Carolina law provides that a real estate agent acting as a dual agent must first obtain the written consent of the parties.

Question 32

If an agent breaches his duties to his principal, what remedies are available for the principal?

Answer 32

Principal’s Remedies for an Agent’s Breach of Fiduciary Duties:

• A compensated agent may be held liable for damages to the principal that result from the agent’s breach; however, an uncompensated agent generally cannot be held liable.
• An agent may be held liable for damages resulting from his breach of the duty of care, such as negligence, or from his breach of the duty of loyalty, such as self-dealing.
• Any transaction resulting from a breach of the agent’s fiduciary duty is voidable by the principal.
• Where the agent breaches his duty of loyalty to the principal, the appropriate remedy is disgorgement of any profits the agent made from his disloyalty, and, if others have also benefitted from the breach, liability of the agent for the profits of 3rd parties, even if the agent did not receive any part of the profits. The principal need not have suffered a financial loss in order to recover.
• If the agent has intentionally breached his fiduciary duty, the principal may withhold compensation.
• Punitive damages may be attributed to the principal under the doctrine of respondeat superior.

Question 33

What are the agent’s duties and obligations to third-parties?

Answer 33

• An agent’s liability to a 3rd party on a contract signed by the agent depends on whether the principal was fully disclosed.
• If a 3rd P knows of the principal’s existence and identity at the time of the transaction [disclosed principal], the agent will not incur personal liabilty unless he takes additional actions to assume personal liabilty.
• To guarantee that he does not assume personal liabilty, the agent should sign any documents with his name and the principal’s name, as well as with a notation that he is acting as an agent.
• If the principal is partially disclosed or undisclosed at the time of the transaction, the agent is presumed to be a party to the K.
• To escape personal liabilty, the agent must make clear to the 3rd P that he is representing a principal and that he is not a party to the K.
• If the existence of a principal directing the agent’s actions is unknown, the agent will be assumed to be contracting on his own behalf.
• Disclosure of the principal after the execution of the K will not relieve the agent of liability. However, the 3rd P must then elect to sue either the principal or the agent.

Question 34

If an undisclosed principal or his agent breaches a K with a 3rd P or is a tortfeasor, who does the 3rd P sue?

Answer 34

Upon learning of the identity and existence of an undisclosed principal, the 3rd P may elect to sue either the principal or the agent.

In South Carolina, an injured party is permitted to sue either the agent or principal singly, or both together, as they are considered joint tortfeasors.

Question 35

What types of authority might an agent have?

Answer 35

RULE:

The general rule is that an agent acting within the scope of his authority may bind his principal in contract through his actual authority or apparent authority.

Question 36

What is Actual Authority?

Answer 36

Actual Authority is created by the manifestation of the principal to the agent of the principal’s request that the agent act for the benefit of the principal in a particular way, and that the principal agrees to be bound by the actions of the agent.

• Consent for actual authority may be written, oral, or through any other method of communication.
• It may be either express or implied.

Question 37

What is Express Authority?

Answer 37

Express Authority arises when the principal directly requests the agent to act in the principal’s behalf in a specific matter.

• Inherent in a grant of express authority is the principal’s consent to any actions that are incidental to the agent’s carrying out of his primary grant of authority.
• Consent to the authority need not be written and may be demonstrated by merely competing the task - EXCEPT for when the Equal Dignities Rule applies.

Question 38

What is the Equal Dignities Rule?

Answer 38

The equal dignities rule holds that if a K must be in writing, the grant of authority to an agent to enter into such contract on behalf of the principal must also be in writing.

Question 39

What is Apparent Authority?

Answer 39

Apparent Authority (not to be confused with apparent agency) arises based on the principal’s representation made not directly to the agent, but to a 3rd P. Because of the behavior of the principal, the 3rd P is led to believe the agent is acting with the principal’s authority.

Under the Doctrine of Apparent Authority, the principal is accountable for the results of the 3rd P’s beliefs about an actor’s authority to act as an agent when the belief is reasonable and is traceable to a manifestation of the principal.

Apparent Authority requires some overt action by the principal.

Question 40

What is Ratification?

Answer 40

Ratification allows a principal to grant retroactive authority for his agent’s earlier unauthorized actions.

• The ratified act must be one that the principal could have authorized at the time of the act, meaning the principal must have been in existence.
• Ratification will only grant authority. It does NOT legitimize an otherwise illegitimate transaction, nor will it grant authority to a nondelegable act.

In South Carolina, as it relates to agency law, the requirements for ratification involve the concurrence of three (3) elements:

1. Acceptance by the principal of the benefits of the agent’s acts;
2. Full knowledge of the facts; AND
3. Circumstances or an affirmative election indicating an intention to adopt the unauthorized arrangements.

• Once an act has been ratified, it has the effect as if it were originally done by the agent with actual authority.

Question 41

Under South Carolina agency law, what is required in order for a principal to ratify the action(s) of his agent?

Answer 41

In South Carolina, as it relates to agency law, the requirements for ratification involve the concurrence of three (3) elements:

1. Acceptance by the principal of the benefits of the agent’s acts;
2. Full knowledge of the facts; AND
3. Circumstances or an affirmative election indicating an intention to adopt the unauthorized arrangements.

Once an act has been ratified, it has the effect as if it were originally done by the agent with actual authority.

Question 42

Can a principal only partly ratify an agent’s act?

Answer 42

No. A principal may not partly ratify an act; ratification of any part of the act or contract is deemed to constitute ratification of the whole.

Question 43

Under what circumstances is ratification not effective?

Answer 43

A ratification will not be effective if, prior to ratification, the ratification would have an adverse effect on 3rd parties in the following circumstances:

1. manifestation of intention to withdraw from the transaction by the 3rd party;
2. a material change in the circumstances that would make it inequitable to bind the 3rd P, unless the 3rd P chooses to be bound; AND
3. a specific time that determines whether a 3rd P is deprived of a right or subjected to a liability.

Question 44

Is ratification retroactive?

Answer 44

Yes. Once an act has been ratified, it has the effect as if it were originally done by the agent with actual authority; however, there is one exception –

Ratification by a principal who did not have capacity when the transaction took place is effective only from the date of ratification.

Question 45

Is an agent able to delegate his duties?

Answer 45

• In general, if the authority given involes the agent using his own judgment, he cannot delegate his responsibilities absent an emergency or explicit agreement of the principal.
• An example of a responsibility that an agent may not delegate is a duty to perform personal services on behalf of the principal for another.
• Delegation of such a duty would be a material change in understanding when a principal has hired a particular person to perform a particular act.

Question 46

How does SC determine whether an agent’s tortious conduct was within his “scope of employment” when applying the doctrine of respondeat superior?

Answer 46

Scope of Employment:

• An EE acts w/in the scope of employment when performing tasks assigned by the ER or engaging in a course of conduct subject to the ER’s control.

The test in South Carolina revolves around whether the servant is acting in furtherance of his master’s business:

1. If the servant is doing some act in furtherance of the master’s business, he will be regarded as acting within the scope of his employment.
2. On the other hand, if the servant acts for some independent purpose of his own, wholly disconnected with the furtherance of his master’s business, his conduct falls outside the scope of his employment.
3. If a servant steps aside from the master’s business for some purpose wholly disconnected with his employment, the relation of Master and Servant is temporarily suspended; and this is so no matter how short the time, a Master is not liable for the acts of his servant during that time.

• An EE’s actions may still be w/in the scope of his employment even while disobeying his employer’s orders or acting beyond the scope of his assigned authority.
• Torts committed by the EE on the way to or from work are generally considered outside the scope of employment, unless the ER places the EE’s travel to and from work w/in the scope of employment by providing the EE w/ a vehicle and exerting control over how the EE uses the vehicle so that the EE may more readily respond to the needs of the ER’s enterprise.
• An ER will not be liable if the EE has substantially deviated from the authorized route (called a frolic), but will be liable if the deviation is light (a detour). However, an EE can return to the scope of employment after a frolic occurs.

Question 47

In an ER-EE/Master-Servant relationship in South Carolina, what must be shown to prove that liabilty has attached to the employer?

Answer 47

Liability attaches to the employer upon a showing that:

1. a master and servant relationship existed at the time of the act; and
2. the tortious act was committed with the scope of the employment.

Question 48

What is the difference between an employee taking a frolic or an employee taking a detour?

Answer 48

An ER will NOT be liable if the EE substantially deviates from the authorized route, or “frolics”; however, the ER WILL be liable if the deviation is only slight, that is, a mere detour.

Question 49

In South Carolina, what is required for a cause of action for negligent hiring/retention/supervision of an EE?

Answer 49

SC recognizes a cause of action for the negligent hiring, retention, or supervision of an EE, but an ER will not be held liable unless the plaintiff shows that the ER knew or should have known of the EE’s propensity for dangerous behavior.

Question 50

While a principal is generally not liable for the intentional tort of an agent, what are the exceptions to this rule?

Answer 50

ERs will generally not be held liable for the intentional tort of an EE UNLESS the tort occurred during an attempt to serve the interest of the ER.

An ER may be held liable for his EE’s intentional torts if the act was done in the course of doing the ER’s work, and for the purposes of accomplishing it.

• In South Carolina, vicarious liability attaches to an ER for defamatory statements made by an agent acting within the scope of his employment.
• The modern trend is to extend an ER’s liabilty for an EE’s intentional torts to situations where the type of employment provides a peculiar opportunity and incentive for the commission of an intentional tort. Thus, where argument is likely to be part of the EE’s duties, and such conduct is wholly or partially in furtherance of the ER’s business, [bouncer, bill collector, etc], liability will be imposes on the ER for those intentional torts which arise from the argument.

Question 51

If a court finds that an agent is not liable for his tortious acts, then can the plaintiff go after the principal?

Answer 51

Generally, a principal cannot be held vicariously liable for the acts of his agent if:

1. a court finds the agent no liable for the tort;
2. the agent is immune from liability under common law or by statute; OR
3. the plaintiff agrees to a settlement with the agent.

According to the SC Supreme Court, a judgment on the merits in favor of an agent precludes a plaintiff from bringing the same claim against the agent’s principal, but a judgment against either the agent or the principal does not necessarily imply fault on the part of the other.

Question 52

How does a principal’s status [as in, Disclosed, Partially Disclosed, or Undisclosed] affect the enforcement of a contract between the principal and a 3rd P?

Answer 52

Disclosed: if a principal is disclosed, only the principal and not the agent may enforce the K and hold a 3rd P liable.

Partially Disclosed or Undisclosed: generally, if the principal is partially disclosed or undisclosed, either the principal of the agent may enforce the K and hold a 3rd P liable.

EXCEPTION:

If the agent has fraudulently concealed the principal’s identity, the principal may not enforce the K and the 3rd P is granted a right of recission.

Question 53

What are the limited situations in which an employer might be held liable for the acts of an independent contractor?

Answer 53

A principal may be held liable for the torts of an IC in the following circumstances:

1. inherently dangerous activities;
2. nondelegable duties; and
3. the negligent selection of a contractor.

Also, when the circumstances are such that although the person committing the tort is an IC, the doctrine of Apparent Agency will cause the person (or entity) who appears to be the principal to be vicariously liable.

Question 54

In South Carolina, what elements are required for a plainitiff to bring a claim against a principal on the theory of apparent agency?

Answer 54

A plaintiff might bring a claim against a hirer of an IC on the theory of Apparent Agency, causing the hiring person (or entity) who appears to be the principal to be vicariously liable for the actions of an IC.

The requirements to base a claim on a theory of apparent agency in SC are:

1. there must be conduct or a respresentation calculated to mislead;
2. an actual reliance upon such representation; and
3. a change of position or injury in reliance upon such representation.

Question 55

How is an agency relationship terminated? What is required for termination to be effective?

Answer 55

Methods of Termination:

Both the principal and the agent have the power to terminate the agency relationship at any time.

The ability to terminate an agency at will does not preclude either party from instituting a breach of K action.

Termination of an agency relationship occurs automatically upon the death of the principal.

Notice of Termination:

For termination to be effective, the principal must notify the agent of termination, unless the agency naturally expires upon completion of an action or the agency is set to expire at a particular time.

An agent’s authority continues to be effective as to acts performed in good faith until the agent receives actual knowledge of the termination.

To terminate the agent’s apparent authority, the principal must notify all 3rd Ps with whom the agent has dealt who might expect the agent to still be acting for the principal.