Agency: issues and rule stmts

Question 1

When is **principal liable to perform **under a contract that agent entered into?

Answer 1

• A principal is liable to a third party for contracts entered into by an authorized agent.
• An agent is authorized to act on behalf of a principal if s/he has actual or apparent authority.
• Actual authority is the authority that agent reasonably believes he possesses based on principal’s conduct.
• Apparent authority exists when the principical holds out the agent as having authority to act that causes a third party to reasonably believe agent has such authority

Question 2

If **agent enters a contract **where principal is undisclosed (3rd party has no idea principal exists) or partially disclosed (3rd party knows of existinece but not identity), then .. .

Answer 2

the principal is still on the hook (liable) AND agent is too

Question 3

When ratification occurs, the Principal can’t argue that agent entered into contract w/o authority.

Ratification occurs when . . .

Answer 3

1. principal knew of all material facts
2. accepted the entire transaction
3. no **altering/cutting **off other party’s rights

Question 4

Under respondeat superior, an employer (principal) may be liable for torts committed by an **employee (agent**) if:

Answer 4

(1) an employee-employer exists (i.e., not an independent contractor)(factors), and
(2) employees comission of the tort occurs within the scope of employment

Question 5

We look to the employer’s [….] to decidie if someone is an employee or an independent contractor. The factors include [……]

Answer 5

generally look at employer’s right to control:
* skill required
* who supplies tools and facilities
* period of employment
* basis of compensation
* business purpose

Question 6

When does the agent’s comission of the tort occur during the scope of employment?

Answer 6

Employee has a detour which is a minor deviation from scope of employment, even if for employees own personal reasons.

and

when the employee’s conduct is of the same general nature that the work entails

Question 7

An agent owes the following fiduciary duties to the principal

Answer 7

• duty to act w/ reasonable care and skill
• duty to act loyally for principal’s sole benefit
• duty to act obdeiently