Chapter 8 Section 2: Agency Flashcards
Define agency
A legal relationship in which the principal appoints the agent to act on his behalf
In an agency relationship, which party needs to have capacity?
The principal, not the agent.
Under what circumstance is an agency agreement required to be in writing?
If it is for land or for longer than one year
Is consideration required to form an agency relationship?
No
What is power of attorney?
Written authorization of agency. Only the principal needs to sign.
What are the duties of the agent?
Duty of loyalty - act only in principal’s interest
Duty of obedience - obey reasonable instructions
Duty of reasonable care - liable if negligent
Duty to account - keep your money separate
What are the duties of the principal?
Compensation
Reimbursement
Is an agency relationship at will?
What’s the exception
Yes
Agency coupled with interest
What circumstances can agency power arise through?
A grant of actual authority
Apparent authority
Ratification
What causes actual authority?
Express communication
Implied by action or lack of action
How do you terminate actual authority?
Act of the parties
Accomplishment of objective or expiration of stated period
Termination of actual authority (death, incapacity, discharge, failure to get license, destruction of subject matter, subsequent illegality)
What is apparent authority based on?
A third party’s reasonable belief that the agent has the power to bind the principal (based on title or position)
Are secret limiting instructions of the apparent authority effective?
Not unless the third party is given notice
What notice must you give a third party to make secret limiting instructions of apparent authority effective?
Actual notice to old customers
Constructive notice to new
Is notice required if apparent authority is terminated by law?
No
Can you ratify part of a transaction?
No - you have to do the whole thing
Under what circumstances is the principal liable for the agent’s actions?
When the agent had actual or apparent authority, or they ratified.
If an undisclosed principal, they are only liable to a third party if agent had actual authority
What if the principal is partially disclosed?
The third party can hold either the principal or the agent liable, but not both
Can the agent hold the third party liable?
No, only the principal can
Is the principal usually responsible for the torts committed by the agent?
What’s the exception?
No
Doctrine of respondeat superior - an employer can be liable for an employee’s torts committed within the scope of employment
What are the requirements for respondeat superior to come into play?
- Establish employer-employee relationship
2. Establish scope of employment
Is the employer responsible under respondeat superior if it was a temp or independent contractor?
No
Under respondeat superior, is the employer responsible for negligence? Intentional torts?
Yes
Not usually, unless it was actually within the scope of employment
