Agency Issues in Exam

Question 1

How is an agency created?

Answer 1

An agency relationship results from (1) assent by principal to agent that agent shall (2) represent principal’s behalf in dealing with third parties and (3) subject to principapls control.

Question 2

What is formation of agency by estoppel?

Answer 2

Agency created by estoppel requires a third-parties reliance on plaintiff’s communication.

Question 3

What are the essential dueis owed by an agent?

Answer 3

The essential duties owed by an agent are; a) loyalty, b) obedience, c) care.

Further, there may be express contractual duties.

Question 4

What remedies are available to Principal where agent breaches their duties?

Answer 4

Remedies available to the principal are: a) Contract Remedies, b) Tort Remedies, c) Secret Profits, d) Withholding Compensation

Question 5

What are duties owed to the agent by the principal?

Answer 5

The principal owes the following duties to the principal: a) Compensate or Reimburse, and b) Cooperate.

Further, there may be express contractual duties.

Question 6

What remedies are available to the agent where prinicpal breaches their duty?

Answer 6

a) Contract remedies, and b) lien on money due from Principal

Question 7

What is authority?

Answer 7

Authority is used to determine if principal is bound by a contract entered into by the agent.

Question 8

What is actual express authority?

Answer 8

Actual express authority are express manifestations to agent containted within “four corners” of agency agreement.

Question 9

What is actual implied authority?

Answer 9

Actual implied authority is authority that agent “reasonably believes” that agent has as a result of principal’s manifestations.

Question 10

What are examples why agent may have reasonable belief he has actual authority? (actual implied authority)

Answer 10

a) Incidental to actual express authority, b) customary, c) prior acquiesence by principal, d) emergency measure, e) buy or sell goods, f) manage investments

Question 11

What is apparent authority?

Answer 11

Arises from 1) manifestations of agents authority where Principal holds agent out as having such authority, and 2) third parties reasonably but mistakenly relies on such authority.

Question 12

What is ratification of authority?

Answer 12

An agent who acts without authority but subsequently validates (express or implied) act by agent with third party, binding the principal

Question 13

What contractual liability does principal have when sued by third party?

Answer 13

All princpals are liable to third part on a contract entered into by agent as long as agent had valid authority to act.

Question 14

What contractual liability does agent have to third parties?

Answer 14

The agent has contractual liability depending on the identity and existence of the principal;

a) DIslosed Principal - Agent is generally not liable, unless otherwise stated
b) Unidentified Principal - Agent and or principal may be liable at third parties election. Agent may avoid liability by disclosing principals identity.
c) Undisclosed Principal - Agent and or principal may be liable at third parties election.

Question 15

When is third party contractually liable to principal?

Answer 15

A disclosed principal may enforce a contract, but not an agent.

A unidentified/undisclosed principal and agent may enforce a contract.

Question 16

When is principal liable for torts committed by agent?

Answer 16

Generally, principal is liable for agent who is an employee, and not an independent contractor.

Question 17

What theories of liabilty can principal be liable for agents torts?

Answer 17

a) Negligent hiring, b) negligent supervision, c) entrustement to employee, or d) respondeat superior

Question 18

What factors determine whether agent is employee or independent contractor?

Answer 18

a) Principal’s control over agent,
b) method of performance,
c) payment method
d) time of employment
e) whose facilities/tools are used
f) Purpose of hire (further business or non-business purpose)
g) existence of agreement (understanding of parties)

Question 19

What is relationship by estoppel for tort liability?

Answer 19

Where 1) Principal holds appearance that agent and principal have employer-employee relationship, 2) principal is estopped from the denying relationship, and will be liable under respondeat superior.

Question 20

How is the scope of employment analyzed for tort liability between agent and principal?

Answer 20

Where employer-employee relationship exists, employer is liable for empoloyee’s torts if they were committed within the “course and scope of employee’s employement”