Chapter 3: Agent's liability & Rights and Duties of the Parties

Question 1

How can an agent avoid liability on the K?

Answer 1

Disclose the existence and identity of the principal and not agree to become a party to the K.

Question 2

Partial Disclosure

Answer 2

The identity of the principal is unknown but the existence of one is disclosed. The default rule is that the agent is liable for the K. Can K otherwise.

Question 3

Undisclosed principal

Answer 3

The existence and name of the principal are not disclosed. The agent is liable on the K.

If the 3rd party discovers the existence of teh principal the election of remedies doctrine applies. The party may seek judgment against the agent or principal.

Agent acting w/out authority: 3rd party can sue agent under theory of breach of warranty of authority
Warranty of authority can be express or impled

Question 4

Agent tort liability

Answer 4

Agent is liable for personal torts, regardless of authority

Question 5

Rights and duties of the principal

Answer 5

Principals have the right to direct and control the agent

Can’t require illegal activity/violation of public policy

P have the right ot be reasonably informed and receive accounting of funds

A gratuitous agent has same duty of care as compensated agent

P owe duty of GF and fair dealing

P is required to comply w/ duties specified in K with agent

Indemnification: default rule: P has a duty to indemnify the agent against damages incurred if the action is w/in the scope of the agent’s actual authority

Question 6

Rights and Duties of the Agent

Answer 6

Rights are usually specified in the K

Agents have the right to indemnification for losses incurred when the agent acts w/in his authority except agent’s own neg or illegal acts

Agent’s duty of care requires reasonable care, diligence and judgment.

Agents duty of loyalty requires the agent to avoid or disclose conflicts and not usurp business opportunity.