Formation

Question 1

Agency Definition

Answer 1

Fiduciary relationship that arises when one person (principal) appoints another (agent) to act on the P’s behalf and the A consents to do so subject to P’s control.

Question 2

Consent

Answer 2

Both P and A to form agency relationship
can be written or oral or by implication via conduct

Question 3

Formation Elements

Answer 3

1. Capacity (P full contractual capacity, agent minimal mental capacity
2. Consent of both parties
3. Writing if required (statute of frauds)

Consideration not required

Question 4

Formation Modes

Answer 4

1. Act of Parties: agreement or by holding out by principal(apparent authority) or by ratification
2. Operation of law: estoppel (apparent authority),
3. Statute

Question 5

Agents Duties to Principal

Answer 5

Fiduciary Duties:
* Care - carry out agency with reasonable care, sliding scale depending on special skills (also consider compensation)
* Loyalty - undivided (cannot profit for themselves or benefit themselves or third party, must refrain from dealing with P as an adverse party or acting on behalf of adverse party, no competing, and may not use P’s property/infor for own or others purposes
* Duty of Obidience - must obey all reasonable directions of principal.

Question 6

P’s Remedies for A’s breach

Answer 6

1. contract actions against compensated agents
2. tort actions
3. Actions for secret profits
4. equitable actions for an accounting
5. imposition of constructive trust
6. witholding of compensation for intentional torts or intentional breaches of fiduciary duty.
7. Terminaiton of agency

P may recover actual profits or or properties held by agent whether or not the agent’s profit caused the principal any losts. “Do justice”

Question 7

Principal Duties to Agent

Answer 7

Contractual duties, cooperation, reasonable compensation, and indemnity/reimbursement for expenses.

Question 8

P’s Liability on A’s Contracts

Answer 8

Liable if actual, apparent, or ratified authority.

Question 9

Actual Authority

Answer 9

Authority A reasonably beleives they possess based on Principal’s dealings with them. Reasonable person in agent’s position.

Express -

Implied -
* Incidental to express authority
* arising out of custom known to agent
* resulting from prior acquiescence
* take emergency measures
* delagate authority for ministerial acts where circumstances require/performance is impossible without delegation/delegation is customary
* Pay for and accept delivery of goods
* general warranties payment delivery
* manage investments with prudent investment standard.

Question 10

Termination of Actual Authority

Answer 10

• happening of event that specified to terminate
• lapse of reasonable time
• change in circumstances (subject matter of authority destroyed, insolvency, change in law/business)
• Agent’s breach of fiduciary duty
• Either party’s unilateral term
• Operation of law (death and when agent has notice)

Irrevocable - when agency is coupled with interest or power given as security principal cannot terminate if agency was to protect A or 3P rights and is supported by consideration (mostly voting shares)

Question 11

Apparent Authority

Answer 11

When P holds out another person as agent and 3pty reasonably led to believe that authority exists.

When Agent exceeds actual authortiy P is still bound (prior act, power of title/position)

Agent has no Actual authority - look for actual or constructive notice of termination.

Question 12

Ratification

Answer 12

agent acts without authority but P validates the act and is bound. (must ratify all not part of contract. Can be express or implied.

Requirements - P has knowledge of/reason to know all material facts
P accepts entire transaction
Phas capacity. (no consideration necessary).

Question 13

Liabilities

Answer 13

Principal to 3P - bound if valid authority existed
Agent - bound unless P’s existence and identity are disclosed (can be liable for breach of implied warranty of authority).
3P - bound to P if valid authority existed, bound to A if P unidentified or undisclosed and A enforces contract (P entitled to benefits).

Question 14

P liability for A’s Torts

Answer 14

Vicarious:
1. Respondeat superior
2. Apparent Authority

Negligence in hiring retaining or supervising agent
P directly responsible if auctual authority to commit tort or ratified tort or independant contractors

Question 15

Employee v. IC

Answer 15

Principal retains the right to control the manner in which an employee performs their work.

Employee- with in the scope of employment (of the kind, on the job, motivation to serve employer)
IC - inherently dangerous? duty nondelegable? P knowingly select independent C?

No liability for intentional torts unless in scope of employment

Question 16

Liability for acts of borrowed employees

Answer 16

issue: primary right of control over employee determines who is liable.