ch. 10 : LEB Flashcards
A legal relationship in which the parties agree, in some form, that one party will act as an agent for another party, called the principal, subject to the control of the principal.
agency
Understanding agency law requires one to be aware of:
- Legal requirements for creating an agency,
- Liability of a principal for the agent’s conduct, and
- Duties and obligations of the parties.
Agents are classified into one of three broad categories:
- Employee agents,
- Independent contractor agents, and
- Gratuitous agents.
Agents who act on behalf of a principal without receiving any compensation.
Gratuitous agent.
Individual employees who are authorized to transact business on behalf of the
Employee agents.
are not considered employees and
have no legal protections of employees such as minimum-wage and
overtime-compensation laws
Independent contractor agents
Although the parties themselves may agree to a certain classification, the status of an agent is not based on what the parties agreed to but is instead determined by the ________ working relationship between principal and agent.
actual
Courts apply the _________ form analysis to determine the classification of an agent.
substance-over
I R S’s Three-Prong Test:
- Behavioral aspects of the agency.
- The financial arrangements between principal and agent.
- The type of working relationship between the parties.
Creation of the Agency Relationship
Manifestations and Consent.
Control. Formalities
One of the most important aspects of agency law involves understanding the ways in which actions of an agent result in ____________________.
liability for the principal
When a third party claims that the
principal is liable for an agent’s act, he is asserting that the principal is responsible for ___________________________.
any legal consequences of that act.
Creation of an ________________
typically involves the agent’s power
to bind the principal to third parties
(and third parties to the principal) in
an agreement of some type.
agency relationship
The primary sources of an agent’s
power are:
(1) actual authority, (2)
apparent authority, and (3)
ratification
Arises either when the parties expressly agree to create an agency relationship or when the
authority is implied based on custom or the course of past dealings.
Actual authority.
Appearance of legitimate authority to a third party.
Apparent authority.
Occurs when the principal affirms a previously unauthorized act.
Ratification
An agent’s liability to third
parties in a contract hinges on:
whether the agency relationship is (1) fully disclosed, (2) partially disclosed, or (3) undisclosed
When the third party entering into the contract is aware of the identity of the principal and knows that the agent is acting on behalf of the principal in the transaction.
Fully Disclosed Agency.
If the third party knows that the agent is representing a principal but does not know the actual identity of the principal.
Partially Disclosed Agency.
_______________ may be held liable for
an agent’s tort, most commonly
the tort of negligence, even though
the principal has not engaged in
any wrongful conduct.
A principal
When a third party is completely unaware that an agency relationship exists and believes that the agent is acting on her own behalf in entering a contract.
Undisclosed Agency.
___________ for principals of agents
who are classified as employees is
derived from the doctrine of
respondent superior.
Liability
Limitations to the Doctrine
of Respond eat Superior
- Scope of Employment
- Frolics and Detours
- Traveling to and from Work
- Intentional Torts
