Agency MEE

Question 2

What is an agency relationship?

Answer 2

A voluntary, fiduciary relationship between two parties: a principal and an agent.

Question 3

What must a principal do in an agency relationship?

Answer 3

Authorize the agent to act on the principal’s behalf.

Question 4

What are the two main types of agency relationships?

Answer 4

• Gratuitous Agency
• Contractual Agency

Question 5

What characterizes a gratuitous agency?

Answer 5

The principal does not compensate the agent for their work.

Question 6

What is an employer-employee relationship?

Answer 6

The employer has the right to control what the employee does and how they do it.

Question 7

What distinguishes an employer-independent contractor relationship?

Answer 7

The employer controls what the contractor does but not how they do it.

Question 8

What factors determine an employer’s right to control?

Answer 8

• Whether the work is performed by specialists
• Who provides tools and workspace
• Length and exclusivity of employment
• Payment method
• Whether the work is part of the employer’s regular business

Question 9

What is ‘agency by estoppel’?

Answer 9

An equitable doctrine that protects a third party when no actual agency exists.

Question 10

What are the general requirements for creating an agency relationship?

Answer 10

• Manifestation of the principal’s intent
• Consent of the agent

Question 11

What is agency by ratification?

Answer 11

The retroactive creation of an agency relationship by granting authority for earlier unauthorized actions.

Question 12

What must a principal have at the time of ratification?

Answer 12

• Requisite contractual capacity
• Knowledge of all material facts

Question 13

What is the duty of care owed by agents to principals?

Answer 13

Agents must follow reasonable instructions, perform duties with reasonable care, and indemnify the principal against losses.

Question 14

What is the duty of loyalty owed by agents to principals?

Answer 14

• Prefer the interests of the principal
• Avoid self-dealing
• Not compete or usurp business opportunities

Question 15

What is the principal’s duty of compensation?

Answer 15

To pay the agent the reasonable value of services rendered, unless agreed otherwise.

Question 16

What is actual authority in agency law?

Answer 16

Authority created by the principal’s manifestation to the agent to act for the principal.

Question 17

What is apparent authority?

Answer 17

Authority arising from the principal’s representations to a third party, leading the third party to believe the agent acts with authority.

Question 18

What does the doctrine of respondeat superior entail?

Answer 18

An employer is vicariously liable for the torts of an employee committed within the scope of employment.

Question 19

What is the distinction between frolic and detour?

Answer 19

• Frolic: substantial deviation from authorized route (not liable)
• Detour: slight deviation (liable)

Question 20

What is the liability of agents to third parties for negligence?

Answer 20

Agents are liable for harm caused by their negligence or intentional torts, regardless of the agency relationship.

Question 21

What is the liability of principals on contracts with third parties?

Answer 21

Principals are liable when agents act with actual authority or when authority is granted retroactively through ratification.

Question 22

What is an implied warranty of authority?

Answer 22

Liability incurred by a person contracting on behalf of another without the power to do so.

Question 23

True or False: A principal is generally not vicariously liable for the torts of independent contractors.

Answer 23

True

Question 24

What is the duty to account in agency relationships?

Answer 24

An agent must account for money or property received for the principal and keep assets separate.

Question 25

Fill in the blank: A principal can ratify unauthorized acts of an agent by _______.

Answer 25

[manifesting assent or conduct suggesting consent to be bound]

Question 26

What is the duty of candor owed by agents to principals?

Answer 26

Agents must fully disclose relevant facts to the principal.

Question 27

What is the agent's liability when representing a fully disclosed principal?

Answer 27

Agents are generally not personally liable on the contract.

Question 28

What is the liability of a person who acts without authority?

Answer 28

The person is liable to the third party for breach of implied warranty of authority ## Footnote This means that if someone acts on behalf of another without permission, they may be held responsible for any resulting damages to third parties.

Question 29

Under what condition is an agent not liable to a third party?

Answer 29

The agent is not subject to liability if the principal is bound to a third party based on the agent’s apparent authority ## Footnote This applies even if the agent acted without actual authority.

Question 30

What is required for apparent authority to be applicable?

Answer 30

The injured third party must have a reasonable basis for believing that the party acted as the authorized agent ## Footnote This belief must be derived from actions or omissions of the purported principal.

Question 31

Can undisclosed principals grant apparent authority?

Answer 31

No, undisclosed principals cannot grant apparent authority ## Footnote This means that if the principal is not known to the third party, the doctrine of apparent authority cannot apply.

Question 32

To what types of disputes is the doctrine of apparent authority generally applicable?

Answer 32

The doctrine is applicable to disputes involving contractual liability but not to disputes involving tort liability ## Footnote This distinction is important as it affects the legal responsibilities of agents and principals.

Question 33

In the context of tort liability, what does the injured party rely on?

Answer 33

The injured party does not rely on the tortfeasor’s actual authority to act as a principal’s agent ## Footnote Instead, tort liability is based on the conduct of the agent rather than their authority.

Question 34

Fill in the blank: An agent's ____ authority refers to the authority that others believe the agent has.

Answer 34

apparent

Question 35

True or False: An agent can be liable to a third party for breach of implied warranty of authority if the principal has apparent authority.

Answer 35

False