Chapter 30 - Agency

Question 1

Agent & Principal

Answer 1

• Agent negotiates on behalf of the Principal.
• Employees are agents of employers.
• Independent contractors generally are not agents.
• A Principal may RATIFY an agent’s transaction even if the transaction is outside the scope of the agent’s authority.

Question 2

Agent’s Duties to the Principal

“FIDUCIARY DUTIES”

Answer 2

1. Duty of Loyalty (don’t compete against principal)
2. Duty of Accounting (account for money if in possession of it for the principal)
3. Duty of Performance (perform reasonably withing the scope of being agent)
4. Duty of Obedience (do what you’re told)
5. Duty of Notification (if opportunities available for principal, notify)

Question 3

Principal’s Duties to the Agent

Answer 3

1. Duty of Compensation (principal pays agent for help)
2. Duty of Reimbursement ( If agent incurs cost, pay back)
3. Duty of Indemnification (If agent does what I ask but gets sued, principal “indemnifies” fees)
4. Duty of Cooperation (principal should clarify and answer agent’s questions)
5. Duty of Safe Working Conditions

Question 4

Express Authority (Agent)

Answer 4

• Verbal or written instructions from principal to agent that lays out responsibilities and authority.

Question 5

Power of Attorney (under express authority)

Answer 5

1. General - gives someone authority

2. Specific - much more narrow authority

Question 6

Implied Authority (Agent)

Answer 6

• It is reasonable to assume the authority by certain titles such as President.

Question 7

Apparent Authority (Agent)

Answer 7

• When a principal leads a 3rd party to believe that a person is acting in the capacity as the principal’s agent.
• It is reasonable to believe, principal is bound.

Question 8

Ackerman et al v. Sobol Family Partnership, LLP

Answer 8

• Group of plaintiffs (4) with a defendant and 1 lawyer who represented the 4 plaintiffs.
• They entered into negotiations with the defendant who believes the lawyer is representing all 4.
• One plaintiff says the lawyer no longer represents him.
• Lawyer settles the case but 1 plaintiff says the lawyer didn’t represent.
• Defendant says no one told him that, so it was reasonable to believe that the lawyer represented all 4.
• Lawyer had apparent authority.
• DEFENDANT WON.

Question 9

Respondeat Superior (Principal)

Answer 9

• “A master is liable for the actions of a servant”
• If agent acts in the scope of authority, the principal is generally liable.
• Principal is generally NOT liable to a 3rd party if the agent acts outside the scope of the agent’s authority.

Question 10

Akins v. Golden Triangle Planning

Answer 10

• An employee who receives funds on behalf of employer and the employee is responsible for the funds.
• Employee embezzles the funds.
• The employer didn’t know of activity.
• The employee was acting outside of the scope so the employer wasn’t liable.
• The EMPLOYEE was LIABLE.

Question 11

Liability of Principal to Agent

Answer 11

• If principal breaches contractual duties (compensation, cooperation, etc.), the principal may be sued by the agent.

Question 12

Liability of Agent to 3rd Party

Answer 12

• This exists when the agent acts outside of the scope of the agent’s authority.
• Agent is liable, principal is not liable.

Question 13

Liability of Agent to Principal

Answer 13

• Agent is liable to principal if the agent fails to perform contractual duties. In breach and may be sued by principal.