agency Flashcards
What does it mean to have an “agency relationship” and who are the relevant players?
every agency relationship has a PRINCIPAL and an AGENT
an agent does things on BEHALF of the principal, and the principal typically DIRECTS the agent’s acts.
What are the three components required to create an agency relationship?
What is NOT required?
Must the parties know they are entering into an agency relationship?
ABC!
ASSENT: BOTH parties MANIFEST assent to work together
BENEFIT: agent agrees to work FOR PRINCIPAL’S BENEFIT
CONTROL: agent AGREES to work SUBJECT TO CONTROL of principal
NOT REQUIRED:
- consideration
- written agreement
- awareness that an agency agreement has been formed
When a party disclaims (refutes) the creation of an agency relationship, what will the court look to to determine if it existed?
What does this look like?
MANIFESTATIONS OF ASSENT
could be anything:
- -formal letter
- -spoken words
- -physical action
Who can be a principal?
Any person or entity that has LEGAL CAPACITY
NOT:
- -minors
- -anyone incapacitated by illness or intoxication
- -unincorporated associates (e.g., birdwatching group)
Who can be an agent?
Any person or entity who has MINIMAL CAPACITY
minimal capacity = ABILITY to:
- -ASSENT to agency relationship;
- -PERFORM the tasks on behalf of principal;
- -be SUBJECT to principal’s CONTROL
Include:
- -any type of business entity
- -minors
What are the two types of agents?
What’s the difference?
1) SERVANTS/EMPLOYEES: employer has right to CONTROL the agent’s PHYSICAL CONDUCT OF WORK
2) INDEPENDENT CONTRACTORS: principal DOES NOT HAVE RIGHT TO CONTROL agent’s physical conduct of work
Characteristics of an IC:
- -maintain a high level of INDEPENDENCE
- -FREE to work for other people
- -paid on a FIXED FEE (not salaried)
- -typically owns his OWN TOOLS
How can an agency relationship be terminated and by whom?
EITHER PARTY can terminate an agency relationship UNILATERALLY.
When is a principal liable for contracts entered into by an agent on behalf of the principal?
Principal is bound on a contract when:
1) principal AUTHORIZED the agent to enter into the contract; AND
2) agent acted with LEGAL AUTHORITY
What are the four types of legal authority?
Generally, how do you tell the difference?
1) ACTUAL EXPRESS authority
2) ACTUAL IMPLIED authority
3) APPARENT authority
4) RATIFICATION
key difference between actual and apparent authority = who is communicating:
- -if principal and agent: ACTUAL
- -if principal to third party: APPARENT
When is there ACTUAL EXPRESS authority?
How can it be terminated?
1) communication between AGENT AND PRINCIPAL
2) principal creates actual express authority by using WRITTEN OR SPOKEN WORDS to convey authority to the agent
3) SUBJECTIVE INTENT: agent BELIEVED that he is doing what principal WANTS him to do
4) OBJECTIVE INTENT: agent’s belief is OBJECTIVELY REASONABLE
NB: terminated:
- -upon death of principal, terminates when AGENT HAS ACTUAL KNOWLEDGE of principal’s death
- -upon death of agent, terminates IMMEDIATELY
When is there ACTUAL IMPLIED authority?
1) communication between AGENT AND PRINCIPAL
2) principal creates actual implied authority by using WRITTEN or SPOKEN WORDS, OR OTHER CONDUCT to convey authority to agent to take WHATEVER STEPS NECESSARY to achieve principal’s objectives.
3) agent acts within ACCEPTED BUSINESS CUSTOMS or GENERAL TRADE USAGE
When is there APPARENT authority?
1) communication between THIRD PARTY AND PRINCIPAL
2) principal creates apparent authority by WRITTEN OR SPOKEN WORDS that cause THIRD PARTY to REASONABLY BELIEVE that principal CONSENTS to have acts done on his behalf by the agent.
3) third party belief can be reasonable based on SIMILAR DEALING IN PAST
When is there RATIFICATION by a principal?
1) NO PRE-ACT COMMUNICATION
2) Principal has KNOWLEDGE OF MATERIAL TERMS OF CONTRACT and
3) principal then ACCEPTS CONTRACT’S BENEFITS
Can an agent be held liable for his contract violations or torts, even if principal is liable?
YES!!! BOTH CAN BE LIABLE! AGENT DOESN’T GET OFF HOOK JUST BY BEING AN AGENT
What are the three levels of disclosure of a principal?
What is the effect of each?
1) DISCLOSED:
- -third party knows that the agent is acting on behalf of a principal
- -third party knows the principal’s identity
- -parties to K are THIRD PARTY and PRINCIPAL only
2) PARTIALLY DISCLOSED:
- -third party knows that the agent is acting on behalf of a principal
- -third party does NOT KNOW principal’s identity
- -parties to K are THIRD PARTY, PRINCIPAL, AND AGENT
3) UNDISCLOSED:
- -third party DOES NOT KNOW that agent is acting on behalf of a principal
- -third party DOES NOT KNOW principal’s identity
- -parties to K are AGENT and THIRD PARTY ONLY
- -whether principal is a party depends on agent’s AUTHORITY
