Agency Flashcards
Who can be a principal
Any one or enttity with legal capacity
e.g.
Employer
o Corporation; LLC
o Partnership; LLP
Unincorporated associations CANNOT
Employers as principals
Employers typically exert a great amount of control over employees. This includes a significant amount of control over the DAY TO DAY activities of the employees
- -pay employees
- direct how employees finish/perform tasks ,
Who can be an agent
Any person or entity with minimal capacity
e.g. a minor
Principal’s Contractual Liability:
Express Actual Authority
Actual authority may be express or implied.
Principal directly tells the agent (orally or in writing) that he has the authority to take certain actions
Principal’s Contractual Liability:
Implied Actual Authority
Actual authority may be express or implied.
authority which agent reasonably believes principal
has given b/c of necessity in order to accomplish assigned task; custom; or prior dealings (absent contrary instructions)
e.g. You tell your roommate, who happens to be a talent agent, to get you a role in the new Aquaman film. In an attempt to do this, your roommate takes the producer of the film out to dinner and tells the waiter to send the bill to you. Are you bound by the bill?
Yes The agent had actual implied authority to do whatever was necessary, under accepted business custom or trade usage, to secure the role for the principal.
Principal’s Contractual Liability:
Apparent Authority
Apparent authority exists when:
(1) the principal holds the agent out as having authority to AND
(2) 3rd party reasonably believes the agent has authority to act (based on the principal’s
conduct)
the agent will have the power to bind the principal.
Principal’s Contractual Liability:
Estoppel
Principal is prevented from denying liability if he failed to take reasonable steps and use ordinary care to inform a third party of the lack of authority
e.g. has two co-agents, A and B. P learns that B, acting without actual or apparent authority, is informing P’s neighbors that A has the authority
to sell P’s ring, which P has specifically forbidden A from doing. P’s next-door
neighbor purchases P’s ring from A, in justifiable reliance on B’s representation
as to A’s authority. P, in her suit to rescind the sale, may be estopped
(prevented) from denying B’s authority to make the representation as to A’s
authority.
Termination of Authority
Termination of an agency relationship is unilateral; either party may assert the right to terminate the agreement.
Principal has the power to terminate the agency relationship at any time
An agency relationship terminates and the agent no longer has authority to act if:
Actual authority—simply tell the agent that authority is revoked
Apparent authority—must tell the third party that authority is revoked
Death
Upon the death of the principal, actual express authority terminates when the agent has knowledge of the principal’s death
Ratification
principal can ratify (affirm) an act performed by an agent, even if the agent did not have authority to act
Ratification requires that:
a. The principal ratify the entire contract;
b. The principal and third party have legal capacity to contract;
c. The ratification occurs before the third party withdraws from the contract; and
d. The principal know the material facts of the transaction.
e. g. I have said nothing to my butler about wine, and I have said nothing to the store. I just hired the butler yesterday. The butler, to cheer me up, goes down to the store on the very first day of employment and orders me a huge crate of wine; I have not authorized him and I have not said anything to the store. He brings the crate of wine back and gently drops it at my feet.
If I reject the wine, am I bound to pay? No
If I accept the win, I am bound to pay
General Rule regarding liability in torts and k
PRINCIPAL IS LIABLE FOR AGENT’S CONTRACTS & TORTS IF PRINCIPAL AUTHORIZE THE AGENT TO ACT
Employee vs. Independent Contractor
-Test:Whether the principal had the right to control the manner and method in which the job is performed.
Employee: If principal has substantial control in dictating the manner and method in which the job is performed,
then the person is deemed to be an employee of the principal.
Independent Contractor: Worker is subject to less control
Characteristics of Independent Contractor
- maintain high level of independence
- free to work for other ppl
- paid a fixed raid
- owns his own tools
Termination of agency relationship
Either party can terminate (unilateral termination ok)
Creation of Agency Relationship
- Assent both parties manifest assent to work w/ one anther
- Benefit: Agent agrees to work for principal’s benefit
- Control: agent agrees to work subject to principal’s control
NO consideration requirement
Scenario:
undisclosed. The third party knows neither agent’s status as an agent nor the principal’s identity.
Parties to k are: 3rd party and the agent
Whether an undisclosed principal is also party to the contract depends on whether the agent had the authority to bind the principal to the contract.
