Agency Law Flashcards
What is the difference between an agent and a principal?
An agent does things on behalf of the principal and the principal typically directs an agent’s acts. The principal is liable for the agent’s actions if a valid relationship exists
When might a principal be liable for an agent’s actions?
In contracts and in torts
What are the three components of an agency relationship? (Think ABC)
Assent (requires both parties to manifest assent to work with one another.
Benefit (the agent agrees to work for the principal’s benefit)
Control (Not every association can be principal’s because they lack legal capacity)
What does an employer have a right to control over an agent?
The agent’s physical conduct of work. Employers CANNOT control an independent contractor’s physical conduct of work.
Who can be an agent?
Any person or entity who has minimal capacity, including a minor. Minimal capacity require an agent to assent to the agency relationship, perform the tasks on behalf of the principal and be subject to the principal’s control.
What are characteristics of an independent contractor?
Maintain a high level of independence, free to work for other people, paid on a fixed fee, and typically owns his own tools
What will an agency fact pattern consist of?
Activity that arguably constitutes the formation of an agency relationship between the principal and the agent; The agent will do the work, either by entering into a contract on behalf of the principal or by doing a task in which he agent commits a tort, and the principal is going to be sued by the third-party– a contractual party in tort
When is a principal liable for contracts that an agent enters on behalf of the principal?
The principal authorizes the agent to enter into the contract and the agent acted with legal authority
What are the four types of legal authority?
Actual Expressed, Actual Implied, Apparent, and Ratification
Principal / Agent = Actual Expressed
Principal / Third-Party = Actual Implied
How does a principal create actual expressed authority?
The principal created actual express authority by using words, written or spoken to convey authority to the agent
What is subjective intent?
The agent must believe that he is doing what the principal wants him to do
What is objective intent?
The belief must be objectively reasonable
Explain what happens to authority when the principal dies
Actual express authority terminates when the agent has actual knowledge of the principal’s death and actual express authority terminates immediately upon the death of the agent.
What are the attributes of actual implied authority?
Look to the communication between the principal and the agent. A principal creates actual implied authority by using words, written or spoken, or other conduct to convey authority to the agent to take whatever steps are necessary to achieve the principal’s objectives. The agent has actual implied authority to act within the accepted business customs or general trade customs
What are the attributes of apparent authority?
Look to the communication between the principal and the third-party. The principal creates apparent authority by words, written or spoken, that cause the third-party to REASONABLY believe that the principal consents to have acts done on the principal’s behalf, by the agent
What are the attributes of ratification?
No pre-act communication to consider; requires that the principal has knowledge of the material terms of the contract and the principal then accepts the contract’s benefits
What are the three types of principal’s and their disclosures?
Disclosed – third-party knows that the agent is working on behalf of the principal and the principal’s interest
Partially Disclosed – Third-party knows that the agent is working on behalf of a principal, but not the identity of the principal
Undisclosed – Third-party knows neither agent’s status as an agent nor the principal’s identity (look for a third-party contracting with an agent but, make sure the agent has the authority to contract for the principal)
Explain the principal’s liability in tort actions
Vicarious liability or respondeat superior;
What are the attributes of respondeat superior?
The principal has sufficient authority/control over the agent’s conduct such that the agency relationship is employer-employee and the tort committed b the agent was committed while the agent was acting within the scope of his employment
A principal DOES NOT have vicarious liability over an independent contractor unless…..
The activity is inherently dangerous, the principal was negligent in hiring the independent contractor or the principal retains control over certain tasks and the tort occurs within those tasks
What are the factors used to determine scope of employment?
Did the agent intend to benefit the principal? Was the agent’s conduct of the kind that the agent was hired to perform?
Did the tort occur “on the job”?
Look for a frolic or a detour
What are exceptions to the restriction on intentional tort liability involving an agent and principal?
Principal may be vicariously liable when the conduct occurred 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
What are the three duties that all agents owe to principals– even if the position is unpaid
Duty to exercise reasonable care, Duty to obey reasonable instructions, and Duty of loyalty (can’t usurp a business opportunity and can’t take secret profits, and no competing business)
