Agency1

Question 1

3 Main Agency Problems:

Answer 1

1) Liability of Principal to 3P for Torts of an Agent.
2) Liability of Principal to 3P for Contracts Entered into by an Agent.
3) Duties Agents owe to Principals.

Question 2

Principal-Agent Relationship test +CA:
[If >1 yr. need writing b/c SOF.
NO CONSIDERATION is req'd 
=> GRATUITOUS A has DUTIES! 
CA: A is entitled to reas. Compensation & Reimb. for Expenses if K silent.
Agents need only MIN. capacity 
=> Minors can be Agents]

Answer 2

1) CONSENT by Both
2) Benefit
(A acts ON BEHALF of P)
3) Control (!!!) Principal has:
RIGHT TO CONTROL
/SUPERVISE the MANNER & METHOD of A’s Performance
[the Details]
CA: IC: DISCRETION to follow his own mind.

Question 3

Sub-Agent's TORT: 
Principal is VIC. liable 
(RESPONDEAT Superior) 
IFF ... +CA:
[Cf. A's K. w/ Sub-Agent:
needs authorization]

Answer 3

There’s Assent, Benefit & Control b/w Principal & the Sub-Agent tortfeasor.
*CA: Only have Benefit, but you need ABC.
[CA: Sub-Agent is liable to Agent.
+UNauthorized Sub owes no Duty to P +AGENT as ABSOL. liab. to P for Sub’s breach.]

Question 4

Borrowed Agents:

Employer #1’s agent borrows Employer #2’s agent, who commits a Tort.

Is Employer #1 liable?

Answer 4

NO vicarious liability (RESPONDEAT superior), unless you have ABC.

*You often get Assent and Benefit, but have not Control over the borrowed Agent.

Question 5

GR: No Vicarious liability for INDEPENDENT Contractors’ TORTS.
CA: P is liable for IC’s TORTS IFF …:
[=>even if Assent & BEN, NO *Control b/c can’t Supervise Manner
/DETAILS of IC’s perf.
Factors: WAGES? Whose TOOLS? Line of Biz? etc.]

Answer 5

1) committed during an ULTRA Hazardous or inherently dangerous ACTIVITY =NON-delegable.
2) Principal HOLDS OUT the Indep.C to a 3P as having AUTHORITY (=apparent) => Principal is ESTOPPED from denying an Agency relationship.
Cf. N. hiring => liable for IC’s INT. (not N.) torts.

Question 6

Tory Victus went to E-Stop-L Gas Station to have her brakes repaired. E-Stop-L Gas Station had an indep. contractor arrangement with Brake Repairer, who tortiously repaired Tory’s brakes, resulting in an accident. Is E-Stop-L Gas Station Liable?

Answer 6

GR: There’s no VIC. liability for ICs’ torts. CA: there’s an exc. w/ Estoppel type situations & inh. dangerous activities. Here, if brake repair is an ultra hazardous activity [can’t be made safe] there will be VIC. liability. Alternatively, if E-Stop-L Gas HELD OUT Brake Repairer w/ the Appearance of an Agent, it will be Estopped from denying an agency relationship => vic. liable.

Question 7

SCOPE of Principal-Agent Relationship: 3 FACTORS: [+CA]:

[P has a duty to INDEMNIFY A for any legal liability REAS. incurred by A acting for P, unless the liability was due to the A’s own fault.]

Answer 7

1) KIND of Work HIRED to do?
(similar or incident to authorized work?)
2) Did Tort occur DURING work?
Frolic v. Detour [Define! + Time & Place].
FROLIC: New and INdep. JOURNEY.
=ooSCOPE of Agency.
DETOUR: SMALL Deviation from an Assigned task =still w/IN Scope.
3) Did A (at least partially) ACT for the BENEFIT of P?
[CA: INT Torts. CCA: Ratification]

Question 8

Employer instructs Employee to drive across town to deliver files to a branch office. On the way back, Employee stops to pick up shirts at the dry cleaner for work the next day. In the parking lot of the dry cleaner, Employee hits a pedestrian.
Is Employer liable to pedestrian?

Answer 8

GR: A Principal is liable for his Agents’ Torts committed w/in the Scope of the Agency Relat. Here, Agent was on a ‘detour’ =a MINOR departure from an ASSIGNED Task b/c the tort occurred on the way back to WORK. => A was w/in the SCOPE of the employment
=> P will be vic. liable under RESPONDEAT superior.

Question 9

Principal’s Tort liability for Agent’s INTENTIONAL Torts +CAx4:

Answer 9

INT torts are generally outside the SCOPE
[battery, assault etc.].
CA1: Conduct was AUTHORIZED by P.
CA2: Employment required Force/ Friction [bouncer].
CA3: Conduct was MOTIVATED by A’s DESIRE to SERVE the Principal [Overzealous E’ee].
CA4: N. hiring => Foreseeable.

Question 10

PRINCIPAL’s LIABILITY for CONTRACTS ENTERED by AGENTS. GR:

Answer 10

A Principal is liable for CONTRACTS entered into by Agent w/ 3Ps IFF:
the Agent had AUTHORITY (expr/ impl./apparent) to act or if P subseq. RATIFIED the Transaction.

[Here, 1st, it’s necessary to det. whether A was authorized to enter into the K to…]

Question 11

4 Types of AUTHORITY:

[Here, because A had actual authority, it is unnecessary to discuss the other two types.]

Answer 11

1. Actual Express
2. Actual Implied
3. Apparent
4. Ratification
   [Actual auth. is that which an A reas. believes he has based on his dealings w/ P.
   Apparent auth. arises when P “holds out” another as having authority, causing 3P to believe that authority exists. Ratification is authority given by the P by acceptance of a transaction after the transaction has taken place.]

Question 12

*Actual Express Authority is: +CA:
=>P liab. for K's entered by A.
Note: Expr. authority is 
NARROWLY CONSTRUED 
= Limited to P's actual words.
\+If the  K reqs a writing (SOF) 
=> expr. auth., too. [Land K.]

Answer 12

expressly contained in written or ORAL AGT (even private [whispered]).
CA: 1) REVOKED 
2) Relationship TERMINATED: 
a) by EITHER P or A. 
[even before K. term expires. CA: DMG]
b) at DEATH c) INCAPACITY, 
UNLESS Durable PoA exists.

Question 13

*Hypo: Paula collects rare books. She hires Alice to find a rare book to complete her collection. Alice searches everywhere for the rare book. As Alice is about to pay for the book, Paula dies.
Is Paula’s estate bound by the contract and liable to pay for the book?

Answer 13

The Principal is liable on his Authorized contracts. Here, Alice was authorized to buy the book by ACTUAL Express authority. But Agency/Auth. terminated upon the death of Paula the principal.
=> Paula’s estate NOT liable on the now UNauthorized K.
=> Alice is personally liable.

Question 14

*Actual Implied Authority is:

Answer 14

authority which an AGENT reason. BELIEVES he has based on PRINCIPAL’s DEALINGS w/ A [incl. Prior ACQUIESCENCE]
++An Agent has Implied Authority to do ALL TASKS:
1) INCIDENT or NECESSARY to Accomplish an expr. authorized task [buy tools] OR
2) CUSTOMarily PERFORMED by persons w/ A’s TITLE or Position.

Question 15

Apparent Authority: If …:
+To TERMINATE AA +CA:

[P Negl. permits IMPOSTOR
/Allows LINGERING (written) APPARENT auth.
Cf. INHERENT Auth.: (=UNauth’d, but to protect innocent 3Ps via, e.g., RESPONDEAT SUPERIOR).]

Answer 15

1) P (in)dir. HOLDS OUT the A as having authority, thereby
2) CAUSING 3P to reas. RELY
=> P liab. for K entered by A.
*Termination: P must:
1) PERSONALLY notify 3Ps he knew had DEALINGS w/ A
2) PUBLISH Notice 4 all others.
CA: P’s DEATH term. ALL Auth. & requires NO notice to 3P.

Question 16

Charles owns an antique store. A shipment of antique clocks arrives from London. Charles tells his employee Dufus not to sell a special grandfather clock.
Charles goes to lunch. Dufus sells the clock. Is Charles bound on the sales contract?

Answer 16

An P is liable for all auth’d Ks.
Here, there’s no Actual expr. /impl. authority to sell the clock. However, Apparent auth. arises when P “holds out” another as having authority & 3P RELIES. Here, Charles CLOAKED Dufus with the Appearance of auth. as an E’ee & caused 3P to RELY on it to buy the clock. => C is liable based on AA.

Question 17

*Ratification (expr./impl.):
Authority can be granted RETROactively to RELIEVE the A from K liability, IFF the Principal …+CA:
(=retroactive VALIDATION)

Answer 17

1) has (reason to) KNOW of all MAT. FACTS RELATING to the K. &
2) expr./impl. ACCEPTS the ENTIRE TRANSACTION.
[by accepting its BENEFITS.]
CA: INCOMPLETE RAT. => INVALID
[P Alters some K Terms].

Question 18

Hypo: Priscilla gives Agnes a power of attorney only to purchase steel drums. Agnes enters a contract to purchase 11,000 wooden barrels. Priscilla tells Agnes, “Great job! I love wooden barrels, but I only need 10,000.”
Is Priscilla bound?

Answer 18

GR: P is liable for authorized Ks. Here, NO Expr./ impl. /or even Apparent authority to buy wooden barrels - only steel drums.
However, Priscilla arguably RATIFIED the K through KNOWledge & ACCEPTANCE of its BENEFITS. She could become liable on this basis. But, ratification here was NOT valid b/c Priscilla ALTERED the terms of the K making ratification INCOMPLETE.

Question 19

Principal’s vs. A’s liability for
CONTRACTS w/ 3Ps
entered by Agent:
The Principal is bound and … +CA:

Answer 19

liable to 3Ps on a K. entered by A if: A had VALID authority.
CA1: UNauth. A is liable b/c he IMPLIEDLY WARRANTS he acted w/ auth. & that P exists.
CA2: AUTH. AGENT is bound, too, if:
P is only PARTIALLY disclosed
(=ID unknown) or UNdislosed
(=P’s Existence is unkn. to 3P).

Question 20

DUTIES the AGENT owes to the Principal: In return for …:

Answer 20

REAS. COMPENSATION &
REIMBURSEMENT of EXPENSES, 
A owes P a: 1) DoC
2) Duty 2OBEY reas. INSTRUCTIONS
3) +DoL, which is BREACHED if Agent engages in: 
a) SELF-dealing 
=receives a benefit to P's detriment 
b) USURPing P's OPPORTUNITY 
c) OR making a SECRET PROFIT at P's EXPENSE.

Question 21

Priscilla authorizes Agnes to buy diamonds. Agnes spots diamonds and secretly buys them for herself for $1 million. Agnes then resells the diamonds for $2 million.
What DUTIES did Agnes Breach?
What REMEDIES does Priscilla have?

Answer 21

Agnes, the agent, has breached the DoL to P by:
1. SELF-Dealing, by benefiting herself to P’s detrim.
2. USURPING P’s opportunity to buy the diamonds
3. Making a SECRET Profit on the resale at the expense of P.
=> P may recover 1) *LOSSES CAUSED by the breach
2) *DISgorged PROFITS made by the breaching A Agnes.

Question 22

REMEDY for AGENT’s breach of DUTY owed to Principal:

P may recover …:

Answer 22

1) *LOSSES CAUSED by the Agent’s breach.
2) *DISGORGED profits made by the breaching agent.

[+K ./Tort /ACCOUNTING]