Agency (Essay Only) Flashcards
what are some common examples of principal-agent relationships?
- employee-employer
- named agents (talent agent, govt agent, etc.)
- partner-partnership
- officer/director-corp
when might a principal be liable to 3p for actions of the agent?
- in contracts
- in torts
tip
how should I approach agency essay questions?
- ID whether an agency relationship exists
- Discuss whether principal is liable for agent’s actions
formation of agency relationship
what methods can be used to create an agency relationship?
by appointment frequently (oral or written)
might be required to be in writing when concerns interests in property (ex. power of attorney)
formation of agency relationship
when is an agency relationship created? (what are the components)
- principal manifests assent to the agent and agent manifests assent or otherwise consents
- agent acts on principal’s behalf AND
- agent’s actions are subject to principal’s control
ABC ; make sure to list these in an exam answer
who can be a principal?
basically any person or entity that has the legal capacity to possess rights and incur obligations
agent agrees to be subject to principal’s control and principal agrees to be bound by the acts of its agent w/in scope of agent’s authority
can a corporation with a pending incorporation be a principal?
nope, not yet formed
who can be an agent?
any person with minimal capacity
not required to have the capacity to form contacts (so minors or incompetent ppl can serve as agents)
what is required for an agent?
- have minimal capacity
- manifest assent and consent to act on principal’s behalf AND
- manifest assent to be subject to principal’s control
consideration NOT required
what factors does a court analyze to determine if someone is an employee vs. independent contractor?
independent contractor / non-employee agent
- maintains a high level of independence
- free to work for others
- paid on a fixed fee
- results-based payment
- liable for work performed
- owns own company
what is a gratuitous agent?
agent who does not receive compensation
might prevent formation of enforceable contract b/c lack of consideration
who can terminate an agency relationship?
either party (unilateral)
contractual liability
when is a principal bound on a contract that an agent enters on behalf of the principal?
- principal authorizes the agent to enter into the contract AND
- agent acted with legal authority
contractual liability
what are the types of legal authority?
- actual express authority
- actual implied authority
- apparent authority
- ratification
tip
what should I look for when trying to determine actual authority vs. apparent authority?
who the communication is with
if principal is communicating with agent –> actual authority
principal is communicating with 3p –> apparent authority
principal’s behavior is key
actual express authority
what is required for actual express authority?
can be created via
- oral or written words
- clear, direct, and definite language OR
- specific detailed terms and instructions
agent must believe they are doing what the principal wanted them to do (subjective standard) + agent’s belief must be reasonable (objective standard)
look at communication b/t agent and principal
actual implied authority
what is required for actual implied authority?
agent can take whatever actions (designated or implied) are properly necessary to achieve principal’s objectives based on agent’s reasonable understanding of the manifestations and objectives of the principal
implied authority act within accepted business customs or general trade usage w/in an industry (agent must be aware of these before they act)
apparent authority
what is apparent authority?
derives from a reasonable reliance of a 3p on that party’s perception of the level of authority granted to the agent by the principal
perception is based on principal’s behavior
does not require 3p to establish that they acted in reliance of principal’s manifestations or suffered a determined
actual authority
how may an agent’s actual authority be terminated?
- principal’s revocation
- principal’s agreement with the agent
- change of circumstances
- passage of time
- principal’s death or suspension of powers
- agent’s death or suspension of powers
- principal’s’ loss of capacity
- statutorily mandated termination
what is required for estoppel?
principal is liable for the appearance of authority arising solely from the principal’s failure to take reasonable steps and use ordinary care
- 3p is justifiably induced
- to make a detrimental change in position b/c
- that 3p believed the transaction was entered into for the principal AND
- the principal (a) intentionally or carelessly caused the belief or (b) failed to take reasonable steps to notify them of the facts
what is ratification? (general definition)
the elements are another flashcard
a principal can ratify an act performed by another person, regardless of whether they are a principal
principal affirms a prior act that was done or purported to be done on principal’s behalf
what is ratification? (give the elements)
- principal must ratify the entire act, contract, or transaction (express)
- principal must have legal capacity to ratify the transaction at the time it occurs + legal capacity to engage in the transaction
- ratification must be timely (before 3p withdraws)
- principal must have knowledge of the material facts involved in the original act
tip
even if principal isn’t liable, the agent may still be liable
agent might be liable for violating a contract or committing a tort, regardless of whether they are actually an agent
disclosure of principals
what is a disclosed principal?
3p knows
1. existence and identity of principal
2. agent is acting on behalf of a disclosed principal
agent does not become a party
disclosure of principals
what is a partially disclosed principal?
3p knows that principal exists, but doesn’t know who it is
agent becomes a party
disclosure of principals
what is an undisclosed principal?
3p doesn’t know that principal exists or if agent is acting as an agent
agent becomes a party to the contract and is liable to 3p on the contract
undiscolsed princinpal - no apparent authority
disclosure of principals
when is a 3p liable to an undisclosed principal on a contract made with an agent on behalf of a principal?
generally liable UNLESS
1. principal or undisclosed principals are excluded by form or terms of the contract
or
2. principal’s existence is fraudulently concealed
tort liability
what are the main categories?
- vicarious liability and respondeat superior
- intentional torts
I have notes about this in Torts
agent’s duties
what are the main duties all agents owe to principals?
- duty of loyalty
- duty to follow reasonable instructions
- duty to exercise reasonable care
even if agent is unpaid
duties and rights
what is the basic right a principal has and the corresponding duty of the agent?
principal has legal right to require an agent to act/refrain from acting on its behalf
agent has corresponding obligation/duty to act/refrain from acting on principal’s behalf
what is the duty of loyalty of agents?
agent has to act solely for the benefit of the principal (not 3p) in matters connected with the agency
what duties does a principal have to agents?
- treat agent fairly and in good faith
- provide agent info of risks of physical or financial harm or loss that that are present but unknown to the agent
- duty to pay compensation
- duty not to interfere with agent’s work
- duty to indemnify
what are the required duties of an agent to the principal?
- duty of care to perform with reasonable diligence and skill
- duty to provide info to principal regarding all matters relating to agency relationship
- duty of loyalty to principal + work only for their benefit
- duty of obedience to the principal
- duty not to usurp a business oppy from principal
how does the principal terminate the agency relationship?
- actual authority - tell the agent that authority is revoked
- apparent authority - must tell the 3p that authority is revoked
tip
- if deciding whether principal is bound by actions of agent, think about this
- if deciding whether agent is bound, think about this
Essay 5709
- principal - actual vs. apparent authority
- agent - undisclosed vs. disclosed principal
