Agency Law

Question 1

What is the difference between an agent and a principal?

Answer 1

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

Question 2

When might a principal be liable for an agent’s actions?

Answer 2

In contracts and in torts

Question 3

What are the three components of an agency relationship? (Think ABC)

Answer 3

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)

Question 4

What does an employer have a right to control over an agent?

Answer 4

The agent’s physical conduct of work. Employers CANNOT control an independent contractor’s physical conduct of work.

Question 5

Who can be an agent?

Answer 5

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.

Question 6

What are characteristics of an independent contractor?

Answer 6

Maintain a high level of independence, free to work for other people, paid on a fixed fee, and typically owns his own tools

Question 7

What will an agency fact pattern consist of?

Answer 7

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

Question 8

When is a principal liable for contracts that an agent enters on behalf of the principal?

Answer 8

The principal authorizes the agent to enter into the contract and the agent acted with legal authority

Question 9

What are the four types of legal authority?

Answer 9

Actual Expressed, Actual Implied, Apparent, and Ratification

Principal / Agent = Actual Expressed
Principal / Third-Party = Actual Implied

Question 10

How does a principal create actual expressed authority?

Answer 10

The principal created actual express authority by using words, written or spoken to convey authority to the agent

Question 11

What is subjective intent?

Answer 11

The agent must believe that he is doing what the principal wants him to do

Question 12

What is objective intent?

Answer 12

The belief must be objectively reasonable

Question 13

Explain what happens to authority when the principal dies

Answer 13

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.

Question 14

What are the attributes of actual implied authority?

Answer 14

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

Question 15

What are the attributes of apparent authority?

Answer 15

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

Question 16

What are the attributes of ratification?

Answer 16

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

Question 17

What are the three types of principal’s and their disclosures?

Answer 17

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)

Question 18

Explain the principal’s liability in tort actions

Answer 18

Vicarious liability or respondeat superior;

Question 19

What are the attributes of respondeat superior?

Answer 19

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

Question 20

A principal DOES NOT have vicarious liability over an independent contractor unless…..

Answer 20

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

Question 21

What are the factors used to determine scope of employment?

Answer 21

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

Question 22

What are exceptions to the restriction on intentional tort liability involving an agent and principal?

Answer 22

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

Question 23

What are the three duties that all agents owe to principals– even if the position is unpaid

Answer 23

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)