California Agency

Question 1

Identify whether an agency relationship has been created (California).

Answer 1

An agency relationship is created when a principal authorizes an agent to act on their behalf, and the agent consents. The relationship requires mutual assent and can be express or implied.

Question 2

Identify the duties of principals and agents (California).

Answer 2

Agents owe duties of care, loyalty, accounting, and candor to principals. Principals owe duties of compensation and reimbursement to agents.

Question 3

Recognize issues affecting the agency relationship and third parties (California).

Answer 3

Issues include the scope of an agent’s authority, whether the agent has actual or apparent authority, and the principal’s liability for the agent’s actions.

Question 4

Nature of Agency Relationships (California).

Answer 4

An agency relationship is a voluntary, fiduciary relationship between a principal and an agent, where the agent acts on the principal’s behalf and binds the principal within the scope of authority granted.

Question 5

Types of Agency Relationships (California).

Answer 5

Includes gratuitous agency, employer-employee relationships, and employer-independent contractor relationships. The degree of control the principal has over the agent varies between these types.

Question 6

Agency as an Equitable Doctrine (California).

Answer 6

Agency by estoppel and apparent authority protect third parties when no actual agency exists, treating parties as if an agency relationship and authority were present to prevent damage or loss.

Question 7

Requirements for Creating an Agency Relationship (California).

Answer 7

There must be mutual assent: the principal manifests intent to grant authority, and the agent consents. Both must have the requisite capacity. In some cases, like powers of attorney, additional statutory requirements apply.

Question 8

Agency by Ratification (California).

Answer 8

Ratification allows a principal to retroactively authorize an agent’s actions if the principal had capacity at the time of ratification and knowledge of all material facts.

Question 9

Duties owed by Agents to Principals (California).

Answer 9

Agents owe duties of care (following reasonable instructions and performing duties with care), loyalty (preferring principal’s interests, avoiding self-dealing), accounting (keeping principal’s assets separate), and candor (fully disclosing relevant facts).

Question 10

Duties Owed by Principals to Agents (California).

Answer 10

Principals owe duties of compensation (paying reasonable value for services unless agreed otherwise) and reimbursement (covering reasonable expenses incurred within the scope of agency).

Question 11

Power and Authority of Agents (California).

Answer 11

Agents have the power to bind principals within the scope of their actual (express or implied) authority. Apparent authority arises based on the principal’s representations to third parties.

Question 12

Principal’s Power to Ratify Unauthorized Acts of an Agent (California).

Answer 12

By ratifying a transaction, a principal retroactively grants authority to the agent, binding the principal to the contract, provided the principal had the requisite capacity and knowledge of material facts.

Question 13

Agent’s Liability to Third Parties (California).

Answer 13

Agents are liable for their own negligent or intentional torts, regardless of acting within the agency relationship. For contracts, agents are not liable if the principal is fully disclosed, but are liable if the principal is partially disclosed or undisclosed.

Question 14

Third Parties and a Principal’s Tort Liability (California).

Answer 14

Under respondeat superior, employers are vicariously liable for torts committed by employees within the scope of employment. Principals are generally not liable for torts of independent contractors unless exceptions apply.

Question 15

Scope of Employment (California).

Answer 15

An employee acts within the scope of employment when performing tasks assigned by the employer or engaging in conduct subject to the employer’s control, intended to serve the employer’s interests.

Question 16

Employee’s Intentional Torts (California).

Answer 16

Employers are generally not liable for intentional torts of employees unless the tort is committed in the course of doing the employer’s work and for the purpose of furthering the employer’s interest.

Question 17

Principal’s Liability on a Contract (California).

Answer 17

Principals are liable on contracts entered into by agents with actual authority, retroactively ratified contracts, and contracts made by undisclosed principals if the third party discovers the principal’s identity.

Question 18

Contractual Liability Arising from Apparent Authority (California).

Answer 18

A principal can be held liable for an agent’s actions if the principal’s representations led a third party to reasonably believe the agent had authority, even if no actual authority existed.

Question 19

Factors to Determine Employer’s Right to Control (California).

Answer 19

Consider whether the work is typically performed by specialists without supervision, who supplies tools and place of work, length and exclusivity of the relationship, payment method, and whether the work is part of the employer’s regular business.

Question 20

Agency by Estoppel (California).

Answer 20

Occurs when a principal’s actions or omissions lead a third party to reasonably believe an agency relationship exists, preventing the principal from denying the relationship to avoid liability.

Question 21

Employee vs. Independent Contractor (California).

Answer 21

An employee is controlled by the employer regarding both what and how work is done. An independent contractor is controlled only as to the result of the work, not the means of accomplishing it.

Question 22

Principal’s Liability for Non-Employee Agents (California).

Answer 22

Generally, principals are not liable for torts committed by non-employee agents unless the agent acts with apparent authority or the activity is inherently dangerous, nondelegable, or involves negligent selection of the contractor.

Question 23

Negligent Supervision (California).

Answer 23

Principals can be liable for harm caused by their negligence in selecting, training, retaining, supervising, or otherwise controlling an agent.

Question 24

Power of Attorney (California).

Answer 24

A power of attorney grants an agent the authority to act on behalf of the principal, requiring a signed writing. The agent is called an attorney-in-fact.

Question 25

Retroactive Effect of Ratification (California).

Answer 25

Ratification has the effect as if the act were originally authorized by the principal, provided the principal had capacity at the time of the act and ratification.

Question 26

Third Party’s Reasonable Belief in Apparent Authority (California).

Answer 26

Apparent authority requires the third party’s belief in the agent’s authority to be reasonable and traceable to the principal’s manifestations. Undisclosed principals cannot grant apparent authority.

Question 27

Undisclosed Principals and Liability (California).

Answer 27

Principals are liable for contracts made by agents on their behalf even if the principal is undisclosed, if the third party discovers the principal’s identity later.

Question 28

Frolic and Detour (California).

Answer 28

Employers are not liable for substantial deviations (frolics) from authorized routes by employees but are liable for slight deviations (detours). An employee can return to the scope of employment after a frolic.

Question 29

Inherently Dangerous Activities (California).

Answer 29

Principals may be liable for torts committed by independent contractors if the work involves inherently dangerous activities, nondelegable duties, or negligent selection of the contractor.

Question 30

Employee’s Scope of Employment (California).

Answer 30

Factors include whether the conduct is the kind of work the employee was hired to perform, occurred within authorized time and space, and was intended to serve the employer’s interests.

Question 31

Principal’s Contractual Liability (California).

Answer 31

Principals are liable for contracts entered into by agents with actual or apparent authority, including contracts entered into without disclosure of the principal if the third party later discovers the principal’s identity.

Question 32

Employer’s Liability for Intentional Torts (California).

Answer 32

Employers are liable for employees’ intentional torts if committed during employment and intended to serve the employer’s interests, even if previously instructed otherwise.

Question 33

Requisite Capacity for Agency Relationship (California).

Answer 33

The principal must have contractual capacity to control business affairs, while the agent must have the minimum mental capacity to consent to act on the principal’s behalf.