Chapter 33

Question 1

Scope of Agent’s Authority

Answer 1

Determined mostly by the agency relationship

Question 2

Equal Dignity Rule

Answer 2

If the contract being executed is or must be in writing, then the agent’s authority must be in writing, too.

Failure to comply: contract voidable at the option of the principal

Question 3

What is the best evidence of express authority?

Answer 3

Power of Attorney
Power of Attorney (POA) – gives express authority to the agent and is written and usually notarized.

Question 4

Exceptions to Equal Dignity Rule

Answer 4

1. Executive officer in a corporation when acting for the corporation in an ordinary business situation.
2. When the agent acts in the principal’s presence.
3. When agent’s act of signing is merely a formality. (Not legally required).

Question 5

Implied Authority

Answer 5

Agent has implied authority to do whatever is reasonably necessary to carry out express authority
Can be conferred by custom or position held

Question 6

Apparent Authority

Answer 6

arises from what the principal causes (by words or actions) a third party to believe.
i.e. a principal has given a third-party reason to believe the agent has authority;
In Agency by Estoppel the agent’s authority is “apparent”.

Question 7

Emergency Powers

Answer 7

Authority based an unforeseen emergency Agency by Operation of Law – limited to the emergency situation

Question 8

Ratification

Answer 8

Unauthorized acts that are given authority by the principal accepting or affirming responsibility. The principal chooses to “ratify” the actions of the agent.

If Principal does not ratify either orally or in writing, Principal is not bound to the contract and the third-party agreement is merely an unaccepted offer.

Question 9

There is an agency by agreement, but the agent acts outside the scope of the agreed upon authority. Then the principal accepts legal responsibility for the UNauthorized actions of the agent. Then principal has ________ agent’s actions or an agency by ____________ is said to be present.

Answer 9

ratified, ratification

Question 10

Disclosed Principal

Answer 10

Principal’s identity is known by the 3rd party at the time the contract is entered into with the agent.

Question 11

Partially disclosed principal

Answer 11

The principal’s identity is not known by the 3rd party, but the 3rd party knows that the agent is or may be acting for a principal at the time of the contract.

Question 12

Undisclosed principal

Answer 12

Principal’s identity is totally unknown by the 3rd party, and the 3rd party has no knowledge that the agent is acting on the principal’s behalf at the time of the contract. Sometimes super beneficial. If I’m the agent, I want to be compensated for what the principal wants, because as an agent, I am exposed to liability.

Question 13

Authorized Acts

Answer 13

Principal is obligated to perform the contract

Question 14

Agent’s liability for disclosed principal:

Answer 14

Agent has no contractual liability for principal’s nonperformance. Third party and principal. They sue the principal if it doesn’t work out.

Question 15

Agent’s liability for partially disclosed principal:

Answer 15

Agent is treated as a party to the contract. Agent is drug into it.

Question 16

Agent’s liability for undisclosed principal:

Answer 16

Agent is liable but is entitled to indemnification from principal.

Question 17

Example of Disclosed Principal

Answer 17

Andy Amos, Agent for Peter Piper
(Agent has no contractual liability for Principal’s nonperformance)

Question 18

Example of Partially Disclosed Principal

Answer 18

Andy Amos, Agent
(Agent is treated as a party to the contract and can be liable for Principal’s nonperformance)
Principal should indemnify the Agent’s expenses for having to be involved in a lawsuit

Question 19

Example of Undisclosed Principal

Answer 19

Andy Amos
(Agent is liable but is entitled to indemnification from Principal)

Question 20

Unauthorized Acts

Answer 20

Principal is not liable, but agent is. Assuming they are not ratified.

Question 21

Principal’s liability for torts

Answer 21

The principal can directly commit torts but the focus here is on the Agent committing torts that lead to Principal’s liability. VICARIOUS LIABILITY. (Employer is responsible/liable for the actions of others and did not directly cause the harm to the third party)

Question 22

Doctrine of Respondeat Superior

Answer 22

the employer is liable for any harm caused to a third party by an employee committed by the agent/employee within the “course and scope of employment”. “Let the master respond”, the principal/employer (master), employee (servant).

Question 23

2 part analysis of Respondeat Superior

Answer 23

The principal/employer is liable for any harm caused to a third party (like a customer) by:
1. An agent/employee AND
2. If the harm is committed within the course and scope of employment

Question 24

Questions to determine the scope of employment: (Respondeat Superior doctrine)

Answer 24

1. Are the employee’s actions authorized?
2. Time, place, and purpose of the act
3. Is the action commonly performed by the employee on the employer’s behalf?
4. Extent to which employer’s interests are advanced
5. Extent to which the private employee’s interests are advanced
6. Did the employer furnish the means/instruments?
7. Did the employer have a reason to know the employee would perform the act in question?
8. Did the act involve the commission of a serious crime?

Question 25

What is a serious crime?

Answer 25

Murder, rape, child molestation

Question 26

Exceptions to course and scope

Answer 26

1. Going and coming rule
2. Special errand exception
3. Detour/frolic exception

Question 27

Going and Coming Rule

Answer 27

employee traveling to and from work is not acting in course and scope of employment, unless the worker is a traveling salesperson.

Question 28

Special Errand Exception

Answer 28

if employee is on a special errand for employer at time of accident, employer is liable.

Question 29

Detour:

Answer 29

if employee merely deviates slightly from the employer’s business, employer is liable

Question 30

Frolic:

Answer 30

if the employee deviates substantially, then employee is liable.

Question 31

What if you send an employee on an errand on their way home?

Answer 31

From the moment the employee leaves the office to the moment they make it home is all course and scope. Exception is if they don’t go home immediately. Once they go on their own private interest, they are outside the course and scope.

Question 32

Mr. Fairy: driver for Netties. 2 stops he has to make everyday with time in between. He has his own van for doing the errand. Paid whether he has anything to pick up or not. Controls on how he dresses, van must have AC. Mr. Fairy has some downtime between stops and stops by a pawn shop. On the way to the 2nd stop, he gets in an accident with Studebaker. Studebaker sues the flower shop.

Is Ferry (driver for the flower shop) an employee?

Answer 32

Employee, only indication that he is not, is that he has to have his own van. (He is MORE like an employee)

Question 33

Mr. Fairy: driver for Netties. 2 stops he has to make everyday with time in between. He has his own van for doing the errand. Paid whether he has anything to pick up or not. Controls on how he dresses, van must have AC. Mr. Fairy has some downtime between stops and stops by a pawn shop. On the way to the 2nd stop, he gets in an accident with Studebaker. Studebaker sues the flower shop.

Is Ferry in the course/scope of employment when he has the accident with Mrs. Studebaker?

Answer 33

Is the personal errand a detour or a frolic? Is this a significant deviation? Would it harm the business? The court says that this is just a detour, and Studebaker wins her case, the flower shop is liable.

Question 34

Is the principal liable for his/her own wrongful acts?

Answer 34

Yes

Question 35

Is the principal liable if they authorize an agent to commit wrongful acts?

Answer 35

Yes

Question 36

Is the principal liable if the agent engages in misrepresentations that lead to liability of a third party (fraud)?

Answer 36

Yes

Question 37

Liability for Independent Contractor’s Torts

Answer 37

Person who hires an independent contractor is NOT liable if a 3rd party is injured by the acts of the independent contractor in performing the contract

Question 38

Why are principals who hire independent contractors generally not liable?

Answer 38

the employer does not have the right to control the details of the independent contractor’s performance

Question 39

What is an exception to the general rule for liability for independent contractor torts?

Answer 39

Inherently Dangerous (or Hazardous) Activities carries strict liability

(ex: blasting, transportation of highly volatile chemicals, or the use of poisonous gases)

Question 40

Liability for Agent’s Crimes

Answer 40

an agent is liable for their own criminal actions – meaning the agent pays the criminal penalties….NOT the Employer/Principal. If you do the crime, you do the time.

Question 41

Can the employer choose to take on the criminal consequences of the agent?

Answer 41

Yes.

(Ex: paying a traffic ticket for truckers as a trucking company)