Agency Flashcards

Question 1

Q

Application of agency principles

AGENCY ANALYSIS /agency

Answer

A

whether the agent has the authority to act on behalf of the business
when the business is bound by, or liable for, the actions of its agents
what duties and responsibilities an agent might have to a business
= core concepts that arise in study of partnerships, limited liability companies, and corporations

Question 2

Q

threshold question in analysis

AGENCY ANALYSIS /agency

Answer

A

whether a principal-agent relationship exists

Question 3

Q

3 elements of agency

AGENCY ANALYSIS /agency

Answer

A

manifestation of consent by the principal
that the agent act on the principal’s behalf and subject to the principal’s control
to which the agent manifests consent

Question 4

Q

Creation of an agency

AGENCY ANALYSIS /agency

Answer

A

must be some form of agreement or understanding between the parties (BUT not necessarily a contract or compensation between the parties)
existence of the agency may be proved by an evaluation of the facts in each particular situation
Can look at what the parties said, what they did, how they acted, and their course of dealing over time (even silence may be used to show a party’s consent)

Question 5

Q

3 key players in agency questions

AGENCY ANALYSIS /agency

Answer

A

The Principal
The Agent
The Third Party

Question 6

Q

5 basic principles governing agency relationship

AGENCY ANALYSIS /agency

Answer

A

The agent has certain duties and obligations to the principal.
The principal has certain duties and obligations to the agent.
The principal is responsible for tortious acts committed by the agent that fall within the scope of the agency.
The agent has the ability to enter into binding agreements on the principal’s behalf, as long as the agreement may be traced to the principal’s authority.
The agent’s knowledge (in the subject matter of the agency) is imputed to the principal.

Question 7

Q

PRO TIP = distinctions in fact patterns

AGENCY ANALYSIS /agency

Answer

A

When evaluating an agency problem, it is helpful to distinguish between fact patterns that involve TORT issues and fact patterns that involve CONTRACT issues

Question 8

Q

Analysis for tort fact patterns

AGENCY ANALYSIS /agency

Answer

A

In a tort context, we are typically looking to determine:

Who is LIABLE for a wrongful act or for harm done?

Question 9

Q

Analysis for contract fact patterns

AGENCY ANALYSIS /agency

Answer

A

In a contract context, we are typically looking to determine:
Who is BOUND to the contract?

Question 10

Q

Issue spotting

AGENCY PROBLEMS INVOLVING TORTS /agency

Answer

A

Issue usually = whether P is responsible for A’s tort

- Issue is NOT whether P was negligent

Question 11

Q

Considerations

AGENCY PROBLEMS INVOLVING TORTS /agency

Answer

A

whether a principal is responsible for the wrongdoing of an agent depends upon the nature of the principal-agent relationship
To answer this = determine whether an employee/employer relationship existed
To answer that = assess whether the principal had the right to exert control over the manner and the means by which the agent performed his duty

Question 12

Q

Exercise of control

AGENCY PROBLEMS INVOLVING TORTS /agency

Answer

A

Not just the ACTUAL exercise of control

- Also the RIGHT to exercise control

Question 13

Q

10 factors to determine if agent is employee

AGENCY PROBLEMS INVOLVING TORTS /agency

Answer

A

assessing whether P has right to exert enough control over A for A to be considered employee

CTRL = extent of control that A and P have agreed P may exercise over details of work (ACTUAL exercise also relevant)
DISTINCT = Whether A is engaged in distinct occupation/business
CUSTOMARILY = Whether type of work done by A is customarily done under P’s direction or w/o supervision
SKILL = skill required in A’s occupation
SUPPLY = Whether A or P supplies tools/other stuff required for work and place in which to do it
TIME = length of time during which A is engaged by P
$$$ = Whether A is paid by the hour or per job
Reg = Whether A’s work is part of P’s regular biz
Biz = Whether P is or is not in business
Belief of Relationship = Whether P and A believe they are creating an employment relationship

Question 14

Q

What type of question is “is this an employee/employer relationship?”
EMPLOYEES VS. INDEPENDENT CONTRACTORS (AKA non-employee agents) /agency

Answer

A

Question of fact

Question 15

Q

HYPO: Paul hires Adam to be the manager of Paul’s candy factory, and Adam shows up for work every day, receives a weekly salary, supervises workers and projects and reports to Paul about how things are going at the candy factory. Is Adam an employee or an independent contractor of Paul?
EMPLOYEES VS. INDEPENDENT CONTRACTORS (AKA non-employee agents) /agency

Answer

A

Adam is an employee

Question 16

Q

HYPO: One day, Paul decides that he wants a mural painted on the front of the factory, and he hires Ivan to do it. Ivan, who regularly paints murals and other works of art for hire, is to be paid $5,000 for painting the mural. Paul tells Ivan that Paul has no artistic taste, so Ivan should just paint whatever he wants as long as it appeals to kids. Ivan supplies his own paints and materials, and completes the job in one week. Is Ivan an employee or independent contractor of Paul?
EMPLOYEES VS. INDEPENDENT CONTRACTORS (AKA non-employee agents) /agency

Answer

A

Ivan is Paul’s Agent, but not employee

- Ivan is an independent contractor (non-employee agent under restatement)

Question 17

Q

Significance of distinction between employee and independent contractor
EMPLOYEES VS. INDEPENDENT CONTRACTORS (AKA non-employee agents) /agency

Answer

A

employees and independent contractors create different potential liabilities for their principals.

Question 18

Q

When are employers responsible for torts of their employees?

EMPLOYEES VS. INDEPENDENT CONTRACTORS (AKA non-employee agents) /agency

Answer

A

Under the doctrine of Respondeat Superior, employers are vicariously liable for the torts of their employees that ARISE WITHIN THE SCOPE OF THE EMPLOYMENT

Question 19

Q

When are principals responsible for torts of their independent contractors?
EMPLOYEES VS. INDEPENDENT CONTRACTORS (AKA non-employee agents) /agency

Answer

A

Principals NOT generally responsible for the torts of their independent contractors
UNLESS the tort
(1) arises out of an area over which the principal exercised control OR
(2) falls into one of the exceptions such as an inherently dangerous activity or a non-delegable duty

Question 20

Q

franchise arrangement

FRANCHISE ARRANGEMENTS /agency

Answer

A

involves a company or an individual (franchisee) selling a product or a service or operating a business pursuant to a license to do so (franchise agreement) from another company or individual (franchisor)

Question 21

Q

Evaluating franchise relationship

FRANCHISE ARRANGEMENTS /agency

Answer

A

(NOTE = Even though contractual relationship, not employee/employer relationship, will probably be asked to determine whether whether a franchisor exercised sufficient control over a franchisee to create an agency relationship that might be characterized as an employee/employer relationship)

To make this determination, evaluate

The extent of the franchisor’s involvement in the franchisee’s day-to-day operations
The franchisor’s right to control the franchisee’s operations (even if that control is not exercised)
The right of the franchisor to terminate the relationship (which could suggest that the franchisor has the power to control the franchisee’s actions, even if explicit rights to control are not articulated

Question 22

Q

Franchisor’s right to control the franchisee’s operations

FRANCHISE ARRANGEMENTS /agency

Answer

A

might include provisions in the franchise agreement such as pricing requirements, audit rights and approval of advertising

Question 23

Q

Effect of determination of agency relationship between franchisor and franchisee
FRANCHISE ARRANGEMENTS /agency

Answer

A

If the franchisor exercises sufficient control over the franchisee to characterize the relationship as an employee/employer relationship, then the franchisor would be vicariously liable for tortious conduct of the franchisee (or even tortious conduct of the franchisee’s employees) that occurs within the scope of that employee/employer relationship

Question 24

Q

liability of P for A’s intentional torts - general rule

INTENTIONAL TORTS /agency

Answer

A

usually found to be outside the scope of employment and are committed without any intent to serve the employer
= typically, principals (including employers) are not found to be liable for the intentional torts of their agents (including employees)

Question 25

Q

liability of P for A’s intentional torts - exception

INTENTIONAL TORTS /agency

Answer

A

when employee’s job is such that some part of the intentional tort might be characterized as being done with intent of “serving the employer” OR
if it is foreseeable that some harm might arise of the specific employment/agency relationship, even if the specific harm that occurred was not foreseeable
(to assess whether a particular harm was foreseeable, ask whether the tort was of “characteristic risk” associated with the agency relationship)

EXAMPLE = bouncer who ejects a patron from a club, seriously injuring the patron, might be said to have done so with, at least a partial, intent to serve his employer

Question 26

Q

Analysis

FROLIC AND DETOUR /agency

Answer

A

Determining whether or not an agent has “left employment”

Question 27

Q

Frolic

FROLIC AND DETOUR /agency

Answer

A

when an employee leaves employment to do something for personal reasons, activity = frolic

Question 28

Q

Detour

FROLIC AND DETOUR /agency

Answer

A

If an employee is still engaged in employment but strays only slightly from direct assignment = mere detour

Question 29

Q

HYPO: An agent who is driving to the bank to deposit money for the store that employs him and takes a longer route so he can drive by the new sculpture in the park. Frolic or detour?
FROLIC AND DETOUR /agency

Answer

A

Detour = if he gets into an accident while driving by the sculpture, his employer will still be liable

Question 30

Q

HYPO: An agent who is driving to the bank to deposit money for the store that employs him, but instead of going to the bank, goes to see a movie and spills his soda on the person sitting next to him. Frolic or detour?
FROLIC AND DETOUR /agency

Answer

A

Frolic = person with the soda-stained garment cannot charge the agent’s employer for the cleaning bill

Question 31

Q

In Paul’s candy factory, discussed above, where Adam works as a supervisor, there are regular tours of the factory given. One day Adam notices that a big vat of cherry flavored liquid is leaking. He decides that it does not need to be fixed immediately, but can wait until the weekend. Unfortunately, Adam does not remember that there is a tour of the factory scheduled for that afternoon. One of the individuals on the tour, named Clem Zee, slips on the cherry liquid and breaks his arm. Clem sues Paul because it was Paul’s factory. Paul’s position is that Adam’s negligence caused Clem’s accident, and, because Paul was not negligent, Paul does not think he is liable. What is the likely result?
AGENCY BASICS /agency

Answer

A

We have already been told that Adam is Paul’s employee. As such, Paul is responsible for Adam’s torts that arise out of Adam’s job and/or position as manager of the Candy Factory. It was Adam’s job to supervise the factory. Adam negligently decided that it was not necessary to clean up the spill immediately. As a direct result, Clem was injured. It does not matter that Adam was not supposed to be negligent in his job. It only matters that, in Adam’s employment of supervising the factory, he was negligent. Because Paul is Adam’s principal/employer, Paul is liable for Adam’s negligence and will be liable to Clem. Note that Paul will have a claim against Adam. So, should he choose to take action, Paul could recover from Adam if Paul is found liable as a result of Adam’s negligence.

Question 32

Q

Several months pass following the incident in the preceding problem, and Adam is still working as a supervisor at the Candy Factory. One day Adam leaves work early to go to the local high school football game. At the game he throws a rotten tomato at a fan named Frank, who is cheering for the opposing team. Frank is injured. After the game Adam returns to work until the end of the day. The injured fan, Frank, sues Paul. Does Frank have a claim?
AGENCY BASICS /agency

Answer

A

Since Adam was not acting as Paul’s employee at the football game, and the wrongdoing did not arise out of Adam’s employment at the candy factory, Frank would not have a claim against Paul. Adam was clearly on a “frolic” and had left his position as Paul’s agent. Therefore, Paul would not be liable, even though Adam is his employee, because the wrong did not occur within the scope of Adam’s employment.

Question 33

Q

Adam is still working for Paul’s Candy Factory. One day, in the middle of the workday, Adam looks through the front window of the Candy Factory’ and sees his childhood nemesis, Cruel Carl, walking across the street. Remembering how mean Carl had been in Grammar School, Adam runs outside, crosses the street, and punches Carl in the nose. It turns out that Carl has become a pacifist and wants to stamp out any violence in the world, so he sues Adam and Paul for his injuries. Does Carl have a case against Paul?
AGENCY BASICS /agency

Answer

A

Paul is probably not liable for Adam’s intentional tort. Adam’s action was without any intention of serving his employer—it was a purely personal action. Furthermore, to the extent relevant, such an action is not foreseeable as the type of harm which might arise out of the employment of a supervisor for the Candy Factory. However, if instead of spotting Cruel Carl, Adam had seen a Candy Factory competitor, spying on the Candy Factory in an effort to steal its candy secrets, and Adam had punched the competitor in the nose, then it is likely that Paul would be liable because Adam’s action would have been taken with the intent of serving his employer. Of course, Carl would have a case against Adam, but that claim would be discussed in a Torts class, not Business Associations.

Question 34

Q

Is is possible to have an agency relationship in which the agent is not an employee?
NON-EMPLOYEE AGENTS AND INDEPENDENT CONTRACTORS /agency

Answer

A

Yes, independent contractors AKA non-employee agents

Question 35

Q

Definition

NON-EMPLOYEE AGENTS AND INDEPENDENT CONTRACTORS /agency

Answer

A

those who performed services for another who were not employees were called “independent contractors.”

Question 36

Q

Continuum of control

NON-EMPLOYEE AGENTS AND INDEPENDENT CONTRACTORS /agency

Answer

A

The idea here is that these individuals operate on a continuum of control.
For some, the principal exercises some control over the subject matter of the agency, but not enough control to create an employer/employee relationship.
For others, virtually no control is exercised by the principal, and the relationship involves a third party performing services on a truly independent basis.

Question 37

Q

Rule

NON-EMPLOYEE AGENTS AND INDEPENDENT CONTRACTORS /agency

Answer

A

if the tort occurs in an area over which the principal exercises some control = principal might still be liable.
BUT if the tort occurs in an area over which the principal does not exercise control = no liability UNLESS the activity falls within one of the exceptions

Question 38

Q

Exceptions

NON-EMPLOYEE AGENTS AND INDEPENDENT CONTRACTORS /agency

Answer

A

Situations in which a principal still is liable for the torts of an agent who is not an employee and over whom the principal exercises no control.

Inherently dangerous activities
Non-delegable duties
Negligent hiring

Question 39

Q

Inherently dangerous activities

NON-EMPLOYEE AGENTS AND INDEPENDENT CONTRACTORS /agency

Answer

A

include any activity that is likely to cause harm or damage unless some precautions are taken

Question 40

Q

Non-delegable duty

NON-EMPLOYEE AGENTS AND INDEPENDENT CONTRACTORS /agency

Answer

A

duty that a person may not avoid by the mere delegation of a task to another person
“non-delegable” = means that hiring an agent to perform the task will not discharge or transfer the principal’s responsibility or liability, NOT that an agent may not be hired to perform the task

EXAMPLE = landlords have certain non-delegable duties to their tenants, attorneys have certain non-delegable duties to their clients.

Question 41

Q

negligent hiring

NON-EMPLOYEE AGENTS AND INDEPENDENT CONTRACTORS /agency

Answer

A

not really about vicarious liability
refers to circumstances in which the principal may be found liable for the torts of an independent contractor
= liability is based on the principal’s negligence in hiring the independent contractor, NOT on attributing responsibility for the tortious act of an independent contractor to an innocent principal

Question 42

Q

Agent’s negligence

NON-EMPLOYEE AGENTS AND INDEPENDENT CONTRACTORS /agency

Answer

A

1) The agent is always liable for his own negligence. Agency problems focus on the question of whether the third party can also recover from the non-negligent principal.
2) If the principal is negligent, then the principal is liable for his own negligence, not because of respondeat superior, and not because of the principal-agent relationship.

EXAMPLE = if Paul negligently hires Allison and knew or should have known that she did not have the skill to perform the job, then Paul could also be liable because of “negligent hiring.”

Question 43

Q

Paul hires Ivan, an independent contractor, to paint a mural on the front of the factory. Remember that Ivan, who regularly paints murals and other works of art for hire, is to be paid $5,000 for painting the mural, plus expenses. Paul tells Ivan that Paul has no artistic taste, so Ivan should just paint whatever he wants as long as it appeals to kids. Ivan supplies his own paints and materials and is to complete the job in one week. While working on the mural, Ivan spills paint on a Ferrari parked outside of the factory. Fiona, the Ferrari owner, wants to sue Paul for the damage to her car. In a separate occurrence, Paul, who is also being billed for Ivan’s expenses, tells Ivan not to buy new ladders, but to use an old ladder from the abandoned firehouse next door to the factory in order to reach the high parts of the building. Ivan does use one of the old ladders, which, unfortunately, breaks while Ivan is on it painting the mural, and Ivan falls on Tom who is walking by and admiring the mural. Tom wants to sue Paul for the damage associated with his physical injuries. Will Fiona and/or Tom be successful if they try to recover from Paul?
NON-EMPLOYEE AGENTS AND INDEPENDENT CONTRACTORS /agency

Answer

A

It is unlikely that Fiona would prevail in a suit against Paul. Ivan is not an employee. He is an independent contractor (also known as a “non-employee agent”). The damage to Fiona’s car occurred as a result of an activity over which Paul had no control. Since Ivan was an independent contractor acting outside the scope of Paul’s control, and the activity did not involve an inherently dangerous activity, a non-delegable duty or a negligent hiring, Paul will not be liable.
However, it is likely that Tom would prevail in a suit against Paul. Because the selection of the ladder is an area over which Paul exercised control, Paul will not be able to claim that he bears no vicarious liability for Ivan’s actions, even though Ivan is an independent contractor. Instructing Ivan to use an old ladder is not sufficient to make Ivan Paul’s employee. However, it is sufficient to create liability for Paul if the use of the old ladder caused the damage. Because Tom was injured as a result of the use of the old ladder, and Paul instructed Ivan to use that old ladder, it is likely that Tom will be successful in a claim against Paul.

Question 44

Q

One day Paul decides that he wants to expand his factory. Paul buys the property next door to the factory where the abandoned firehouse currently stands. Paul then hires Allison to demolish the abandoned firehouse so the candy factory can build new facilities. Allison uses exceptionally powerful dynamite to demolish the firehouse, and, as a result, property surrounding the firehouse is damaged. The owners of the damaged property sue Paul for the damage. Will Paul prevail if he exercised no control over the manner or means that Allison used to demolish the firehouse?
NON-EMPLOYEE AGENTS AND INDEPENDENT CONTRACTORS /agency

Answer

A

Paul will not prevail. The activity of demolishing a building is inherently dangerous. Inherently dangerous activities are likely to cause harm or injury to others unless precautions are taken, and the law does not let a principal avoid liability for such activities merely by hiring an agent to perform an inherently dangerous activity. These concerns certainly apply to using dynamite to demolish a building. So, Paul will still be liable for the property damage resulting from Allison’s activity because of the inherently dangerous nature of the activity. The fact that Allison is an independent contractor or a non-employee agent will not shield Paul, the principal, from liability in such an activity.

Question 45

Q

Principle

APPARENT AGENCY /agency

Answer

A

Principal (or alleged principal) could also incur liability for the wrongdoing committed by an agent (or an alleged agent), acting with apparent authority on behalf, or purportedly on behalf, of the principal

Question 46

Q

Contract v. tort analysis

APPARENT AGENCY /agency

Answer

A

principal’s responsibility for the actions of an agent turns upon issues of control and vicarious responsibility and not questions of appearances
Evaluation of appearances = usually seen in evaluating contract agency AKA apparent authority
One instance in which the concept of the apparent role of the agent (or alleged agent) is relevant to a tort analysis. That instance is known as “apparent agency.”

Question 47

Q

Liability

APPARENT AGENCY /agency

Answer

A

arises in situations in which the person committing the tort is not the employee, or perhaps not even the agent, of the principal, thus, P would not be liable for alleged A’s tort under traditional agency analysis
BUT if there are circumstances that led the injured third party to reasonably believe that an employment or agency relationship existed between the principal and the alleged agent AND those circumstances existed because of some action or inaction (manifestation) on the part of the principal = the principal might still be liable under a theory of apparent agency, even if no employment relationship existed
(majority also require the injury to the third party resulted because of the third party’s reasonable—albeit incorrect—belief that the alleged agent was, in fact, an agent of the principal AKA some showing that if the alleged agent had been under the control of the principal, then the principal would, or could, have exercised control to avoid the tort which took place)

Question 48

Q

3 requirements/elements

APPARENT AGENCY /agency

Answer

A

A reasonable belief by the 3P that the alleged A is an agent of the P (= reasonable reliance) AND
Some action or inaction by the P to create (or to fail to dispel) that reasonable belief on the part of 3P AND
Some showing (in many cases) that 3P’s injury could have been avoided had the alleged P exercised control over alleged A (AKA 3P’s injury arose out of that third party’s reasonable belief that an employee/agency relationship existed)

Question 49

Q

illustrative example

APPARENT AGENCY /agency

Answer

A

A restaurant chain called Super Clean Restaurants allows a restaurant, formerly known as Dirty Dan’s, to use the Super Clean Restaurant name, logo and menu. The newly named restaurant is now called DD’s Super Clean Restaurant (“DD’s Restaurant”). Customers who enter DD’s Restaurant make the reasonable (although incorrect) assumption that the restaurant is owned and operated by the Super Clean Restaurant chain. However, in reality DD’s Restaurant is owned and operated by Dirty Dan, and Dirty Dan has just paid a fee to Super Clean Restaurants to use its name and logo. While Super Clean Restaurants does provide some optional training to DD’s Restaurant personnel, Super Clean Restaurants does not exercise sufficient control to make DD’s Super Clean Restaurant an “employee”/agent. One day, Olive, Charlie and Dexter (“OC & D”) go to eat at DD’s Restaurant, reasonably believing that it is owned and operated by Super Clean Restaurants. Unfortunately, Dirty Dan’s staff doesn’t follow proper sanitation or food preparation procedures, and OC & D all get food poisoning. If OC & D sue Super Clean Restaurants, OC & D will not be able to show that DD’s Restaurant was Super Clean Restaurants’ agent. However, they might be able to show that DD’s Restaurant was Super Clean Restaurants’ apparent agent, and had Super Clean Restaurants been the principal, it could have required DD’s Restaurant to follow proper food sanitation procedures, and, had the Super Clean Restaurants’ procedures been followed, OC & D would not have become sick. Since Super Clean Restaurants allowed DD’s Restaurant to use the Super Clean Restaurant name, logo and menu and create the impression of an agency relationship with third parties, Super Clean Restaurants could be found liable for OC & D’s injuries under a theory of apparent agency.

Question 50

Q

Analysis of fact pattern involving contract

OVERVIEW /agency problems involving contracts

Answer

A

Issue = whether the principal is bound by the agent’s actions
(question is not whether the principal is “liable”)

Question 51

Q

When does agent have ability to bind principal to an agreement?
OVERVIEW /agency problems involving contracts

Answer

A

when the agent has some form of authority, including

Actual Authority (both express and implied)
Apparent Authority
Ratification (which is authority granted after the fact)
Inherent Authority (3rd Restatement replaced liability of an undisclosed principal)
Agency Estoppel (NOTE = not technically a form of authority; it’s a doctrine that applies here to prevents a Principal from arguing that no authority existed BUT doctrine may not be used independently by that Principal to enforce the agreement against 3P)

Question 52

Q

Definition

ACTUAL AUTHORITY /agency problems involving contracts

Answer

A

exists when the principal communicates to the agent about the activities in which the agent may engage and the obligations the agent may undertake
may be spoken or written, may be through silence or implied in the job

Question 53

Q

2 forms

ACTUAL AUTHORITY /agency problems involving contracts

Answer

A

Express

2. Implied

Question 54

Q

Analysis of Actual Express Authority

ACTUAL AUTHORITY /agency problems involving contracts

Answer

A

involves examining the principal’s explicit instructions

Question 55

Q

Analysis of Actual Implied Authority

ACTUAL AUTHORITY /agency problems involving contracts

Answer

A

involves examining the principal’s explicit instructions and asking what else might be reasonably included in those instructions (AKA implied) to accomplish the job

Question 56

Q

Implied Authority examples

ACTUAL AUTHORITY /agency problems involving contracts

Answer

A

includes actions that are necessary to accomplish the principal’s original instructions to the agent
includes those actions that the agent reasonably believes the principal wishes him to do, based on the agent’s reasonable understanding of the authority granted by the principal

Question 57

Q

illustrative example

ACTUAL AUTHORITY /agency problems involving contracts

Answer

A

Patty hires Andrew to work in her toy company and places Andrew in charge of toys for little girls. Patty tells Andrew to purchase 1,000 stuffed dogs for sale in Patty’s store. Andrew does. He is acting under Patty’s actual express authority. If Andrew also buys 1,000 leashes to sell with the dogs, he is acting pursuant to actual implied authority. Patty did not tell Andrew to buy the leashes, but they are an accessory item that accompanies the toy. Andrew’s authority is implied from Patty’s instructions.

Question 58

Q

Focus of analysis

APPARENT AUTHORITY /agency problems involving contracts

Answer

A

= about what a 3P reasonably believes the P has authorized A to do (NOT about what the principal wants the agent to do)
AKA look at manifestations between P and 3P (NOT at communications between P and A)

Question 59

Q

Definition

APPARENT AUTHORITY /agency problems involving contracts

Answer

A

created when a person (principal or apparent principal) does something, says something, or creates a reasonable impression (a “manifestation”) that another person (the apparent agent) has the authority to act on behalf of that apparent principal

Question 60

Q

HYPO: Patty calls up the toy manufacturer and tells the manufacturer that Andrew is coming over to buy 1000 stuffed animals for her. However, Patty tells Andrew, “Don’t buy bears. I hate bears.” If Andrew buys bears anyway and brings them back to Patty saying, “but these bears are cute,” and Patty tries to return the bears, does the manufacturer need to accept them?
APPARENT AUTHORITY /agency problems involving contracts

Answer

A

No, the manufacturer does not need to accept them because the manufacturer reasonably relied on Patty’s statement that Andrew had authority to buy “stuffed animals.”
= Andrew did not have actual authority to buy the bears, but he did have apparent authority.

Question 61

Q

definition

RATIFICATION /agency problems involving contracts

Answer

A

authority that is granted by the principal after an agreement has been made.
involves situations in which an agent enters into an agreement on behalf of the principal without any authority (actual or apparent) to do so
may be express or implied (often implied by a principal accepting the benefits of the transaction

Question 62

Q

2 questions to ask in determining if there was a valid ratification of such an agreement
RATIFICATION /agency problems involving contracts

Answer

A

1) Did the principal, through word or deed, manifest his assent to (“affirm”) the agreement?
2) Given the facts and circumstances of the situation, will the law give effect to that assent?

Question 63

Q

Effect of ratification

RATIFICATION /agency problems involving contracts

Answer

A

Once an agreement or transaction has been ratified, the law treats it as if the agent with actual authority originally did it. Both parties to the agreement are bound.

Question 64

Q

Limitations on Ratification

RATIFICATION /agency problems involving contracts

Answer

A

only certain circumstances in which an agreement may be ratified
Some limits include:
1. for a ratification to be valid, the principal must know or have reason to know, at the time of the alleged ratification, the material facts relating to the transaction.
2. principal may not partially ratify a transaction (all or nothing)
3. If the third party manifests an intention to withdraw from the transaction prior to the ratification, the principal may not then ratify the agreement
4. ratification will be denied when necessary to protect the rights of innocent third parties (usually happens when there has been some material change in the circumstances between the time of the transaction and the time of the purported ratification)

Answer 65

A

Once a contract has been ratified, it generally creates retroactive authority.
= law treats the agreement as though the agent who entered into the agreement had actual authority at the time the agreement was made, even if the agent lacked authority at that time
EXCEPTION = when the principal had no capacity to enter into the agreement at the time it was made (EXAMPLE = if A enters into an agreement on behalf of a minor, and the minor does not ratify the agreement until she becomes an adult, the agreement is effective with respect to that former minor upon ratification, not the date of the original agreement)

Answer 66

A

because an undisclosed principal cannot, by definition, have made any manifestation to the third party, there can be no apparent authority with an undisclosed principal

Answer 67

A

undisclosed principal is liable for certain unauthorized transactions of his agent when:
1) a third party has made a “detrimental change in position;”
2) the principal had notice of the agent’s conduct;
3) the conduct might induce third parties to change their positions; AND
4) the principal did not take reasonable steps to notify the third parties of the facts.
(formerly inherent agency)

Answer 68

A

Liability of an undisclosed principal most often arises in situations in which the agent acts in a manner consistent with the authority that a third party would reasonably believe the agent to have under the same circumstances had the principal been disclosed

Answer 69

A

Not really a form of authority
equitable doctrine that prevents the principal from denying that an agency relationship exists
generally arises in agency situations in which the principal has done something improper

Answer 70

A

As used in agency, estoppel involves:

Intentional, negligent or otherwise culpable acts or omissions by the principal, which create an appearance of authority in the purported agent;
A third party who reasonably, and in good faith, acts in reliance on that appearance of authority; and
The third party changes her position in reliance upon that appearance of authority.

Answer 71

A

Detrimental reliance
- estoppel requires that the third party alter his or her position in reliance on the
purported authority
- no requirement for apparent authority
Manifestation by P to 3P
- Required for apparent authority
- Not required for estoppel (merely some culpable act or omission by the principal)

(NOTE = certainly possible that both conditions exist in the same fact pattern)

Answer 72

A

used to prevent one party (typically the principal) from denying a purported agent’s authority when the third party wants to enforce that contract
NOTE = used in a variety of contexts in different areas of the law to bind various individuals BUT in the agency context, estoppel is not used to create a binding contract that may be enforced by both parties

Answer 73

A

No. This is an example of a classic agency problem involving a contract. Astrid was Penny’s agent because Astrid was an employee. Astrid either had actual express authority to order books and ordering more copies of “The Best Cookbook” fell under that authority, or, at a minimum, Astrid had actual implied authority to order more books for the store and ordering more copies of “The Best Cookbook” fell under that implied authority. It is reasonable for Astrid to understand her authority to include ordering more copies of a particular book. If Penny did not want Astrid to order more copies of “The Best Cookbook,” Penny should have communicated that to Astrid. Furthermore, even if Astrid lacked actual authority, she probably had apparent authority. Because Astrid had placed orders for Better Books in the past and, presumably, the publishing house had dealt with Astrid before, it is reasonable to assume that Astrid had the authority to order more books for the store in, what seemed to be, the ordinary course of business. Under any of these approaches, Penny would be bound.

Answer 74

A

In this situation, we first must ask whether Dan was Penny’s agent or just a friend putting a few books on the shelves. The definition of agency is very simple: all that is required is a manifestation of consent by the principal that the agent act on the principal’s behalf and subject to the principal’s control, and the agent manifests consents to so act. Here, Penny “manifested consent” that Dan shelve books. (In fact she bought him lunch in exchange for his help.) Penny tells Dan what to do and how to do it, and Dan agrees, either verbally or impliedly from his taking on the task requested. That makes Dan Penny’s agent. However, we still need to ask what authority Dan has to act on Penny’s behalf. There does not seem to be a claim of actual authority here. Penny did not tell Dan to talk with customers or to sell books. She just asked him to help put books on the shelves, and authority to interact with customers probably cannot be implied from those instructions. However, there is a question of whether Dan had apparent authority. By having Dan perform work on behalf of the bookstore, Penny may have created the impression that Dan was a store employee. If store employees typically have the authority to make double your money back guaranties, Dan might have had apparent authority for his action, and Penny might be bound by it. In order to evaluate this problem, we would want to know additional facts, such as whether store employees have uniforms or nametags to identify them as store employees—in other words, whether it was reasonable for Sue to assume that Dan worked for the store based on the fact that Dan was performing a task for the store. If so, AND if store employees occasionally convey money back offers, Penny will be liable to Sue under apparent authority. Even if there are not enough facts to show that Penny and/or the bookstore created a reasonable inference of Dan’s authority, it is possible that Penny might still be liable under an estoppel argument. Asking Dan to shelve books for the store might negligently create some appearance of authority or might allow for a situation in which Dan could misrepresent his authority to Sue. Furthermore, Sue could argue that she relied on the appearance of Dan’s authority AND changed her position by buying the Yellow Lollipops Are Best book in reliance on that appearance of authority. In that instance, it is quite possible that a court would find that Penny was estopped from denying Dan’s authority and would have to pay Sue. Note that there is no allegation the Penny ratified Dan’s agreement with Sue, so that would not be an issue here.

Answer 75

A

STEP ONE: Is there a Principal-Agent relationship?

STEP TWO: If so, does the issue involve a tort or a contract?

Answer 76

A

To determine whether P is liable, ask

Is there an Employee (“EE”)/Employer (“ER”) relationship?
a. Did the Principal have the right to exert control over the means and manner in which the Agent performed the task(s)?
If the Agent is an EE, did the tort occur within the scope of the employment or was it clearly outside the scope (“frolic or detour”)?
a. If the tort was intentional with no purpose to serve the ER, was it foreseeable (characteristic of the risks that arise from the employment)?
Even if there is not an EE/ER relationship, is there sufficient control to create a “non-employee agent,” and, if so, did the tort occur within the scope of that control?
Even if there is no control exercised over the Agent, does the event fall into an exception such as an inherently dangerous activity, a non-delegable duty, or negligent hiring?
Even if there is no liability for the Principal under a control analysis, is there a claim for Apparent Agency because the third party reasonably relied on the appearance of agency and was harmed as a result of that reliance?

Answer 77

A

To determine whether P is bound, ask

Did the Principal give Actual Authority to the Agent (either express or implied)?
Did the Principal make some manifestation to the third party creating Apparent Authority?
Was the Principal undisclosed, creating liability of an undisclosed principal (formerly Inherent Agency Power (IAP))?
Did the Principal ratify the contract?
a. Do any exceptions apply (didn’t know all the facts, partial ratification, unfair to third party)?
Is Estoppel an issue?
a. Did the Principal do something wrong, or fail to do something, that created an impression with the third party?
b. Did the third party rely and alter his or her position to his or her detriment?

Answer 78

A

an agent is liable for his or her tortious conduct regardless of whether the principal is also liable through vicarious liability
unless some applicable statute provides otherwise, a person is liable for his or her wrongdoing
the fact that an agent might have been acting as an employee and/or under the authority of a principal does not eliminate agent’s liability (these factors merely impact whether principal might ALSO be liable)

Answer 79

A

Typically an agent is not liable as a party to the contracts that that agent enters into on behalf of a disclosed principal UNLESS

there are special circumstances and/or
the parties agree that the agent will be liable under the contract

Answer 80

A

Occurs when the agent is acting on behalf of:

An undisclosed principal; or
An unidentified principal (AKA a partially disclosed principal)

NOTE = In either of these, once agreement is signed/agreed to, A is bound, EVEN IF P is subsequently disclosed or identified UNLESS parties specifically agree A won’t be bound OR original agreement provides A will not be bound upon identification of P

Answer 81

A

exists when an agent is acting on behalf of a principal, but the agent does not tell the third party (and the third party does not know) that the agent is acting on behalf of a principal
(b/c 3P thinks it’s entering into agreement with agent and no other person disclosed, agent is presumed to be a party to the agreement and is bound by it)

Answer 82

A

AKA a partially disclosed principal
exists when an agent tells the third party that the agent is acting on behalf of a principal, but the identity of the principal is not disclosed
(b/c an unidentified party may not enter into a contract, the agent is usually treated as a party to the agreement and is bound by the agreement)

Answer 83

A

Majority = if the third party wishes to sue for a breach of the contract, must often elect whether to sue the agent or the principal
Minority = the third party may sue both the agent and the principal, but may only recover for damages once
(NOTE = usually if A is found liable under agreement entered into for P when acting with P’s authority and didn’t cause the breach, A would have a claim for indemnification from P)

Answer 84

A

If the principal is disclosed and the agent, with authority to do so, enters into an agreement with a third party, then, generally, the principal will be bound but the agent will not.
If the principal is undisclosed or unidentified and the agent, with authority to do so, enters into an agreement with a third party, then, generally, the principal will be bound, but the agent will also be bound.
If the principal is undisclosed or unidentified and the agent, without authority to do so, enters into an agreement with a third party, then the agent will be bound, but the principal is not typically bound unless the circumstances trigger the provisions of the Third Restatement (discussed above) for liability of an undisclosed principal, or there is some additional action (such as ratification) on the part of the principal.
If the principal is disclosed and the agent, without authority to do so, enters into an agreement with a third party, then, depending upon the circumstances, the principal may or may not be bound, and the agent (although probably not bound) could be liable to the third party for a breach of the agent’s warranty of authority, or could be liable to the principal for the damages caused by the agent’s improper actions.

Answer 85

A

the idea that taking responsibility for acting on behalf of another carries with it certain duties beyond the mere completion of the task involved

Answer 86

A

to act consistently with any contractual duties the agent might have to the principal
to act within the scope of the agent’s actual authority
to comply with the principal’s lawful instructions.

Answer 87

A

Duty of care, competence, and diligence
Duty of loyalty
Duty not to acquire material benefits arising out of the agency
Duty not to act as (or on behalf of) an adverse party
Duty not to compete
Duty not to use principal’s property
Duty not to use confidential information
Duty of good conduct
Duty to provide information

Answer 88

A

An agent has a duty to the principal to act with the care, competence, and diligence normally exercised by agents in similar circumstances unless the agent has special skills or knowledge, which would require the agent to act at the commensurate, higher level of skill or knowledge.

Answer 89

A

The agent has a duty to act loyally for the principal’s benefit in all matters connected with the agency.

Answer 90

A

The agent may not acquire a material benefit from a third party in connection with transactions or actions taken on behalf of the principal or otherwise through the agent’s position.

Answer 91

A

An agent may not deal with the principal as or on behalf of an adverse party in a transaction connected with the agency relationship.

Answer 92

A

The agent may not compete with the principal or take action on behalf of or otherwise assist the principal’s competitors.
(Note that this prohibition does not extend beyond the end of the agency relationship and does not prohibit an agent’s preparing to compete, following the end of the agency relationship, provided the conduct is not otherwise wrongful.)

Answer 93

A

An agent may not use property of the principal for the agent’s own purposes or the purposes of a third party.
Moreover, agent may not mingle principal’s property with anyone else’s, including the agent’s.

Answer 94

A

An agent may not use or communicate confidential information of the principal for the agent’s own purposes or for the purposes of a third party.
(Note that this prohibition would typically prevent the use or disclosure of confidential information learned during the agency relationship, even after the termination of that agency relationship.)

Answer 95

A

An agent must, within the scope of the agency, act reasonably and refrain from conduct that is likely to damage the principal’s enterprise.

Answer 96

A

An agent has a duty to provide the principal with facts that the agent knows, has reason to know or should know, if the agent knows or should know that the principal would want to know those facts or if the facts are material to the agent’s duties to the principal, but only if providing the facts to the principal does not violate a superior duty owed by the agent to another person.

Answer 97

A

P may waive some of these duties IF

The principal is fully informed AND
The agent still acts in good faith and still deals fairly with the principal

Answer 98

A

If an agent violates these duties without the consent of the fully-informed principal, the agent will be liable to the principal for damages.
In the alternative, the agent could be liable to disgorge to the principal any profit made by the agent in violation of a duty, even if the principal could not have made the same profit.

Answer 99

A

Duty to indemnify

2. Duty of good faith and fair dealing

Answer 100

A

A principal must typically indemnify an agent for costs, expenses, and/or damages incurred by the agent in the scope of the agency (provided the agent is acting within the scope of the agent’s actual authority) or when acting for the principal’s benefit and/or in accordance with any agreement between the agent and the principal.

Answer 101

A

A principal must deal with its agent fairly and in good faith.
This duty includes an obligation to inform the agent about risks of physical harm or financial loss that the principal knows, has reason to know, or should know are present in the agent’s work but are unknown to the agent.

Answer 102

A

Did the agent violate any duty to the principal?
Did the agent violate any duty to a third party?
Did the agent willfully or negligently damage a third party?
For what damages, if any, might the agent be liable?
If the agent has incurred any costs, expenses or damages, does the agent have a claim for indemnification against the principal?

Answer 103

A

Because Alex agreed to act on behalf of Peter, Alex is Peter’s agent. As an agent, Alex has certain duties to Peter. One of those duties is not to obtain a material benefit from third parties in connection with actions taken on behalf of the principal or otherwise through the agent’s use of the agent’s position. Another duty is not to use property of the principal for the agent’s own purposes. Alex clearly violated these duties to Peter by using the classic car for Alex’s own benefit and profit. While Alex might try to argue that Peter did not prohibit such activities as long as Alex arrived in San Diego within two weeks, this argument is unlikely to prevail, especially given the requirement that any waiver of an agent’s duties by the principal must be a “fully informed” waiver. Alex might also argue that even if he did violate a duty (or duties) to Peter, the car was not damaged, and thus, Alex does not owe Peter any money. However, the proper remedy in this situation is not based merely on “damages” to Peter. Alex must turn over to Peter the benefit Alex obtained from his breach of duty to Peter. The law would require that Alex hold the benefits/profits of his breach of duty in “constructive trust” for Peter. Therefore, Peter may recover the $700 that Alex obtained using Peter’s car in violation of Alex’s duties to Peter.

Answer 104

A

NOT PRINCIPLE

put the A of agency in principAL whoa i just thought of that, that’s really good

Answer 105

A

The critical word in answering this question is “authority.”
P is liable for contracts made by A if P authorized A to make the contract for P.

Answer 106

A

Arises from communications between P and A
= Through her words or conduct, P communicated to A that A could and should enter into contracts such as this contract with T

Answer 107

A

Arises from communications between P and T

= Through her words or conduct, P communicated to T that A could enter into such contracts as A’s contract with T

Answer 108

A

an agent cannot create his own authority—P, not A, is the source of A’s authority to contract for P
an agent can have both actual and apparent authority to enter into a contract
an agent’s apparent authority can be different from and even broader than her actual authority

Answer 109

A

Both actual and apparent authority.

Answer 110

A

A no longer has actual authority, but A still has apparent authority.
If A buys more grits on credit from T, P will be liable on the contract to T.

Answer 111

A

Actual and apparent authority are not only the basis for P’s liability on contracts between A and T but are also the basis for P’s rights on contracts between A and T
T will be liable to P if P would have been liable to T = if T fails to deliver the goods or services contracted for by A, P can enforce that contract against T so long as A was acting with actual or apparent authority

Answer 112

A

*The key word in answering questions about the agent’s liability is “disclosed.”**
1. If T had reason to know that A was acting as P’s agent = disclosed, so A is not liable on the contract he made with T
2. If T did not know that A was acting as an agent = undisclosed, so A is liable.
3. If T knew that A was acting as an agent but did not know that A was acting as agent for P = partly disclosed, so A is liable on the contract

Answer 113

A

Yes, if A was authorized and P was undisclosed = both are liable on the contract with T.

Answer 114

A

An employer’s liability for the torts of an employee depend on whether

the tortfeasor was acting within the scope of employment and
whether the employer had the right to control

Answer 115

A

Creates an agency relationship that does not exist
= If P’s words and conduct cause T to believe A is subject to P’s control and rely on A = P is liable for A’s torts.

EXAMPLE = has been used to hold franchisor McDonald’s liable for the torts of a franchisee b/c McDonald’s actions led the tort victim to believe that the restaurant belonged to McDonald’s, not the franchisee

Answer 116

A

Apparent authority = Contracts concept, expands authority of an actual agent

Apparent agency = Torts concepts, expands employer’s liability include torts of someone who is not actually an agent

Answer 117

A

= fiduciary relationship between the agent and the principal

Answer 118

A

In general, an agent must act loyally and carefully (duty of loyalty and care)

Answer 119

A

Express authorization by the principal for the agent to act
Express manifestations can always negate implied authority
Involves examining principal’s explicit instructions

Answer 120

A

Authority to do acts incidental to express authority, usually accompanies it, or is reasonably necessary to accomplish the task
Involves examining the principal’s explicit instructions and asking what else might be reasonably included in those instructions (implied) to accomplish the job
Includes actions that are necessary to accomplish the principal’s original instructions to the agent and also those actions that the agent reasonably believes the principal wishes him to do based on the agent’s reasonable understanding of the authority granted by the principal

Answer 121

A

Implied authority is actual authority that the principal intended the agent to possess and includes such powers as are practically necessary to carry out the delegated duties

Bill was an agent w/ implied authority to hire his brother b/c there was a course of prior dealing w/ his brother working at the church, Sam reasonably believed Bill had the authority to hire him/it appeared to him this was okay (apparent authority), and the church paid Sam for his ½ hour of work

The existence of prior similar practices is one of the most important factors of circumstantial evidence

Answer 122

A

theoretically if there are circumstances which led the injured party to reasonably believe that an employment or agency relationship existed between the principal and alleged agent (reasonable reliance), and those circumstances existed because of some action or inaction on the part of the principal, the principal may still be L, even if no employment relationship existed

Principal (or alleged principal) could incur liability for the wrongdoing committed by an agent (or alleged agent) acting with apparent authority on behalf, or purportedly on behalf, or purportedly on behalf, of the principal (RST Third § 7.08)

Answer 123

A

An agent has apparent authority sufficient to bind the principal when the principal acts in such a manner as would lead a reasonably prudent person to suppose that the agent had the authority he purports to exercise.

Many courts also require that the injury incurred by the third party resulted b/c of third party’s reasonable (but incorrect) belief that alleged agent was in fact an agent of the principal.

Absent knowledge on behalf of 3P to the contrary, the agent has apparent authority to do those things which are usual and proper to the conduct of business which he is employed to conduct

Contract - There must be a meeting of the minds and a communication that each party has consented to the terms of the agreement in order for a K to exist.

Answer 124

A

Apparent authority to conduct the usual tasks/responsibilities of a position (i.e. front desk clerk at a dry cleaner’s has apparent authority to promise 24-hour service)

Mere position of attorney or another does not create apparent authority to act

An agent must be acting within the scope of employment to bind the principal, but such scope includes actions that are reasonable

A principal is generally not liable for acts of an independent contractor, unless certain exceptions apply, including inherently dangerous activities

Answer 125

A

Inherent agency power is the power of an agent which is derived not from authority, apparent authority, or estoppel, but solely from the agency relationship and exists for the protection of persons harmed by or dealing with a servant or other agent

Individual performs a function that is not permitted by the principal but might be considered within the scope of duties; company is bound (even if the principal was not aware)

Function does not have to be a holding out of authority for the principal/agent relationship to exist

Answer 126

A

owners of pub liable for purchases by their manager because they had inherent agency power to make purchases and did not make clear to public that they were the new owners

Note - Third RST is must narrower than Watteau, it concludes w/ the qualification that the principal is L “if the principal, having notice of the agency’s conduct and that it might induce others to change their position did not take reasonable steps to notify them of the facts.”

Answer 127

A

The individual is not an agent, but if the principal ratifies the behavior, the company can be bound by the individual’s actions

Ratification requires acceptance of the results of the act with the intent to ratify, and act with full knowledge of the material circumstances

Answer 128

A

Express = action of the individual is expressly affirmed by the principal

Implied occurs through acceptance of the benefits of the transaction at a time when it is possible to decline such benefits, can also be implied through silence or inaction, such as in the following (let’s just make this another card)

Answer 129

A

Botticello v. Stefanovicz – husband made deal but wife didn’t go along with it. She didn’t manifest consent or ratify, he never signed as her agent – she signed the deed, mortgage, other docs. She didn’t know about all the terms, and you must know all terms to ratify

Implied affirmation can also occur through bringing lawsuit to enforce a contract.

Answer 130

A

If affirmed, the law treats the agreement or transaction as if it had been done by the agent under actual authority (retroactive authority)

To be valid, the principal must know or have reason to know at the time of the alleged ratification the material facts relating to the transaction

Principal cannot partially ratify – it’s all or nothing

You cannot sit back and see what is going to happen because the longer you wait, the more likely the court will find implied ratification

You can’t say that you didn’t have the authority to do so, but now that it’s beneficial to me, I’ll ratify it

All or nothing: if a purported principal attempts to ratify only part of a single transaction, then either the entire transaction is ratified or there is no ratification at all

Answer 131

A

Estoppel: there is no denying agency based on the impression of the third party; should the principal be estopped from denying that the false agent was one of the principal’s?

Involves:

acts or omissions (generally wrongful) by the principal (either intentional or negligent) which creates an appearance of authority by the purported agent
the third party reasonably, and in good faith, acts in reliance on the appearance of authority; and
the third party changes her position in reliance upon that appearance of authority

Answer 132

A

Remember, estoppel is one way street – only party who relies on authority can claim estoppel (e.g. the store couldn’t claim estoppel because of that guy acting as a sales agent)

Store liable because the business should bear the risk – not the customer’s job to make sure the employee works there

D, as a furniture store, still owed a duty of care to P when she entered the store and had an expectation that she would be tended by an actual salesperson rather than an imposter

Answer 133

A

The principal will be at fault should be bound if:

Intentional or careless, OR

Notice and principal took no reasonable steps to protect third parties

Answer 134

A

one who operates independently and simply enters into arm’s length transactions with others

Answer 135

A

a principal can still be liable for the torts of an independent contractor

if: the principal retains control over aspects of the activity in which the tort occurs

the principal is negligent in hiring, training, retraining, supervising the independent, OR

the principal hires the independent contractor to perform an inherently dangerous activity (i.e. blasting, transporting toxic chemicals)

Answer 136

A

Agency requires mutual consent of both the principal to control and direct the agent and the agent to consent to be controlled and directed
An individual need not be an agent-in-fact or have a contract to be in a position to bind a principal to the agent’s actions
There are different types of agency
- – some that relate to the relationship between the principal and agent and some that relate to how the relationship is presented or perceived by 3P

Answer 137

A

Ratification and Estoppel can be used to bind a P, even absent a finding of agency
Agency can sometimes be argued for purposes of ensuring liability attaches to an entity as opposed to an individual

Answer 138

A

Determination of principal liability in connection with franchise arrangements depends on the franchisor’s control over the operations of the franchisee
- – Note apparent agency could also apply depending on how the parties hold themselves out to the public
An agent must be acting within the scope of employment to bind the principal, but such scope includes actions that are reasonable foreseeable, even if done on an individual basis
A principal is generally not liable for acts of an independent contractor, unless certain exceptions apply, including inherently hazardous activities

Answer 139

A

Agents owe a fiduciary obligation to the principal, which obligations extend to third parties (for hazardous activities) and to the principal relative to the principal’s propriety business interests

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