Agency

Question 1

what are the 3 types of agency problems?

Answer 1

1) liability of P to 3rd party for TORTS of an agent
2) liability of P to 3rd party for K’s entered into by agent
3) Duties which agents owe to P

Question 2

when is a P liable for torts committed by its agent (2 )

Answer 2

1) there was a principal- agent relationship AND

2) the tort was committed by the agent w/i the SCOPE of that relationship

Question 3

what does the principal relationship require? (3 things)

Answer 3

1) assent
2) benefit
3) control

Question 4

what is assent for principal relationship

Answer 4

an informal agreement b/w P (who has capacity) and A

Question 5

what is benefit for P-A

Answer 5

agents conduct must be for P’s Benefit

Question 6

what is control for P-A

Answer 6

Principal must have

1) RIGHT to control agent by having the
2) POWER to SUPERVISE the manner of the agents performance

Question 7

when will the P be vicariously liable if its agent gets the help of a “sub-agent” and the sub-agent commits tort?

Answer 7

P will be liable for sub-agent only if there is

1) assent
2) benefit and
3) control b/w the P and the sub-agent

Question 8

typically does P assent to the sub-agent or have control of a sub-agent>

Answer 8

NO. therefore w/o assent, benefit and control, not vicariously liable

Question 9

when will a P be vicariously liable for a borrowed agent?

Answer 9

the P will be liable for the borrowed agents tort only if there is

1) assent
2) benefit and
3) control b/w the borrowing P and borrowed agent

Question 10

typically does the P have control over a borrowed agent?

Answer 10

No. typically the borrowing principal does not assume any right to control the borrowed agent, therefore cannot be held vicariously liable

Question 11

what is the difference b/w an agent and an independent contractor?

Answer 11

there is no right to control an independent contractor because there is no
1) power to supervise the manner of its performance

Question 12

what is the general rule for vicarious liability for independent contractors torts>

Answer 12

generally there is NO vicarious liability for an independent contractors torts

Question 13

what are the X/C for when a P IS liable for the independent contractors torts

Answer 13

1) inherently dangerous activity

2) Estoppel

Question 14

what is the inherently dangerous activity x/c for independent contractors torts?

Answer 14

if independent K commits torts while doing inherently dangerous activity, P will be vicariously liable

Question 15

what is the estoppel x/c for when a P is vicariously liable for independent K

Answer 15

if P “holds out” independent K of appearance of agency, you will be estopped from denying vicarious liability

Question 16

what are the 3 questions dealing with scope for P vicariously liable for agents torts

Answer 16

1) was conduct “of the kind” agent was hired to perform?
2) did the tort occur “on the job” (frolic v. detour)
3) did the agent INTEND to benefit the P?

Question 17

what is the “was the conduct of the kind” agent was hired to perform for scope of agency for torts?

Answer 17

was conduct w/i the job description, if so likely w/i scope of P-A relationship

Question 18

what is the difference b/w frolic and detour?

Answer 18

frolic: is a new and independent journey and therefore agent is outside scope
detour: is MERE departure from assigned task, and therefore is still w/i scope

Question 19

what words to look for with detour?

Answer 19

“on the way back”

Question 20

what is the part for scope that “did the agent intend to benefit the principal”

Answer 20

if agent even in part intended to benefit the P by its conduct, that is even to be w/i scope

Question 21

what is the general rule for intentional torts and vicarious liability?

Answer 21

GR: Intentional torts are generally outside the scope of employment

Question 22

what are the x/c for when a P is vicariously liable for agents intentional torts?

Answer 22

1) AUTHORIZED by the P or
2) NATURAL from the nature of employment (security guard, bouncer)
3) MOTIVATED by a desire to serve the P

Question 23

when is a P liable for contracts entered by its agent to 3rd party? (authority)

Answer 23

P is liable for K’s entered into by A only if the P AUTHORIZED the agency to enter into K

Question 24

what are the 4 types of authority that A enters into a K

Answer 24

1) actual expressed authority
2) actual implied authority
3) apparent authority
4) ratification

Question 25

what is actual express authority?

Answer 25

P used words to express authority to A

Question 26

can actual express words be oral and even in privacy?

Answer 26

YES

Question 27

what is the X/C that actual express authority must be in writing?

Answer 27

SOF

Question 28

how will actual express authority be revoked (2 ways)

Answer 28

unilateral act of either P or the agent

2) DEATH or incapacity of P

Question 29

what is the x/c that death or incapacity terminates actual express authority

Answer 29

durable power of attorney

if P gives A durable power of attorney (written expression of authority to enter into transaction)

Question 30

what to look for with durable power of attorney

Answer 30

“survives death”

Question 31

how is actual express authority construed?

Answer 31

narrowly

Question 32

what is actual implied authority?

Answer 32

authority which P gives A through conduct or circumstance

Question 33

what are the 3 ways for actual implied authority

Answer 33

1) necessity
2) custom
3) prior acquiescence by the P

Question 34

what is neccessity for actual implied authority

Answer 34

there is implied authority to do ALL tasks

Question 35

what is custom for actual implied authority

Answer 35

there is implied authority to do all tasks

1) by custom that are performed by person by agents title or position (ex: CEO)

Question 36

what is prior acquiescence by P for actual implied authority

Answer 36

there is implied authority to do all tasks which
agent believes authorized to do so by prior acquiescence by the P
(ex: doing something for so long)

Question 37

what are the 2 part tests for apparent authority

Answer 37

1) P “cloaked” agent with the appearance of authority and

2) 3rd party REASONABLY RELIED upon the appearance of authority

Question 38

whose actions and conduct do you look at for apparent authority?

Answer 38

ONLY P’S NEVER A’S

what P did do the 3rd party?

Question 39

what is ratification

Answer 39

authority can be granted AFTER the K has been entered if

1) p has KNOWLEDGE of all material facts regarding the K and
2) P accepts the BENEFITS

Question 40

When is ratification?

Answer 40

after the K was entered

Question 41

can the ratification by the P ALTER the k?

Answer 41

NO. cannot alter the terms of the K, must accept in whole or reject in whole

Question 42

what is the general rule for A’s liability on a K entered into for P?

Answer 42

general rule: the P is liable on its authorized contracts, and therefore as a rule
1) authorized agents ARE NOT liable for their authorized contracts

Question 43

what are the X/C when agent is liable for the K entered for P?

Answer 43

1) if P is PARTIALLY DISCLOSED (only the identity of the P concealed or
2) UNDISCLOSED (fact of P concealed) authorized agent MAY nonetheless be liable at the election of 3rd party

Question 44

what are the agents duties to P (3)

Answer 44

1) duty of care
2) duty to obey instructions that are reasonable
3) duty of loyalty

Question 45

what may the A never do under the duty of loyalty

Answer 45

1) self dealing: agent cannot receive a benefit to the detriment to the P
2) USURPING the P’s opportunity
3) secret profits: making a profit at the P’s expense w/o disclosure

Question 46

what are the P’s remedies if A self deals?

Answer 46

P may recover
1) any loses that caused by the breach including idemity from agent and also
2) disgorge the profits made by the breaching agent
(get the profits from agent)

Question 47

are both the agent and P both liable on a K entered it by an AUTHORIZED agent on behalf of a disclosed P

Answer 47

YES. But must have the authority to enter into the K. if the A was not authorized to enter into the K, then they may be the only person held liable on the K.

Question 48

are both P and A liable for K entered into by AUTHORIZED A when the agent partially discloses principal

Answer 48

YES. But must have authority to enter into K.

Question 49

In IL can an undisclosed P ratify a K

Answer 49

NO. undisclosed P cannot ratify a K b/c the agent must have purportedly been acting on behalf of a P.

Question 50

In IL what type of P can ratify a K

Answer 50

only a disclosed or unidentified P may ratify (b/c requires that agent purport to be acting on behalf of the P)

Question 51

what if the agent exceeds his actual authority by violating directions but acts with apparent authority

Answer 51

against is liable agent will be liable to he P for any loss that the P suffers
- UNLESS P ratifies the transaction.

Question 52

when does a A bind a P to K

Answer 52

when agent had authority, P is liable to 3rd party