Agency Basics

Question 1

Approach to an agency essay

Answer 1

1. Identify whether agency relationship exists
2. Discuss whether Principle is liable for agent’s actions
3. Articulates agent’s fiduciary dutes to principal + any breach

*Typically it is asking whether the principle is liable to a thrid party

Question 2

Components of an Agency Relationship

Answer 2

ABC
1. Assent - both parties manifest assent to work with one another
2. Benefit - the agent agrees to work for principle’s benefit
3. Control - the agent agrees to work subject to control of the principal

No consideration required – no writing required

If parties deny creation of an agency relationship, courts look to manifestations of assent (ie formal letter, spoken words, physical actions)

Question 3

Who can be a Principal?

Answer 3

Any individual or entity that has a legal capacity to possess rights and incur obligations

Exclude mirnos, illness capacitated/inebriated

Question 4

Employer Principals

Answer 4

• Typically exert a great amount of control
• Control over day-to-day activities
• Controls physical conduct

The more control, the more likely that this relationship exists

Question 5

Employer Principal Factors

Answer 5

• Structured pay periods
• Workers skill level is specialized
• Principal directs the work to completion
• Prinicpal provides tools
• control over day-to-day activities

Question 6

Entity Principals

Answer 6

p* Corporations, partnerships, sole-proprieters, entrepreneurs
* While most entities can be a principle, unicorporated associations cannot - they lack legal capacity (ie. book grou, coffee shop group, bird-watching group)

Partners, officers, employees, attorneys, can be agents

Question 7

Who can be an Agent?

Answer 7

Person/incorporated entity with minimal capacity

A minor may serve as an agent

Question 8

Minimal Capacity Defined

Answer 8

• Assent to the agency relationship
• Ability to perfrom tasks on behalf of principal
• Subjjust to prinicpal’s control

Agents only

No consideration required ** remember assent, benefit, control**

Question 9

Types of Agents

Answer 9

• Servant/employees - right to control physical conduct of work
• Indpendent Contractors - no right to control physical conduct of work
• Gratuitous Agent - no payment, still agency, but prevents promation of enforceable contract between principal and agent
• General Agent - broad authorty over wide variety of tasks (store managers, purhasing agents)
• Special Agent - Limited authorty, specific transactions (real estate agents, subagents, insurance agents, commission merchants, bailees)
• Trustee as Agent - Subject to control of settlor/trust (benefit of the settlor)

Question 10

Subagent

Answer 10

• Person appointed by an agent to perfrom functions agent has agreed to perform on behlf of principal
• Agent is liable to principal for misconduct of subagent, Principal is stil bound
• Agent must have authority to appoint subagent

Question 11

Formalities of Creating An Agency Relationship

Answer 11

1. Assent
2. Benefit
3. Control

No writing, no consideration

Unless Equal-dignities Rule applies

Question 12

Equal-Dignities Rule

Answer 12

Authorization must be of equal dignity to the underlying transaction

When required by statute

Question 13

Independent Contractor Factors

Answer 13

• High level of indpendence
• Free to work for other people
• Paid on fix-fee
• Typically owns your own tools

Question 14

Termination

Answer 14

Either Party can terminate an agency relationship unilaterally

Subject to breach and damages if not mutual agreement to terminate

Question 15

Termination Upon Death

Answer 15

• Death of principal - actual express authority terminates when agent has actual knowledge of death
• Death of Agent - Express authority terminated immediately

Question 16

Changed Circumstances of Relationship

Agency Termination

Answer 16

• Change in statute
• Insolvency of either party
• Dramatic change in business conditions
• Destruction of subject matter of relationship
• A disaster

Question 17

Principal’s Loss of Capacity

Answer 17

Terminates agents actual authority (modern trend is that agent must have notice, too)

P may orverride if given A Durable Power of Attorney, which continues aftre incapacity, and continues after death in certain cases where necessary (ie autopsy or right to medial records)