Agency

Question 1

When is a principal liable for the torts of an agent?

Answer 1

When there is a principal agent relationship and tort committed within the scope of the relationship

Question 2

Is consideration and a writing required to enter into an agency relationship?

Answer 2

No consideration
No writing
can be informal

Question 3

What does an agency relationship require?

Answer 3

1) assent between parties
2) agent is acting for the principal’s benefit
3) principal has a right to control the agent

Question 4

Is a principal liable for torts committed by sub-agent?

Answer 4

Only if there is assent, benefit and right to control.

- Generally no right to control

Question 5

Is a principal liable for tort committed by an agent who is borrowed from another principal?

Answer 5

Only if there is assent, benefit and control

Question 6

When is a principal liable for the torts of an independent contractor?

Answer 6

1) activity is ultra hazardous
2) activity is non-delegable
3) principal holds out with appearance of agency
4) principal’s own negligence in hiring or selecting

Question 7

Is a frolic within the scope of the agency relationship?

Answer 7

No - frolic is a major deviation and outside of scope.

Question 8

Is a detour within the scope of the agency relationship?

Answer 8

Yes, mere departure from assigned task, within scope of agency

Question 9

When is a principal liable for the intentional torts of an agent?

Answer 9

1) intentional tort is authorized by principal
2) natural to the nature of employment
3) motivated by a desire to serve a principal

Question 10

When is a principal liable on a contract entered into by agent?

Answer 10

Only on contracts that principal authorized agent to enter into.

• actual
• actual implied
• apparent
• ratification

Question 11

How can express authorization be revoked?

Answer 11

1) unilateral act of principal or agent

2) death or incapacity of principal, unless irrevocable or durable power of attorney

Question 12

Actual implied authority can arise when?

Answer 12

1) necessity - implied authority to do all tasks
2) customarily performed by persons who agent’s title or position
3) prior acquiescence by principal

Question 13

What is required for apparent authority?

Answer 13

Principal cloaked agent with appearance of authority and third party reasonably relies on the appearance of authority

Question 14

How can a principal ratify the actions of an agent?

Answer 14

Principal has knowledge of all material facts regarding the contract and principal accepts the benefits.

Question 15

Can a principal alter the terms of the contract when ratifying the agent’s actions?

Answer 15

No. Must agree to all the terms.

Question 16

Can an undisclosed principal ratify a contract entered into by agent?

Answer 16

No. Third party never relied upon the undisclosed principal’s existence

Question 17

Can silence by a principal ratify a contract entered into by an agent?

Answer 17

Yes, when he would otherwise have a duty to disaffirm the transaction.

Question 18

Who is liable on a contract entered into by an agent with a third party when the principal is partially disclosed or undisclosed?

Answer 18

Third party has election to bind principal or agent.

Question 19

What are exceptions to when an agent will be liable on a contract with a third party for a disclosed principal?

Answer 19

1) agent is a party to contract and parties intended agent to be a party
2) agent’s implied warranty of authority

Question 20

Can a minor serve as an agent?

Answer 20

Yes, agent only need to have minimum capacity.

Question 21

Can an employee be a bailee of employer’s goods?

Answer 21

No when used in course of employment.

When goods are used for employee’s own benefit then a bailment may result (possession and control)

Question 22

Is a principal liable for the negligence of employee who uses goods outside scope of employment?

Answer 22

No. May be a bailment situation and bailor is not liable for negligence of bailee.

Question 23

Is commuting to and from work within the scope of employment to hold an agent liable for negligence?

Answer 23

No. This is not within the scope of agency, unless facts indicate otherwise.

Question 24

While driving on a delivery, an agent gets into a dispute with a third party regarding the right of way on a road. During the dispute, the agent hits the third party. Is the principal liable?

Answer 24

Ordinarily principal not liable for intentional torts
may be liable if done within the scope of the employment and motivated by an interest to serve the principal
- if facts indicate it was a personal feeling of agent then outside of scope of employment

Question 25

Does an agent’s conduct while on a lunch break fall within the scope of employment?

Answer 25

No. Lunch break falls outside of scope of employment and does not reenter employment until directed by principal.

Question 26

When an agent breaches a fiduciary duty, can a principal withhold compensation from an agent?

Answer 26

Yes.

Question 27

What is the general rule regarding knowledge of agent?

Answer 27

Imputed to principal
Unless
a) agent’s behavior raises a presumption that knowledge will not report
b) agent is acting out of a personal motive

Question 28

Is an agent acting outside his authority when committing fraud?

Answer 28

No. Probably still within scope of agency

Question 29

If the agent lacked authority to enter into a contract, who can the third party hold liable?

Answer 29

Depends on whether the principal’s identity was disclosed.

If disclosed then no liable for the agent, only principal.

Question 30

If an agent disobeys orders from the principal are they liable on the contract?

Answer 30

Agent liable for disobeying orders.

Question 31

How can an agent be liable to a third party on a contract when there is no actual, apparent, or ratification authority to enter into the contract?

Answer 31

Based on a warranty theory.

Every agent impliedly warrants to the third party that he has authority to enter into the contract.

Question 32

How can an agent be liable to a principal on a contract when there is no actual, apparent, or ratification authority to enter into the contract?

Answer 32

For exceeding authority and breaching his duty to follow principal’s instructions.

Question 33

What are four factors to consider whether a person is an agent or independent contractor?

Answer 33

1) selection and engagement
2) payment of compensation
3) power of dismissal
4) power to control work of the individual