Final Exam - Agency Flashcards
When is a principal subject to liability on contracts made by an agent acting within his authority? [didn’t talk about in review]
When the contract is made in proper form and with the understanding that the principal is a party
When is a disclosed or partially disclosed principal subject to liability for acts of agent? [didn’t talk about in review]
- acts are done on his account
- which usually accompany or are incidental to the transactions which the agent is authorized to conduct
- the other party reasonably believes that the agent is authorized to do them and has no notice that he is not so authorized.
Might still need inherent authority - court will apply when exceeds scope of authorized authority.
When is an agent who entered into a contract on behalf of a partially disclosed or undisclosed P liable on a contract?
Agent treated as though party to the contract.
When is an agent who entered into a contract on behalf of a disclosed principal liable on a contract?
clear intent of all parties that A be bound OR
A made contract without authority
What is inherent authority?
2d Restatement fills in gaps:
1. when undisclosed P, can’t have manifestation from P to T
2. when T doesn’t know industry customs, can’t have reasonable belief that A has the authority
3rd restatement eliminates and expands definition of apparent authority
ASSUME THAT 2ND APPLIES
What is the rule of ratification? Acquiescence?
When A acts without any authority and no grounds for estoppel, P is only bound if P ratifies the conduct.
1. valid affirmation by P to which the law will give effect
2. P must know or have reason to know all of the material facts
will be denied legal effect to protect rights of third parties (can’t go back and ratify because you’ll get some great gain)
Ratification can serve to indicate authorization to do the same thing in the future, aka as acquiescence. If you ratify the delivery the first few times, might be stuck with future deliveries.
What is estoppel [authority]?
Negligent [or intentional] acts [or omissions] that give the appearance of authority, plus reasonable and good faith reliance means courts may find equivalent authority even if not actual.
P’s vicariously liability for employees v. ICs (both types of ICs)
For employee: P is liable if the A is acting within the scope of employment
For agent-type IC: no liability except in certain cases
For nonagent IC: P not liable in agency law.
What is a servant/employee?
a servant is an agent performing services in the master’s affairs whose physical conduct is controlled or subject to the right of control by the master.
General principles of scope of employment
of the kind that employed to perform
within authorized time and space (see Clover - no total abandonment)
actuated at least in part by purpose to serve P
Per Rest., when is P liable for torts of IC?
Master is liable for torts of IC in contract only in special circumstances:
- P retains control over relevant aspects of activity
- P employs incompetent IC
- performance of task is inherently dangerous
- non-delegable duty
Per Rest., when is P/master liable for torts of employee?
Employee: if in scope of employment or under exception:
- master intended conduct or the consequences
- master negligent or reckless
- conduct violated non-delegable duty of master [usually in statute]
[A acted on behalf of P and there was reliance upon apparent authority, or was aided in accomplishing tort by existence of agency relationship.]
What are the fiduciary duties of an agent?
Duty of care - standard care and skill, special skill. Care and skill required of persons not agents performing similar gratuitous undertakings for others
Duty of loyalty - agent is subject to a duty to his P to act solely for the benefit of P”
violated when:
- payment from T - kickbacks, bribes, etc.
- secret profits (Reading)
- transacting with P without P’s knowledge
- acquiring material benefit from T in connection with transactions conducted or other actions taken on behalf of P or otherwise through A’s use of A’s position
- usurping business opportunities of P
- grabbing and leaving
