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Business Associations > Agency Law > Flashcards

Agency Law Flashcards

1
Q

What does an agency relationship trigger?

A
  1. Fiduciary Duties
  2. Authority
  3. Liability
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2
Q

3 Elements of Agency Relationship

A
  1. Principal manifests assent and agent consents
  2. Agent acts on principal’s behalf
  3. Control of agent by principal
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3
Q

How does an agent assent to the principal?

A

Express through writing OR speaking OR through conduct

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4
Q

What capacity is required for principal vs. agent?

A

Principal must have legal capacity (18+ with mental abilities)
Agent’s lack of capacity would not affect liability.

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5
Q

How do you establish control by principal of agent?

A
  1. Totality of the circumstances
  2. Control need not be constant
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6
Q

What elements on their own could establish control?

A
  1. “Yes or no” final say by the principal
  2. Right of first refusal
  3. Contractual restrictions
  4. Check and audits
  5. Acting with a word or name
  6. Power to discontinue
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7
Q

Marya v. Slakey

A

Indian woman sued landlord because tenant denied housing. Tenant WAS acting as an agent by conduct because the landlord had final say on decisions, but benefited from tenant’s advertising and interviewing.

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8
Q

o A. Gay Jenson Farms v. Cargill, Inc

A

Cargill claimed it was mere creditor, but circumstances showed Cargill was principal b/c it assumed de facto control over debtor Warren. Had many of the circumstances which would have proven control automatically.

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9
Q

Agent’s Fiduciary Duties to Principal

A

Duty of Care AND Duty of Loyalty

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10
Q

Pure Power Boot Camp v. Warrior Fitness Boot Camp

A

Employees breached duty of loyalty to Pure Power in acting to establish their own fitness boot camp modeled after employer’s. Actions proving breach: stealing proprietary documents, stealing and destroying employee files, soliciting current clients while employed, stealing client contact list, deliberately leaving employer understaffed.

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11
Q

What may an agent do when leaving a company?

A

Make plans to leave, but NOT profit at the principal’s expense.

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12
Q

Secret Profit

A

This is prohibited
1. Profiting primarily because of agent position
2. Element of dishonesty

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13
Q

Corporate Opportunity Doctrine

A

When a proposed activity is reasonably incident to a corporation’s business (present or prospective) and is one in which the corporation has the capacity to engage. Agent must disclose corporate opportunities to the principal first.

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14
Q

Advantage Marketing Group v. Keane

A

AMG properly pled that founder, Keane, breached fiduciary duty by acquiring a competitor biz, The Mail House, b/c Keane did not present purchase opportunity to AMG. Part of Keane’s job was biz devel for AMG.

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15
Q

How to consider a principal’s liability in contract

A
  1. Focus on the conduct of the principal
  2. Third party believe is only relevant to agency by estoppel
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16
Q

Principal Liability Statute of Frauds

A

If law requires record signed by P to prove A’s authority to bind P in contract, P is not bound in its absence.

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17
Q

Actual Authority

A

Agent believes he is acting as the principal’s agent based on the principal’s conduct.

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18
Q

Implied Authority

A

Consider the past conduct of the principal and the agent and the customs of their agreement.

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19
Q

Castillo v. Case Farms of Ohio

A

Case Farms was liable b/c employee Cilona (VP HR) told ATC to get workers to plant. This included implied authority like housing, transportation, etc. b/c this was customary for seasonal employees.

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20
Q

Apparent Authority

A
  1. Third party reasonably believes actor has authority to act on behalf of Principal
  2. The believe is traceable to manifestations of the principal.
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21
Q

Tanner v. WIOO

A

Tanner is trying to show that he relied on the publication that states Waite as the general manager as the manifestation of WIOO as the principal. WIOO liable through apparent authority b/c WIOO knew and allowed Waite to use GM title; Waite was listed as GM in industry publication; custom is that GMs bind radio stations; and WIOO paid Tanner in the past for these contracts.

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22
Q

Inherent Authority

A

(AKA undisclosed principal)
P liable for acts of A which are in the authority usually confided to A of that character. (Look at industry custom)

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23
Q

Watteau v. Fenwick

A

Humble sold pub to Fenwick, but Fenwick kept Humble to manage pub and Humble’s name on pub. Watteau sued Fenwick for supplies purchased on credit beyond Humble’s express authority (e.g. cigars). Fenwick arg’d not liable for purchase outside of its instructions. Watteau arg’d it couldn’t know principal’s “secret intentions.” Fenwick was liable for supplies purchased on credit. Humble’s actions were those of an ordinary agent in his position.

24
Q

Ratification

A

(1) Principal knows of all material facts re: contract
(2) Principal ratifies act by (a) manifesting assent to transaction or (b) accepting benefits (ratification by conduct)
(3) Ratification must follow very same contractual terms to be ratified
(4) Retroactive effect. No partial ratification.

25
Q

Majority Rule on Ratification

A

Ratification can only occur where someone claims to act as an agent.

26
Q

Keams v. Tempe Technical Institute, Inc

A

Students sued now-bankrupt TTI claiming bank that issued student loans ratified TTI’s behavior + is vicariously liable for their debt. Bank d/n ratify TTI’s actions. No agency relationship; clear separation of entities. Moreover, damage alleged was sham education, not unlawful loan. Bank w/o connection to education quality and d/n purport to be TTI’s agent.

27
Q

Agency by Estoppel

A

Proprietor is estopped from arguing no agency where a proprietor by dereliction of duty enables non-agent to conspicuously act as his agent and ostensibly transact biz w/ appearance and character of an agent.

28
Q

Agency by Estoppel Factors

A

(1) 3d party reasonably and in good faith relied on appearance of authority.
(2) 3d party changed their position in reliance on that appearance.
(3) Acts, facts, or omissions by principal, either intentional or negligent, created an appearance of authority in the purported agent.

29
Q

Hoddeston v. Koos Bros.

A

Mrs. Hoddeston bought furniture w/ cash, no receipt. Awaited delivery which never came. Store had no record of transaction. Store was liable for the acts of purported salesman b/c it created an environment where a fake agent could act.

30
Q

Principal’s Liability in Contract

A

Principal is bound by contract w/ 3d party if agent acts with actual authority or apparent authority, ratifies, or is estopped to deny agency, or P was negligent.

31
Q

Who is party to a contract if agent discloses that he is acting as agent to principal and disposes the principal’s name?

A

Principal and third party, not A, unless the agent and third party agree otherwise.

32
Q

Who is party to a contract if the agent makes a contract as an agent on behalf of an unidentified principal?

A

Principal, third party and agent, unless agent and third party agree otherwise

33
Q

Who is party to a contract if agent makes a contract on behalf of an undisclosed principal?

A

Agent, third party and principal. P & A have the same rights, liabilities, and defenses as if P had made contract personally.

34
Q

Principal’s Liability for Tort Test (Respondent Superior)

A

(1) employer-employee relationship exists &
(2) tortious conduct was w/in scope of A’s employment.

35
Q

Principal’s Direct Liability for Tort

A
  1. ratifies A’s act or
  2. A acts w/ actual authority in tortious conduct or
  3. P is negligent in selecting/supervising/controlling agent or
  4. P delegates performance of duty to use care and A fails to do so
36
Q

Principal’s Vicarious Liability for tort

A
  1. Agent acts w/in scope of employment or
  2. Agent commits tort while acting w/ apparent agency.
37
Q

Scope of Employer-Employee Relationship

A
  1. Employee is an agent whose P controls or has right to control.
  2. Employer-employee relationship is read broadly. Formerly master-servant.
  3. Substance always trumps form. Cts are suspicious of power imbalances.
38
Q

Franchisor Liability

A

Franchisor may be liable where (1) franchisor has control over daily operations or over specific instrumentality of harm or (2) apparent agency exists.

39
Q

Bartholomew v. Burger King Corp

A

Denied Summ. J. b/c a jury could find BK liable for injuries caused by needle in burger patty on theory of direct-agency relationship b/c control over instrumentality of harm or apparent agency. Apparent agency factors incl.: BK branding, which manifests nat’l relationship through use of name. Control factors: strict standards on prep & limited suppliers approved.

40
Q

Employee vs. Independent Contractor Test

A

Examination of employer’s right/power to control over manner of performance, not merely exercise of actual control.

41
Q

Uber Case: Narayanasamy v. Issa

A

(Settled outside of court, but denied Summary Judgment based on the following factors)
(1) Uber controlled finances; (2) Uber controlled branding; (3) Uber imposed req’s on drivers; (4) Uber handles disputes; (5) Relationship b/w rider & Uber, not rider/driver; (6) Uber provides benefits (like ins.) to drivers; (7) Employer-like activities (e.g. req drivers to upload DL).

42
Q

Purpose Test for Scope of Employment

A

If employee was motivated by a dual purpose, act is w/in scope of employment. If employer would have sent another employee to do the task, it is w/in scope of employment.

43
Q

Foreseeability test for Scope of Employment

A

Employers are liable for employees’ negligent acts that are foreseeable. Act is foreseeable if characteristic of employer’s activities. Employer d/n have to foresee this harm.

44
Q

Clover v. Snowbird Ski Resort

A

Clover sued Snowbird for injury by chef taking a ski jump while on mountain. Chef had made a few runs and checked in w/ mid-mountain restaurant at employer’s request, no set time to check-in. Court held that there were enough facts for a jury to decide whether the chef was acting within the scope of employment. You must have an extreme deviation to be outside scope.

45
Q

Ira S. Bushey & Sons v. U.S.

A

USFG was vicariously liable for drunk seaman’s sinking of drydocked ship when he turned wheels and let in water. Because harms caused by a drunk sailor returning to boat for evening are foreseeable.

46
Q

Vicarious Liability for Intentional Torts

A

(1) Intentional tort;
(2) Plaintiff’s conduct interfered w/ employee’s job performance or was motivated to so affect job performance;
(3) Tort directly in response, not mere retaliation.

47
Q

Hatch v. VP Fair Foundation

A

Landowner (Fair Found.) could be held liable for negligence of independent contractor who forgot to secure bungee cord b/c activity was inherently dangerous and negligence is w/in Fair’s contemplation. A landowner is generally not liable for negligence of independent contractor unless landowner has control OR activity is inherently dangerous.

48
Q

Duty of Care (Principal Agent Context)

A
  1. Act only w/in actual authority.
  2. Act reasonably and avoid damaging P’s biz.
  3. Provide all info P would want to know.
49
Q

Duty of Loyalty (Principal Agent Context)

A
  1. No self-dealing or personal enrichment to A when acting as A.
  2. D/n deal w/ P on behalf of adverse party.
  3. Refrain from competing w/ P during agency.
  4. Safeguard P’s property or confidential info.
50
Q

What does a principal owe to an agent?

A
  1. P can consent to As conduct which is normally a breach of duty if A acts in good faith, discloses all material facts and deals fairly w/ P.
  2. Indemnify agent.
  3. Deal fairly and in good faith, provide info about risks to agent unknown to A but known to P.
51
Q

Remedies for breaches by principals or agents

A
  1. P can w/hold compensation or seek damages in contract, tort
  2. P can also bring action for accounting or recover secret profits
  3. A can seek damages in contract, or seek lien
52
Q

Termination of Principal and Agent Relationship

A
  1. Agreement of parties (specific date or occurrence)
  2. Lapse of time (specified time or w/in reasonable time period if none specified)
  3. Any time by P or A after notice
  4. Fulfillment of the agency purpose
  5. By operation of law
53
Q

Changed circumstances that should cause A to realize P terminates

A

destruction of subject matter, drastic change in biz conditions or relevant laws

54
Q

Automatic termination of agent principal relationship

A

Agent acting contrary to authority conferred by P automatically terminates agency relationship.

55
Q

Apparent Authority Termination

A

Not necessarily when actual authority terminates. Only happens when it is no longer reasonable for the third party to assume that the agent has authority.

Business Associations (6 decks)

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