Agency Flashcards
Agency question about P’s liability under K Law
This is an agency question in a contract setting.
Consent: The principal becomes liable to a 3rd party on a contract entered into by the agent if the agent and principal both consent,
Authority: and the agent has either actual or apparent authority to bind the principal.
Capacity: The principal must have contractual capacity, but the agent need not have that capacity (must have mental capacity).
Writing: Agency law does not require a writing to establish an agent-principal relationship, but a writing may be required by the SOF.
Consideration: Consideration not required.
Actual Authority
Agent must have authority (or substitute) to bind principal.
Actual authority: created by P expressly telling agent to act on her behalf or impliedly when P leads A to believe that he has authority
Substitutes for actual authority
Apparent authority, ratification, adoption
Apparent authority
P leads/lets 3rd party to believe A has authority (can be mere silence when reasonable person would speak up and clarify)
Ratification
A acts without authority, but P later validates act and becomes bound. RETROACTIVE
Requires:
P must have knowledge of all material facts
P must accept entire transaction
P must have contractual capacity
P must affirm (in writing or by actions)
P must be disclosed to 3rd party
Creation of agency relationship
Need capacity (P’s contractual capacity) and consent (of both parties). A writing may be required by other law (like SOF).
Agent’s Duties to Principal
Express contractual duties (if applicable)
Duty of loyalty
Duty of obedience
Duty of reasonable care
Principal’s Duties to Agent
Express contractual duties (if applicable)
Reasonable compensation
Reimbursement for expenses
Principal’s Remedies for A’s Breach
Contract remedies Tort remedies Constructive trust Action for secret profits Withhold compensation Terminate agency
Agent’s Remedies for P’s Breach
Contractual remedies
Possessory lien
Termination of Actual Authority
Lapse of a specified or reasonable time Happening of a specified event Change in circumstances Agent's breach of fiduciary duty Either party's unilateral termination Operation of law (loss of capacity, etc.)
Irrevocable Agency
When agency entered into for A’s benefit and coupled with an interest/power given as a security
3rd Party v P
P liable to 3rd party as long as A had authority to act
3rd Party v A
If P disclosed (existence and identity known), P liable and A not liable (unless intended to be)
If P not disclosed, A and P liable
3rd Party Liability
If P disclosed, only P can enforce K against 3rd party
If P not disclosed, either P or A can enforce (but benefits flow to P)
P cannot enforce if misrepresented or burden when P undisclosed
P liable for A’s tort
This is an agency question arising in tort context. The issue is whether the tort was committed by a servant acting w/in the scope of employment. If so, the master & servant are jointly and severally liable to third party.
Other theories of principal liability in tort (beyond respondent superior)
Direct liability: P’s negligence in hiring, retaining, or supervising A
Liability for A’s tort when gave actual authority to committed tort or ratified tort
Employee vs Independent Contractor
Look to whether employer controlled manner, time of person’s work; look and see time period of employment, what skills are involved, how payment is made
Scope of Employment
Was employee doing what they were hired to do?
Was it a during a detour (slight deviation) or frolic (big deviation from normal working tasks/times)
If close call, side with innocent 3rd party against employer
Intentional torts outside scope UNLES force used to further master’s business, master ratifies use, or master authorized intentional tort.
P liable for independent contractor
Activity is inherently dangerous, or
Nondelegable duties have been delegated
Principal is negligent in selecting contractor
P liable for tort b/c apparent authority
P vicariously liable where A appears to deal on behalf of P and A’s apparent authority enables A to commit a tort or conceal its commission.
