Creation of the Agency Relationship Flashcards
How is an agency relationship formed?
An agency relationship is formed by the principal granting authority to the agent to act for him.
A principal must manifest an intent to grant authority to another to act on his behalf and subject to his control.
The agent must consent to the principal’s authority and control.
These manifestations can be express or implied, oral, written, or by conduct.
What is a power of attorney?
It is a written authorization enabling a person to act on behalf of another.
A power of attorney can take effect immediately or at a named future event (springing).
It is said to be durable if the authority of the agent to make decisions for the principal continues to be effective even if the principal becomes incapacitated. To effect a durable power of attorney, the writing must contain specific language showing that the principal intended for the authority conferred to the agent to be exercisable, notwithstanding the principal’s subsequent disability, incapacity, or extended absence. It must be a writing and signed by principal and two witnesses.
A general power of attorney grants an agent the authority to conduct all acts that a principal could ordinarily do.
A special power of attorney grants an agent the authority to conduct only certain acts on behalf of the principal that are specified in the grant of authority.
A power of attorney permits the agent to make health care decisions, except no life-sustaining treatment decisions unless the power complies with the requirements of the Oklahoma Rights of the Terminally Ill or Persistently Unconscious Act or the Oklahoma Do-Not-Resuscitate Act.
What capacity requirements are there?
Principal
Any person who has capacity to effect his own transactions has capacity to appoint an agent to act on his behalf. An incompetent may not act as a principal. A minor can act as a principal only for the contracting of necessaries. A corporation can only be a principal as to matters within its corporate powers.
Agent
Generally, anyone with minimum mental capacity may act as an agent. Accordingly, minors and incompetents may act as agents.
A parent is vicariously liable for injuries caused to a person or property by any child under the age of 18 years living with the parent, up to $2,500. In the absence of an applicable statute, a parent’s vicarious liability for the acts of minor child rest on the same basic facts as the liability of an employer for the acts of his employee.
The agent will be endowed with the same capacity as the principal.
One may not be an agent for two adverse parties to a transaction unless both parties are fully advised and give their consent. The burden is upon the agent to show full disclosure and consent.
How can an agency be proven?
It can be established by circumstantial evidence.
Relevant factors include:
- the situation of each party; and
- their words and actions.
It is a question of fact for the jury, and the burden of proof rests with the party asserting the relationship. It is to be determined from all the evidence, direct or circumstantial, and must be proved by a fair preponderance of the evidence. It will not be implied solely from the showing of a family relationship.
An alleged agent may be called as a witness to testify to facts from which an agency relationship may be found, he may not testify to his conclusions on the matter.
Statements of the alleged agent made out of court are inadmissible to prove agency. Such statements are not competent as admissions by the principal, binding upon him, in the absence of independent evidence of the authority of the alleged agent to make them.
What is the effect of motor vehicle operation on agency?
At common law, the owner of a motor vehicle is not presumed liable for the negligent use of the vehicles of another.
Oklahoma does not have a presumption that the driver of a motor vehicle is operating as the agent of the owner. To recover against the non-driver owners of a vehicle, the P must prove:
- occurrence of the injury;
- ownership of the vehicle;
- that the driver was the agent of the owner; and
- that the agent was acting within the scope of his authority concerning the principal’s business at the time of the injury.
What is the family purpose doctrine?
It is the doctrine that imposes vicarious liability upon the owner of a motor vehicle for the negligent or willful misconduct of an immediate family member arising out of such family member’s permissive use of a motor vehicle.
Oklahoma does not recognize the family purpose doctrine. Familial relationship is not enough to impose vicarious liability. However, a parent permitting a known incompetent driver to operate his vehicle may be liable for negligent entrustment.
What are the types of principals?
Disclosed - A principal is disclosed if, at the time of the transaction, the third party has notice that the agent is acting for a principal and has notice of the principal’s identity.
Undisclosed - If the third party has no knowledge of the existence or identity of a principal, the principal is undisclosed.
Partially Disclosed - A partially disclosed principal is one whose existence, but no identity, is known to the third party.
An agent who enters into a contract for an undisclosed or partially disclosed principal is personally liable on the contract. An agent for a fully disclosed principal does not ordinarily incur personal liability.
What are the types of agents?
The authority conferrd by a principal on his agent may be general in nature, or limited in scope. In either case, the agent possesses the authority to conduct transactions which are incidental to the main business at hand.
General Agent
A general agent is employed by a principal to transact all of his business of a particular kind. The authority of a general agent to perform all things usual in the line of business in which he is employed cannot be limited by any private order or direction not known to the party dealing with him.
Special Agent
A special agent is employed by the principal, specifically, for one transaction. A special agent has no authority to bind his principal beyond the terms of the specific authority conferred upon him by the agreement for employment.
Real estate agent is a special agent who may be either an agent or a broker licensed by the state to conduct sales of real property. A listing broker merely has authority to promote property while a selling agent possesses apparent authority to bind a seller. Oklahoma permits real estate agents to act as dual agents, after proper disclosure and written consent; however, the Supreme Court has stated that dual agents do not and cannot by law afford the same degree of loyalty to a buyer as an agent who represents solely the buyer.
A salesperson is an agent to sell chattels and warrant goods under the UCC, although he usually may not modify terms of a sale.
An auctioneer is a special sales agent with authority to sell goods within the auction’s terms, usually to the highest bidder. The auctioneer is the agent of the seller, and as a result, warrants title to the goods.
What are subagents?
They are persons entitled to do work for the original agent in the relationship and as a consequence a new agency relationship is created with the original agent becoming the principal of the subagent.
Where the principal has authorized the agent to appoint subagents, the subagent has the same responsibilities to the principal as the original agent does.
Any breach of duty by the subagent will be imputed to the agent.
If the subagent has been appointed without the principal’s authority, no agency relationship exists between the principal and the subagent.
What are gratuitous agents?
A gratuitous agent agrees to perform all the duties of an agent without compensation.
What is an employer and employee?
An employer is a principal who employs an agent to perform service in his affairs and who controls or has the right to control the physical conduct of the other in the performance of the service.
An employee is an agent employed by an employer to perform service in his affairs whose physical conduct in the performance of the service is controlled or is subject to the right of control by the employer.
What is an independent contractor?
It is a person who contracts with another to do something for him but who is not controlled by the other or subject to the other’s right to control with respect to his physical conduct in the performance of the undertaking.
The test to determine whether a person is an employee or independent contractor is whether the person for whom the services are rendered has the right to control the physical details of the work.
The following factors are also used:
- whether the agent is engaged in a distinct occupation or business;
- whether the type of work the agent is doing is customarily done under the supervision of the principal;
- the skill required in the agent’s occupation;
- who supplies the tools required for the agent’s work;
- who determines the place of performance;
- the length of time the agent is engaged by the principal;
- whether the agent is paid by the job or by the hour;
- whether the principal and agent intend to create an employment relationship; and
- whether the principal routinely conducts a certain type of business.
Is knowledge imputed to the principal?
The knowledge of an agent is imputed to his principal.
For knowledge to be imputed, the agent must have a duty to speak to his principal about the specific item of knowledge.
Exceptions:
Knowledge is not imputed to the principal where:
1. the agent has a duty not to disclose the information;
2. the person claiming benefit of the notice colluded with the agent to defraud the principal; or
3. the agent’s conduct raises a clear presumption that he would not communicate the information to his principal such as:
a. where the agent was acting on his own business;
b. where the agent was acting in his own personal interest adverse to the principal, and the principal was unaware of the adverse interest;
c. where the agent was committing fraud against the principal; or
d. where some other person existed for the agent to conceal facts from his principal.
