Agency Flashcards
What is the general requirement for creation of an agency relationship?
Mutual assent
What does mutual assent to create an agency relationship entail?
Principal must intend to grant authority (1) on P’s behalf and (2) subject to P’s control.
Agent must consent to that grant of authority.
AND each party must have capacity (not a minor/incompetent)
What is the difference between an employee and an independent contractor?
An agent is an employee when the employer controls or has the right to control the agent’s performance.
An agent is a an IC where the employer determines what the agent is to perform, but now how the agent does it.
What is required for agency by ratification?
the would-be principal must have knowledge of the material facts of the actions and assent to be bound by the agent’s actions
Capacity – measured at the time the contract is formed, NOT at time of ratification
What duties does an agent owe a principal?
Duty of care: (1) follow principal’s instructions; (2) with reasonable care; (3) indemnify principal against loss
Duty of loyalty: must (1) prefer interests of P over others; (2) avoid self-dealing; (3) not compete nor usurp biz opportunities
What duties does a principal owe an agent?
Duty of compensation: quasi-contractual duty to pay the agent for reasonable value of services rendered (failure = restitution)
Duty of reimbursement: Principal must reimburse the agent for reasonable expenses incurred during the scope of agency
What is the power of an agent?
1) Agent has power to bind the principal when acting in the scope of authorized powers
2) Authority can be express or implied (i.e., what is reasonably necessary to fulfill broader responsibilities)
What is a principals’ power w/rt unauthorized acts of agent?
By ratifying a transaction entered into on its behalf, the principal can retroactively grant the agent authority to act and thereby agree to be bound.
This can be either via express assent or implied conduct.
What is within the scope of employment?
An action is within the scope of employment when the task performed is assigned by the employer or subject to the principal’s control
It is NOT within the scope of employment when done for the employee’s purposes only
What is the extent of an agent’s liability to third parties?
Torts: agents are liable for torts whether or not acting within the scope of agency
Contract:
- If principal is fully disclosed, the agent is not personally liable for the contract.
- If the principal is undisclosed or only partially disclosed, the agent is personally liable, along with the principal
What is the principals’ tort liability to third parties for the principal’s own negligence?
A principal is liable for harm caused by his negligence in selecting or controlling an agent
What is the principals’ vicarious tort liability to third parties for the agent’s conduct?
Under respondeat superior, vicarious liability attaches where P has a right to control the A and the A’s axns are w/in the scope of the agency.
(A) employee’s negligence –P’s liability limited to axns during scope of employment.
(B) employee’s intentional tort – generally, P not liable. XC: P liable if in the course of doing P’s work and for the purpose of doing that work. No defense that P told A not to use force.
What is a principals’ contract liability to third parties?
(1) principal is bound when the agent has actual authority
(2) principal bound under apparent authority doctrine
What is the apparent authority doctrine?
Principal is bound if the agent’s words/actions/omissions cause a third party reasonably—but mistakenly—to believe that it acts as the principal’s authorized agent.
