Agency (DONE) Flashcards
What is agency liability in contract?
Principal (P) becomes liable to third party (T) through the actions of his agent (A) if A and P both consent and A is subject to P’s control.
What is required for a contract between P, T, and A?
1) Capacity
2) Writing (maybe, under SoF)
3) Consideration (not required)
What is the contractual capacity requirement between a principal, agent, and third party?
P must have contractual capacity (because the contract is between P and T), but A does not, because A just an intermediary.
What is the writing requirement for agency?
Agency law requires no writing, but the SoF may,
If the contract involves a conveyance of land, or performance for more than one year, then a writing is required.
Is consideration required for agency contract?
No.
How is actual authority of an agent created?
1) Express: P expressly tells A to act on P’s behalf.
2) Implied: P’s conduct leads A to believe that A has authority.
How is actual authority terminated?
1) After a specified time/event or a reasonable time
2) By change of circumstances (e.g., subject matter destroyed)
3) If agent acquired adverse interest (e.g., joins a competitor)
4) When agent says so (because agency in consensual)
5) When principal says so, unless it’s “coupled with an interest” (which makes power of agency irrevocable)
6) By death/incapacity/bankruptcy, unless coupled by an interest.
Can an agent delegate his authority to another?
This is ok if the P consents (may be express of implied)
What are substitutes to actual authority?
1) Apparent authority
2) Ratification
3) Intervening rights
What is apparent authority?
P leads T to mistakenly believe A has authority.
There must be a reasonable belief created by P, not by A alone. Otherwise, it wouldn’t be fair to P.
Apparent authority can linger after actual authority ends.
What is the policy behind apparent authority?
Protects an innocent T who relies on P’s holding out A as an agent.
What is ratification?
Even if A had no authority, P can ratify by expressly affirming the contract, accepting the benefit of it, or suing T on it.
What is required for ratification to be effective?
1) Knowledge: P must have knowledge of all material facts
2) All of nothing: P must accept the ENTIRE transaction.
3) Capacity: P must have capacity at the time of ratification, AND at the time of original contract, because ratification is retroactive.
What are intervening rights?
Since ratification is retroactive, we must protect the intervening rights of a bona fide purchaser.
What is adoption?
e.g., A promoter that enters into a lease on behalf of a corporation that has not yet formed (as its agent), the corporation (P) can adopt the lease as its own.
What’s the difference between ratification and adoption?
Adoption is not retroactive. There is only liability on the contract from the moment of adoption forward.
Ratification created liability from the outset.
What is the relationship between a principal and agent?
1) Agent is a FIDUCIARY, and owes duties of loyalty, case, and obedience to the principal.
2) Principal must pay, reimburse, and indemnify A.
Remedies: Wide range, including constructive trust if A breaches the duty of loyalty.
What is the relationship between a principal and third party?
Assuming actual authority or a substitute:
1) Principle is ALWAYS liable to a third party.
2) Third party is liable to principal, UNLESS A has special skills AND T does not know P exists. (“undisclosed P”)
What liability is owed to the third party agent?
Generally no liability, since A is just a go-between.
What is the test for tort liability in agency law?
Was a tort committed by a servant acting within the scope of employment? If so, the master and servant are jointly and severally liable.
What is the test for tort liability against a servant or independent contractor?
Did the employer have the right to control how the employee did the job (even if never exercised?)
If an independent contractor, then the employer will probably not be vicariously liable for the IC’s tort.
What is the analysis to determine whether a person is liable as a servant or not liable as an independent contractor?
1) Who supplied the tools/workplace?
2) Was the job part of the employer’s regular business?
3) Was it long-term?
4) How much skill was required?
5) Was payment made in regular intervals (salary), or by the job?
What is the analysis for the scope of employment of an agent?
A master is not automatically liable for a servant’s torts. M is liable only if S was acting within the scope of their employment.
1) USUAL TASK: If S was doing a usual task, the tort was within the scope.
2) DEVIATION: How substantial was the deviation?
What types of deviation still result in liability of an employer?
1) Detour: A minor deviation that is still within the scope of employment
2) Frolic: A substantial deviation that is outside the scope
What is the employer’s liability for an employee’s intentional torts?
Employee’s intentional torts are OUTSIDE the scope unless
1) Force is used to further Employer’s business,
2) Employer ratifiers use of force, or
3) Employer authorized Employee to commit the tort
What is the liability of M and S if there is vicarious liability?
M and S are JOINTLY and SEVERALLY liable.
e.g., T can sue S alone or M alone or join them as defendants, but is entitled to only one satisfaction.
When is there direct liability to employer for the intentional tort of an employee?
Employer is liable for its own negligence if it fails to properly train or supervise employees or check an employee’s criminal record or job history.
