Agency (j)

Question 1

Independent Contractor

Answer 1

As a rule, there is no vicarious liability for that independent contractors tort except for inherently dangerous activities or by estoppel.

Question 2

Is the principal liable for the torts of its agent?

Answer 2

Principal will be liable for torts committed by its agent if:

(1) There is a principal-agent relationship, and
(2) the tort was committed by the agent within the scope of that relationship

Question 3

What is required to form a principal-agent relationship?

Answer 3

Assent, Benefit, Control

Question 4

Assent

Answer 4

An informal agreement between the principal who has capacity and the agent

Question 5

Benefit

Answer 5

Agents conduct must be for the principal’s benefit

Question 6

Control

Answer 6

Principal must have the right to control the agent by having the power to supervise the manner of the agents performance

Question 7

Sub-Agent Tortfeasors

Answer 7

A principal will be liable for a sub-agent’s tort only if there is assent, benefit and control between the principal and the sub-agent tortfeasor

Question 8

Was the tort committed within the SCOPE of that relationship?

Answer 8

(1) Was conduct “of the kind” agent was hired to perform?
(2) Did the tort occur “on the job”? (frolic v. detour)
(3) Did the agent intend to benefit the principal?

Question 9

Intentional Torts

Answer 9

Intentional torts are generally outside the scope of the principal-agent relationship, unless:

(1) Authorized by the principal, or
(2) Natural from the nature of employment, or
(3) motivated by a desire to serve the principal

Question 10

Contracts

Answer 10

The principal is liable for contracts entered into by its agent only if the principal authorized the agent to enter that contract.
- four types of authority (express, implied, apparent and ratification)

Question 11

Actual Express Authority

Answer 11

Principal used words to express authority to agent.

Question 12

Actual Implied Authority

Answer 12

Authority which the principal gives the agent through conduct or circumstance.

• Necessity (to accomplish an expressly authorized task)
• Custom (with title of agent)
• Prior Dealings with principal where principal acquiesced

Question 13

Apparent Authority

Answer 13

(1) Principal “cloaked” agent with the appearance of authority, AND
(2) third party reasonably relies on appearance of authority

Question 14

Ratification

Answer 14

Authority can be granted after the contract has been entered, if:

(1) Principal has knowledge of all material facts regarding the contract, AND
(2) Principal accepts its benefits.
- Exception: Ratification cannot alter the terms of the contract.

Question 15

Rules of Liability on the Contract

Answer 15

The principal is liable on its authorized contracts, and therefore as a rule, an authorized agent with authority is generally NOT liable on its authorized contracts
- Exception: The Undisclosed Principal

Question 16

Undisclosed Principal Exception to Contract Liability

Answer 16

If principal is partially disclosed (only the identity of the principal concealed) or undisclosed (fact of principal concealed), authorized agent may nonetheless be liable at the election of the third party.

Question 17

Duties Agent Owes to Principal

Answer 17

In return for reasonable compensation and reimbursement of expenses, agents owe principals:

(1) Duty of Care
(2) Duty to obey instructions that are reasonable
(3) Duty of Loyalty

Question 18

Agents Duty of Loyalty

Answer 18

The agent may never do any of the following:

(1) Self-Dealing (agent cannot receive a benefit to the detriment of principal)
(2) Usurping the principal’s opportunity, or
(3) Secret profits (making a profit at principal’s expense without disclosure)