Agency Law

Question 1

Components of an Agency Relationship

Answer 1

Assent - both parties manifest assent
Benefit - agent agrees to work for the principal’s benefit
Control- agent agrees to work subject to control of the principal

Question 2

Who can be a principal?

Answer 2

Almost any person or entity with legal capacity

Excludes minors, mentally ill, intoxicated

Question 3

Who can be an agent?

Answer 3

Any person with minimal capacity

a minor CAN be an agent

Because we want minors to be able to get a job

Question 4

Servant/Employee

Types of Agents

Answer 4

Employer has right to control the agent’s physical conduct of work

MORE CONTROL + MORE LIABILITY

Question 5

Independent Contractors

Types of Agents

Answer 5

Principal does not control or have the right to control the agent’s physical conduct of work

LESS CONTROL + LESS LIABILITY

Question 6

Characteristics of an Independent Contractor

Answer 6

• High level of independence
• Free to work for other people
• Paid on a fixed fee
• Typically owns their own tools

Question 7

Who can terminate an agency relationship?

Answer 7

Either party can terminate unilaterally

Question 8

When is a principal bound by contracts entered into by an agent on their behalf?

Answer 8

• Principal authorized the agent to enter into the contract AND
• The agent acted with legal authority

Question 9

Four Types of Authority

Answer 9

• Actual Express
• Actual Implied
• Apparent
• Ratification

Question 10

Actual Express Authority

Answer 10

Principal creates actual express authority by using writen or spoken words to convey authority to the agent.

Look to communication between agent and principal

Question 11

Intent required for Actual Express Authority

Answer 11

Subjective intent: Agent must believe that he is doing what the principal wants
AND
Objective intent: The belief must be objectively reasonable

Question 12

Termination by death of Actual Express Authority

Answer 12

Death of Principal: terminates when agent has actual knowledge of principal’s death
Death of Agent: terminates immediately

Question 13

Actual Implied Authority

Answer 13

Principal creates implied authority via written or spoken words OR other conduct to convey authority to agent to take whatever necessary steps to acheieve principal’s objectives.

Look to communication between principal and agent

Must act within accepted buisness customs or general trade usage

Question 14

Apparent Authority

Answer 14

Principal creates authority via written or spoken words that cause a third party to reasonably believe the principal consents to have acts done on his behalf by the agent

Look to communication between third party and principal

Question 15

Ratification

Answer 15

Requires that principal has:
* knowledge of the amterial terms of the contract AND
* Accepts the benefits of the contract

NO pre-act communication

Question 16

Types of Disclosure

Answer 16

Disclosed: Third party knows the agent is acting on behalf of an identified principal. (Contracts are between third party and principal).

Partially Disclosed: Third party knows the agent is acting on behalf of someone, but not identified. (Contracts are between third party, agent, and principal.

Undisclosed: Third party is unaware of the agent’s status nor the principal’s idenitity. (Contracts are between agent and third party).

Question 17

Vicarious liability/respondeat superior

And requirements

Answer 17

Principal may be laible for the tortious acts of his agent IF:
* Principal has sufficient control over the agent’s conduct such that the agency relationship is employer/employee AND
* The tort committed by the agent was committed while the agent was acting within the scope of his employment.

Question 18

Sufficient Control

Answer 18

Principal controls or has right to control the physical conduct (manner and means) of the agent’s performance of work.

Question 19

When can an independent contractor create liability for his principal?

in tort

Answer 19

• The task is inherently dangerous
• Principal was negligent in hiring
• Principal retains control over certain tasks and tort occurs within those tasks

Question 20

Scope of Employment Factors

Answer 20

• Did agent intend to benefit the principal?
• Was the agent’s conduct of the kind the agent was hired to perform?
• Did the tort occur “on the job?”

Question 21

Frolic

Answer 21

A significant deviation from an assigned path; is outside scope of employment

Question 22

Detour

Answer 22

A diminimus deviation from an assigned path; within scope of employment

Question 23

When may a principal be liable for the intentional tort of his agent?

Answer 23

• The conduct occured within the general space and time limits of employment
• The agent was motivated in some part to benefit the principal AND
• The act is of a kind that the agent was hired to perform

Question 24

Duties of an agent

Answer 24

• Duty to exercise reasonable care
• Duty to obey reasonable instructions
• Duty of loyalty