Chapter 2: Liability of the Princiapl to Third Parties

Question 1

When can the principal be held liable from a K entered into between the agent and third party?

Answer 1

Actual authority (express or implied)
Apparent authority
Principal ratified the K

Question 2

Actual authority

Answer 2

Authority agent reasonably thinks he possesses, measured by the agent’s perspective.

Conferred intentionally or negligently/want of ordinary care by principal
Agent must think he has the authority
The belief must be reasonable

Can be express or implied (facts and circumstances test)

Question 3

Can the agent delegate?

Answer 3

No implied authority to delegate unless: ministerial or mechanical acts (do not require independent judgment) or impossible for the agent to accomplish alone.

Question 4

Apparent authority

Answer 4

From the third party’s perspective, was it reasonable for the third party to rely on the agent’s authority.

Question 5

Termination of authority

Answer 5

Can be terminated by either party or result from changed circumstances.

Death of the principal: automatically terminates agency relationship, unless teh agent’s power to act is coupled with an interest in the subject matter of the power.

Death of the agent always terminstes the agency relationship.

Incapacity of the principal generally terminate the relationship unless there is a durable power of attorney.

Question 6

Estoppel

Answer 6

Principal cannot deny the agent’s authority if the principal’s actions caused 3rd party to reasonably believe the agent is acting on principal’s behalf.

Based on reasonable expectations of 3rd party as a result of the principal’s actions, that the agent is acting with authority.

Principal must act reasonably to defeat these reasonable expectations.

Principal must clarify the record and make it clear that the agent is not acting on his behalf.

Question 7

Ratification

Answer 7

Agent didn’t have actual or apparent authority and principal affirms the K or act. Must be intention, knowing, and timely.

Principal must have capacity and affirm the whole act

Question 8

Vicarious liability

Answer 8

An employer is vicariously liable for the employee’s torts w/in the scope of employment under the theory of respondeat superior.

Facts and circumstances test.

Question 9

Direct Liability

Answer 9

A principal can be directly liable to a third party for an agent’s conduct if the principal authorizes or ratifies it; the principal is negligent in selecting or monitoring the agent, or the conduct relates to a nondelegable duty.