Agency Law Flashcards
1
Q
Agency
A
Consensual relationship where the agent agrees to act on behalf of the principal and it can bind him towards third parties
2
Q
Who is the principal
A
- Must have sufficient legal capacity to consent to the agency
- Infants may appoint and void appointment of Agent
unless the agent is taking care of necessities such as shelter food etc
-Corporations must act through agents - Partnerships may act through partners or outside agents
- Unincorporated associations are not legal entities so they cannot appoint agents
-Appointments made prior to insanity declaration are voidable
-Appointments after insanity are void - spouses can act as each others agents
- the principal needs to exist at the time the deed took place otherwise it cannot create agency by ratification
-the pricipal needs to have knowledge of the material facts of the transactions
3
Q
Principal’s Duty to agent
A
- Compensate for Services ( based on initial agrrement or if no agreement, reasonble compensation for services)
- Reimbursement for raisonable expenses in the course of the agency
- Indemnification for loss of liability for acts performed under principal’s direction (unless unlawful)
- Compensation for injury
4
Q
Who is the Agent
A
- Anyone that can carry out instructions
- Doesnt need to have the legal capacity to contract
5
Q
Agent types
A
- General Agent - broad authority, variety of transactions
- limited to one transaction or a series of related transactions (attorney, broker) - the pricipal is less likely to be liable for unauthorized actions than in the first case
- Sub agent - agent appointed by another agent that has the right to appoint agents. subagent has adutty of loyalty to both the agent and the principal
- Co- agent - hired by another agent to act as an ancilliary agent for the pricipal but it is only subject to the principals control
- Agent of an Agent - appointed by an agent that does not have the right to appoint agents for the principal. Is only subject to the agents control
- Gratuitos agent - agrees to perform without compensation. It doesnt have to perform but if it starts it cannot act negligently
- Agency Coupled with an interest - Irrevocable agency where the principal gives the agent a property or security interest in the thing subject to the power of agency - (ex creditor has the property of a debtor and can sell it. in this case the creditor is the agent of the debtor)
6
Q
Agent’s Duties to Principal
A
- Loyalty
- Follow Instructions
- Communicate material facts
- Account for Property or Money - dont mingle the funds with those fromt he principal- liable for possible loses if funds mingled
7
Q
Agent’s Duties to Principal - 1. Loyalty
A
- Fiduciary duty to be loyal
- Can be liable for losses
- losses right to compensation, reimburssemnt and indemnification
- Cannot act for two principals with conflicting interest unless both consent
- cannot deal for its interest to the detriment of the principal (constructive trustee which means that whatever money is obtained it belongs to the principal)
- cannot compete with the principal unless consent
- cannot disclose confidential info acqured dureing the agency relationship
8
Q
Agent’s Duties to Principal - 2. Follow Instructions
A
- follow the principal lawful instructions
- using reasonable care and skill
- cannot delegate dutties requiring discretion unless consent
- liable for loses resulting from negligence
9
Q
Agent’s Duties to Principal - 3.Communicate material facts
A
- Communicate material facts
- Notice to an agent by a third paty is considered notice to the principal if the agent has actual or apparent authority to accept notice, unless the thrid party knows that the agent is full of shot and has bad intentions
- Knowledge - agent’s knowledge is imputed to the principal
- Admissions - out of court admissions by an agents are considered as admissions of the principal and can be used as evidence against principal
10
Q
Agent’s authority to bind principal
A
- Actual principal directly given to agent
- Express or implied from the principal’s behavior
- Apparent or Ostensible - agent does not have the authority but the 3rd party reasonably believes they do because of principals actions have led the 3rd party to believe that
- > principal can sue the agent for losses unless the principal has ractfied the contract ipso fact
11
Q
Agency Creation
A
- Written or oral
- expect if statute of fraud - real estate or if it cannot be completed within a year
- no consideration is needed
- Power of attorney possible if statute of fraud activities
- no agency can be created for non delegateble duties
- agency by ratification - if a principal acepts smth that was done for them after the fact
- A partially undisclosed principal can ratify but not a fully undisclosed one
- ratification must take place before the 3rd party withdraws
- Ratification needs to be complete and not partial
- ratification cannot be withdrawn
- Agency by estopel - the actions of the principal made the 3rd party believe that they were dealing with an agent
- Necessity - the law implies agency for example in times of emergencies
12
Q
Principal’s liability
A
- Liable for torts of agent commited in the course of executing his agent duties (both actual and apparent agency) - the third party can sue both the agent and the principal but can only have on recovery
- even if the agent went against the instructions of the principal
- Principal is only responsible for torts not crimes unless if they participate or if the law explicitly says
- If material misstatement in the cotract with 3rd party then if principal if fully disclosed then principalliable, if partially then principal and agentare liable and if principal fully undisclosed then agent fully liable
- Undisclosed principal can inforce contract against 3rd party unless the subject matter is about personal service, trust or confidence
- Undisclosed principal has the same defenses as the agent
- Undisclosed principal can be held liable if it gets disclosed - unless contract was performed, the 3rd party already had recovered from agent or contract says no undisclosed principal can be liable (negotiable document or sealed instrument)
13
Q
Agent’s liability
A
- For Torts (civil wrong) both the principal and the agent can be held accountable but the 3rd party can only recover from one of them
- For contract breatches is the same thing
- Disclosed principal - Not liable unless the agent writes his name in the executed contract, he becomes part in this contract and garanties that the contract will be fully executed and signs a negotiable document or sealed instrument
- Partially disclosed principal, both principal and agent are liable but only one recovery possible unless the contract spcifies that te agent is not bound or if the pricipal is fully identified
- Unauthorized act - then agent is liable
- If no principal or the principal lacks competence and the agent operates knwoing this then the agent is liable because he represented to an unaware 3rd party that the principal exists and is competent
14
Q
Termination of agency
A
- Mutual Agreement - agent and principal
- It automatically terminates when the objective is completed - Either party can terminate at will but:
- The agent can terminate at will but he will liable for breach unless he was gratuitos
- the principal can terminate at will unless this is an agency coupled with interest
- There are casses where the principal does not have the right to revoke so he will be liable for breach - Operation of law
- death or insanity (both parties),
- Bankruptcy or insolvency of the principal
- Bankruptcy of agent if it impacts the execution of its duties
- Illegality and impossibility
15
Q
Notice for Termination
A
- No notice if termination by operation of law
- If either parties terminate the agency they need to notify all 3rd parties with who they did business (actual notice)
- 3rd parties that have not dealt with the agent need to be given constructive notice for example by publication
