Agency Relationship Flashcards
An agency relationship is created when:
i.) A principal manifests assent to an agent;
ii.) The agent acts on the principal’s behalf;
iii.) The agent’s actions are subject to the principal’s control; and
iv.) The agent manifests assent or otherwise consents.
Types of Principals
i.) Individual
ii.) Employer
iii.) Entrepreneur
iv.) Corporation
v.) Partnership
The agency relationship requires an agent to:
i.) Have minimal capacity;
ii.) Manifest assent and consent to act on the principal’s behalf; and
iii.)Manifest assent to be subject to the principal’s control.
Types of Agents
i.) Individual
ii.) Employee
iii.) Independent Contractor
iv.) Gratuitous Agent
v.) General Agents
vi.) Special Agents
vii.) A trustee as an agent
viii.) Subagents
Subagent
A person appointed by an agent to perform functions that the agent has agreed to perform on behalf of the principal.
Duties of subagent
Duty of Loyalty to the principal and appointing agent.
An agent has the power to bind the principal to a contract when:
i.) The agent has actual authority (express or implied);
ii.) The agent has apparent authority; or
iii.) The principal is estopped from denying the agent’s authority.
Actual Authority (Express)
Can be created via:
i.) Oral or written words;
ii.) Clear, direct, and definite language; or
iii.) Specific detailed terms and instructions.
Does express authority granted in error create express authority?
Yes
Actual Authority (Implied)
Allows an agent to take whatever actions are properly necessary to achieve the principal’s objectives.
Principal causes an agent to reasonably believe that the agent has authority to act.
Apparent Authority
Derives from the reasonable reliance of a third party.
Reasonable Belief Factors for a Third-Party
i) Past dealings between the principal and the agent of which the third party is aware;
ii) Trade customs regarding how a similar transaction is normally accomplished;
iii) Relevant industry standards;
iv) The principal’s written statements of authority;
v) Transactions that do not benefit the principal; or
vi) Extraordinary or novel transactions for the principal or similar types of principals.
Respondeat Superior
a principal may be vicariously liable for a tort committed by an agent acting within the scope of employment.
Principal’s Direct Liability to Third-Parties
A principal is directly liable to a third person harmed by an agent’s conduct if:
I) the principal authorizes or ratifies the agent’s conduct
ii) The principal is negligent in selecting, training, supervising, or otherwise controlling the agent; or
iii) The principal delegates to an agent performance of a non-delegable duty to use care to protect other persons or their property, and the agent breaches the duty.
Agents Liability in Contractual Dealing
Not a party to the contract or liable for disclosed principal.
Party and potentially liable for undisclosed principal.
Rights of Principals
Control of the Agent.
An agent’s duty of care.
An agent’s duties of loyalty and obedience.
Notification of issues.
Accounting of funds received or paid on the principal’s behalf.
Duties of Principal to Agent
Deal fairly and in good faith
Contractual Duties
Duty to pay compensation
Duty not to interfere with the agent’s work
Duty to indemnify
Rights of an Agent
Right to compensation
Right to have the principal not interfere with their work
Right to indemnification and reimbursement
Right to work in a safe environment
Remedies
Duties of an Agent
Duty of loyalty - work only for P’s benefit;
Duty of Care - perform with reasonable diligence and skill;
Duty of Obedience
Duty to Provide Information - regarding all matters relating to agency relationship.
