Agency MEE Flashcards
Agency Relationship
Fiduciary relationship that arises when the principal appoints agent to act on the principal’s behalf and agent consents
Agency Elements
(1) Appointment
(2) Consent
(3) On behalf of
(4) Control
Capacity Requirements
Principal - contractual capacity
Agent - minimal capacity
Disqualifications
(A) for representing both parties
(B) for failing to have a required license
Equal Dignities Rule
Requires an agency relationship be in writing when the agent is to enter into certain contracts within the Staute of Frauds
Modes of Creation Agency Relationship
(1) By Acts of Parties
(2) By Operation of Law
Operation of Law for Creation of Agency
(1) Estoppel
(2) Statute
Agency by Statute
Statutes creating agencies are usually designed to accomplish a limited purpose
Agency by Estoppel
Virtually the same as apparent authority in that it requires third party reliance on principal’s communication
Agents Duties to Principal
(1) Duty of Care
(2) Duty of Loyalty
(3) Duty of Obedience
Subagent
Person appointed by an agent to perform functions that the agent has consented to perform on behalf of the agent’s principal
Duties if Subagent If Authorized
If the principal authorized the agent to appoint the subagent, the subagent owes the principal the same duties as the agent owes the principal
Duties if Subagent Was Not Authorized
If the agent was not authorized to appoint a subagent, the subagent does not owe duties to the principal but does owe duties to the agent
Principals Duties to Agent
(1) All duties imposed by their contract
(2) Reasonable Compensation
(3) Reimbursement for expenses
When May a Principal be Bound
An agent has the power to bind the principal to a contract only if the agent acted with authority
Three Types of Authority
(1) Actual
(2) Apparent
(3) Ratified
Actual Authority
Authority that the agent reasonably believes they possess based on the principals dealings with them
Express Actual Authority
Authority conveyed by the principal in words (oral or written)
Implied Actual Authority
Authority the agent reasonably believes they have as a result of the principals words or actions
Implied Actual Authority Includes
(1) Incidental to express authority
(2) Arising out of custom known to the agent
(3) Resulting from prior acquiescence by principal
(4) To take emergency measurements
(5) To delegate authority in cases of ministerial acts, where circumstances require, where performance is impossible without delegation, or where delegation is customary
(6) To pay for and accept delivery of goods
(7) To give general warranties
(8) To manage investments
Termination or Revocation of Actual Authority
(1) happening of an event
(2) lapse of reasonable time
(3) change in circumstances
(4) agents breach of fiduciary duty
(5) either parties unilateral termination
(6) operation of law
Irrevocable Agencies
Neither an agency couple with an interest nor a power given as security may be unilaterally terminated by the principal if the agency was given to protect the agent’s rights and is supported by consideration
Apparent Authority
exists when the principal “holds out” another as possessing authority and based on this holding out, a third party is reasonably led to believe that authority exists
Apparent Authority Types
(1) When Agent Exceeds Actual Authority
(2) When Agent Has No Actual Authority
Apparent Authority - Agent Exceeds Prior Act
where principal previously permitted the agent to exceed their express or implied authority and knows that the 3rd party is aware of this
Apparent Authority - Power of Position
when the agent is in a position that customarily carries with it certain responsibilities, the principal is liable for the agents acts that come within these customary responsibilities
Apparent Authority - Imposters
where the principal negligently permits an imposter to be in a position to appear to have agency authority, the principal will be held liable for the imposters actions undertaken with such authority
Apparent Authority - Lingering
apparent authority can linger after actual authority ends
Inherent Authority
derived solely from the agency relationship and results in the principal being bound even though the agent had no actual or apparent authority to perform a particular act
Types of Inherent Authority
(1) Respondeat Superior
(2) Conduct Similar to Authorized
Ratification
created when an agent purports to act on behalf of a principal without any authority at all, but the principals subsequently validates the act and becomes bound
Methods of Ratification
(1) Express
(2) Implied
Ratification Requirements
(a) Knowledge of all material facts regarding the contract
(b) accept the entire transaction AND
(c) have capacity
What May be Ratified
generally a principal may ratify anything unless:
(1) performance was illegal
(2) the third party has withdrawn
(3) there has been a material change in circumstances
Who May Ratify
Only disclosed (existence and identity of principal) or unidentified (principals ID withheld) principal’s may ratify
Third Party v Agent - Principal Disclosed
if agent had authority, agent cannot be held liable on the contract
Third Party v. Agent - Unidentified/Undisclosed
if the principal is unidentified (ID of principal) or undisclosed (agent does say they are contracting for principal) either the principal OR the agent can be held liable in contract
Third Party v. Agent - Later Sue
if the third party obtains a judgment against the agent without knowledge of the principals identity, they can later sue the principal when their identity is discovered if the judgment has not been satisfied
Principal v. Third Party
when the principal is disclosed, only the principal, may enforce the contract and hold the third party liable
Unidentified and Undisclosed Principal v. Third Party
if principal is unidentified or undisclosed, either the principal or the agent may enforce the contract and hold the third party liable
Vicarious Liability for Agent’s Torts
a principal may be vicariously liable for the torts of their agent under:
(1) respondeat superior
(2) apparent authority
Principal Direct Liability
(1) a principal may be directly liable for their own negligence in hiring, retaining, or supervising the agent
(2) if they gave the agent actual authority commit the tort or ratified the tort, or in other circumstances involving independent contractors
Respondeat Superior
an employer is liable for the torts of an employee committed within the scope of the employment
Independent Contractor v. Employee
a principal does not reserve the right to control the manner in which work is performed by an independent contractor
Right to Control Factors
(1) degree of skill required
(2) tools and facility
(3) period of employment
(4) basis of compensation
(5) business purpose
(6) distinct business
(7) characterization and understanding
(8) customs of the locality
Scope of Employment
employer is liable for the employees torts only if they were committed within the scope of the employees employment
Three Factors for Employment Scope Determination
(1) was the conduct of the kind the agent was hired to perform
(2) did the tort occur on the job
(3) was the conduct actuated at least in part to benefit the principal
Frolic v Detour
a detour or small deviation from the employers direction is within the scope of employment while a frolic or major deviation is beyond
Intentional Torts
general rule is that an employer is not liable for the intentional torts of an employee
Intentional Tort Exception
intentional torts will be viewed within the scope of employment if the conduct is:
(1) a natural incident of the employee’s duties
(2) where the employee is promoting the employers business or is motivated to serve the employer; or
(3) specifically authorized or ratified by the employer
Employer-Employee by Estoppel
where a principal creates the appearance of an employer-employee relationship upon which a third party relies, that principal will be estopped from denying the relationship and will be liable under the doctrine
Liability for Acts of Independent Contractors
a principal will incur liability for the acts of an independent contractor where:
(1) inherently dangerous activities
(2) nondelegable duties have been delegated or
(3) the principal knowingly selected an incompetent independent contractor
Vicarious Liability - Apparent Authority
a principal is vicariously liable where an agent appears to deal or communicate on behalf of the principal and the agent’s apparent authority enables the agent to (1) commit a tort or (2) conceal its commission
