Exam 4 Flashcards
Chapters 17-20 Agency law, employment and labor law, employment discrimination, starting a business: LLCs and other options
principal
a person who has someone else acting for him
agent
a person who acts for someone else
agent relationship
- principal and
- agent,
- mutually consent that agent will act on behalf of the principal and
- be subject to the principal’s control
- thereby creating a fiduciary relationship
consent
the principal must ask the agent to do something, and the agent must agree
control
principals are liable for an agent’s acts because they exercise control over that person
fiduciary relationship
the trustee must act in the best interests of the beneficiary
- one of trust
- agents has a fiduciary duty to their principals
agency relationships
- consent
- control
- fiduciary duty
elements NOT required for an agency relationship
- written agreement
- formal agreement
- compensation
equal dignities rule
if an agent is empowered to enter into a contract that must be in writing, then the appointment of the agent must also be written
duties of agents to principals
- duty of loyalty
- duty of obey instructions
- duty of care
- duty to provide information
agent to principal: duty of loyalty
an agent has a fiduciary duty to act loyally for the principal’s benefit in all matters connected with the agency relationship
- outside benefits
- confidential information
- competition with the principal
- conflict of interest between two principals
- secretly dealing with the principal
- appropriate behavior
outside benefits
an agent may not receive profits unless the principal knowns and approves
confidential information
agents can neither disclose nor use for their own benefit any confidential information they acquire during their agency
competition with the principal
agents are not allowed to compete with their principal in any matter within scope of the agency business
conflict off interest between two principals
unless otherwise agreed, an agent may not act for two principals whose interests conflict
secretly dealing with the principal
if a principal hires an agent to arrange to transaction, the agent may not become a party to the transaction without the principal’s permission
appropriate behavior
an agent may not engage inappropriate behavior that reflects badly on the principal
- even off duty, in uniform
other duties of an agent
- duty to obey instruction
- duty of care
- duty to provide information
agent to principal: agent’s duty to obey instructions
an agent must obey her principal’s instructions unless the principal directs her to behave illegally or unethically
agent to principal: agent’s duty of care
an agent has a duty to act with reasonable care
- an agent with special skills is held to a higher standards because she is expected ti use those skills
gratuitous agent
someone not paid for performing duties
- agents are liable of they commit gross negligence, not not ordinary negligence
agent to principal: agent’s duty to provide information
an agent has a duty provide the principal with all information in her possession that she has reason to believe the principal wants to know. She also has a duty to provide accurate information
principal’s remedies when the agent breaches a duty
- damages
- profits
- rescission
principal’s remedies: damages
the principal can recover from the agent any damages the breach has caused
principal’s remedies: profits
if an agent breaches the duty of loyalty, he must turn over to the principal any profits he has earned as a result of his wrongdoing
principal’s remedies: recession
if the agent has violated her duty of loyalty, the principal may rescind the transaction
duties of principals to agents
- duty of indemnify
- duty to cooperate
principal to agent: duty to indemnify (1)
a principal must indemnify an agent for any expenses or damages reasonably incurred in carrying out his agency responsibilities
principal to agent: duty to indemnify (2)
a principal must indemnify an agent for tort claims brought by a third party is the principal authorized the agent’s behavior and the agent did not realize he was committing a tort
principal to agent: duty to indemnify (3)
the principal must indemnify the agent for any liability to this parties that the agent incurs as a result of entering into a contract on the principals behalf, including attorney’s fees and reasonable settlements
principal to agent: duty to cooperate (1)
the principal must furnish the agent with the opportunity to work
principal to agent: duty to cooperate (2)
the principal cannot unreasonably interfere with the agent’s ability to accomplish his task
principal to agent: duty to cooperate (3)
the principal must perform her part of the contract
terminating an agency relationship
- termination by agent and/or principal
- principal or agent can no linger perform required duties
- change in circumstances
- effect of termination
terminating an agency relationship: termination by agent and/or principal
- term agreement
- time
- achieving a purpose
- mutual agreement
- agency at will
- wrongful termination
termination by agent and/or principal: term agreement
if the principal and agent in advance how long their relationship will last, they have a term agreement
- time
- achieving a purpose
- mutual agreement
termination by agent and/or principal: agency at will
if they make no agreement in advance about the term of the agreement, either principal or agent can terminate at any time
termination by agent and/or principal: wrongful termination
a principal and agent have a personal relationship, if an agency relationship is not working out, the courts will not force the agent and principal to stay together
termination by agent and/or principal: either party always has the power to terminate they may not, however, have the right
if one party’s departure from the agency relationship violates the agreement and causes harm to the other party, the wrongful party must pay damages
terminating an agency relationship: principal or agent can no linger perform required duties (1)
either the agent or principal fails to obtain (or keep) a required license
terminating an agency relationship: principal or agent can no linger perform required duties (2)
the bankruptcy of the agent or the principal affects their ability to perform required duties
terminating an agency relationship: principal or agent can no linger perform required duties (3)
either the principal or the agent dies or becomes incapacitated
terminating an agency relationship: principal or agent can no linger perform required duties (4)
the agent violates her duty of loyalty
terminating an agency relationship: changes in circumstances
- war
- change of law
-loss of destruction of subject matter
terminating an agency relationship: effect of termination
once an agency relationship ends, the agent no longer has the authority to act for the principal. if she continues to act, she if liable to the principal for any damages he incurs as a result
effect of termination
some of the duties of both the principal and agent continues even after the relationship ends:
- principal’s duty to indemnify the agent
- confidential information
liability to third parties
- principal’s liability for contracts
- agent’s liability for contracts
- principal’s liability for negligent physical torts
- principal’s liability for intentional physical torts
principal’s liability for nonphysical torts - agents liability for tots
liability to third parties: principal’s liability for contracts
- authority (express/implied/apparent)
- ratification
- subagent
principal’s liability for contracts : authority
a principal is bound by the act of an agent of the agent had authority
principal’s liability for contracts : authority - expressed
the principal grants express authority by words or conduct that, reasonably interpreted, cause the agent believe the principal desired her to act on the principal’s account
principal’s liability for contracts : authority - implied
unless otherwise agreed, authority to conduct a transaction includes authority to do acts that are reasonably necessary to accomplish it
principal’s liability for contracts: authority - apparent
a principal can be liable for the acts of an agent who is not, in fact, acting with authority if the principal’s conduct causes a third party reasonably to believe that the agent is authorized
- remember that the issue in apparent authority is always what the principal has done to make the third party believe that the agent has authority
principal’s liability for contracts: ratification
if a person accepts the benefits of an unauthorized transaction or fails to repudiate it, then he inbound by the act as if he has originally authorized it. He has ratified the act
principal’s liability for contracts: ratification 2
even if an agent acts without authority, the principal can decide later to be bound by her actions as long as these requirements are met:
- the “agent” indicates to the third party that she is acting for a principal
- the “principal” knows all the material facts of the transaction
- the “principal” accepts the benefit of the whole transaction, not just part
- the third party does not with draw from the contract before ratification
principal’s liability for contracts: subagent - intermediary agent
someone who hires subagents for the principal
- when an agent is authorized to hire a subagent, the principal is a s liable for the acts of the subagent as he is for the acts of a regular agent
principal’s liability for contracts: subagent
someone appointed by an agent to perform the agents duties
liability to thirds parties: agent’s liability for contracts
- fully disclosed principal
- unidentified principal
- undisclosed principal
- unauthorized agent
agent’s liability for contracts: fully disclosed principal
an agent is not liable for any contracts she makes on behalf of a fully disclosed principal
- a principal is only fully disclosed if the third party knows of his existence and identity
agent’s liability for contracts: unidentified principal
in the case of an unidentified principal, the third party can recover from either the agent or the principal (partially disclosed principal)
- a principal is unidentified If the third party knew of his existence but not his identity
unidentified principal: jointly and severally liable
all members of a group are liable; they can be sued as a group, or any one of them can be sued individually for the full amount owed, but the plaintiff cannot recover more than the total she is owed
agent’s liability for contracts: undisclosed principal
in the case of an undisclosed principal, the third party can recover from either the agent or the principal
- a principal is undisclosed if the third party did not know of his existence
- the principal is always liable, but the agent is only liable when the principal’s identity is unknown
agent’s liability for contracts: undisclosed principal rules
a third party is not bound to the contract with an undisclosed principal if
- the contract specifically provides that the third party is not bound to anyone other than the agent
- the agent lies about the principal because she knows the third party would refuse to contrast with him
agent’s liability for contracts: unauthorized agent
if the agent hasn’t o authority (express, implied, or apparent), the principal is not liable to the third party, and the agent is
liability to third parties: principal’s liability for negligent physical torts
an employer is liable for physical torts negligently committed by an employee acting within the cope of employer
- employee
- scope of employment
liability to third parties: principal’s liability for negligent physical torts - respondent superior
a principal is liable for certain torts committed by an agent
principal’s liability for negligent physical tort: employee
two kinds of agents:
1. employee; principal is liable
2. independent contractor; principal is not liable
principal’s liability for negligent physical tort: the gig economy
the gig economy is based on companies that, instead of hiring full-time employees, use mobile apps to facilitate peer-to-peer transactions that pay per job
-ride sharing, chores, cleaning, delivery, repairs, and shipping
principal’s liability for negligent physical tort: negligent hiring
a principal is liable for both the negligent and intentional physical torts of an independent if the principal has been negligent in hiring or supervising her
principal’s liability for negligent physical tort: scope of employment
an employee is acting within the scope of employment if the act:
- is one that employees are generally responsible for,
- takes place during hours that the employee is generally employed,
- is part of the principal’s business,
- is similar to the one the principal authorized,
- is one for which the principal supplied the tools, and
- is not seriously criminal
principal’s liability for negligent physical tort: scope of employment - authorization
an act is within the scope of the employment if expressly forbidden, is it is of the same nature as that authorized or if it is incidental to the conduct authorized