Creating the Agency Relationship

Question 1

Introduction

Answer 1

• Every agency relationship must have a principal and agent
• Generally, an agent does things on behalf of the principal and the principal typically directs the agent acts.
• Common Examples
  
  • employee employer
  • extertainer talent agent
  • partner partnership
  • officer director-corp
• When is principal going to be held liable to3P for actions of agent - contracts and torts

Question 2

Creation of an Agency Relationship

Answer 2

Three Components - (“ABC”)

1. Assent - requires that the principal manifests assent to have the agent party work for them and the agent manifests assent to work for the principal

Note - when one more more parties disclaim creation of an agency relationship, courts will look to manifestations of assent which can range from formal letter, spoken words, and physical actions

2. Benefit - agent agrees to work for the principals benefit
3. Control - the agent agrees to work subject to the principal’s control

Note - there is no requirement of consideration to create an agency relationship

Question 3

Principals and Agents

Answer 3

Principal

Who - almost any person or entity that has legal capacity, but this excludes minors and those incapcitated by substances or illness

Control - includes a significant amount of control including

1. giving the employee tools to work at the workplace
2. paying employees on a structed pay period
3. directing the ways in which employees should perform tasks

What Entities Cannot be Principal - unincorporated association

Agent

Who? - any person or entity who has minimal capacity (including a minor)

Minimal Capactiy -

1) assent to the agency relationship
2) perform the tasks on behalf of the principal
3) be subject to the principal’s control

Question 4

Principals and Agents - Formalities for Creating an Agency Relationship

Answer 4

Only requires assent, benefit, and control and no consideration is required nor is any evidence in writing necessary

Question 5

Principals and Agents - Types of Agents

Answer 5

1. Servent/Employee - employer has right to control agent’s physical conduct of work
2. Independent COntractor - principal does not control or have right to control agent’s physical conduct of work; factors:

• maintain high level of independence
• free to work for other people
• paid on a fixed fee
• has his own tools

Question 6

Terminating an Agency Relationship

Answer 6

Either party can terminate the relationship unilaterally