From practice essays

Question 1

Agency definition

Answer 1

Principal + agent
Agent does things for principal and principal directs agent’s actions
Legal consequences - principal can be held liable for acts of agents (contracts, torts)

Question 2

Components of agency relationship (ABC)

Answer 2

Assent - both parties manifest assent to work with each other
Benefit - agent agrees to work for principal’s benefit
Control - agent agrees to work subject to control of principal

Question 3

Definition of principal

Answer 3

Any person or entity that has legal capacity
Not minors or incapacitated
But unincorporated associations cannot be principals because they lack legal capacity

Question 4

Definition of agent

Answer 4

Any person or entity with minimal capacity (a minor can be an agent)
Minimal capacity = ability to assent to relationship, perform tasks on behalf of principal, and be subject to principal’s control
Employee v. independent contractor

Question 5

Liability to 3rd parties - contracts

Answer 5

When principal is liable for contracts that agent enters on behalf of the principal
Principal bound when principal authorized agent to enter contract and agent acted with legal authority

Question 6

Actual express authority

Answer 6

Principal creates by using words, written or spoken, to convey authority to agent
Agent must believe that he is doing what the principal wants him to do, belief must be objectively reasonable

Question 7

Actual implied

Answer 7

Created by words or other conduct to convey authority to agent to take whatever steps are necessary to achieve principal’s objectives

Question 8

Apparent

Answer 8

Created by words that caused 3rd party to reasonably believe that principal consents to have acts done on principal’s behalf by agent
Binds principal to the contract
Principal acting as agent may still be bound if they acted with apparent authority (in ordinary course of business)

Question 9

Ratification

Answer 9

If the principal ratifies the agent’s action, then the principal is bound just as if the action had been authorized, even if the agent acted without authority

Principal has knowledge of material terms of contract and principal accepts the contract’s benefits
(i) the principal must ratify the entire contract; (ii) the principal and the third party must have legal capacity to enter into the contract; (iii) the ratification must occur before the third party withdraws from the contract; and (iv) the principal must know the material facts of the transaction.

If the agent binds the principal to the contract, or if the principal ratifies the contract, then both the principal and agent are parties to the contract with the third party.

Question 10

Disclosed principal

Answer 10

3rd party knows agent is acting on behalf of principal and knows principal’s identity
Parties to contract are 3rd party and principal

Question 11

Partially disclosed

Answer 11

3rd party knows agent is working on behalf of principal, but does not know identity of principal
Unless the agent and the third party agree otherwise, an agent who enters into a contract on behalf of a partially disclosed principal becomes a party to the contract.

Question 12

Undisclosed

Answer 12

3rd party doesn’t know agent’s status as an agent nor the principal’s identity
Parties to contract are 3rd party and agent (An agent who enters into a contract on behalf of an undisclosed principal becomes a party to the contract.)
Whether undisclosed principal is party depends on whether agent had authority to bind principal to contract
I.e.: If the agent had the authority to bind the principal to the contract, then both the principal and the agent are parties to the contract with the third person.

Even if later ratified and agent and 3rd party were originally in contract, agent will remain party to contract

**Once the third party discovers the existence of the principal, the election of remedies doctrine requires the third party to choose to hold liable either the principal or the agent

Question 13

Tort liability

Answer 13

Vicarious liability, respondeat superior
Principal may be liable for tortious acts of agent
Requires that principal have sufficient control over agent’s conduct such that agency relationship is employer-employee and tort committed by agent was committed while agent was acting within scope of employment
Agent must act for BENEFIT of principal

Question 14

Vicarious liability

Answer 14

The doctrine of vicarious liability asserts that a principal is liable for the acts of an agent, even though the principal is innocent of fault and not directly guilty of any tort or crime.

Question 15

Respondeat superior

Answer 15

Under the doctrine of respondeat superior, a principal may be vicariously liable for a tort committed by an agent acting within the scope of his employment.

Question 16

Apparent authority tort

Answer 16

A principal is liable for a tort committed by an agent with apparent authority when the agent’s appearance of authority enables him to commit a tort or conceal its commission.
For apparent authority to exist, a third person must believe that the agent acted with actual authority, and such belief must be reasonable and be traceable to a manifestation by the principal.

Question 17

Proximate cause

Answer 17

The majority rule for proximate cause requires that the plaintiff suffer a foreseeable harm that is not too remote and is within the risk created by the defendant’s conduct.

Question 18

Intervening cause

Answer 18

An intervening cause is a factual cause of the plaintiff’s harm that contributes to her harm after the defendant’s tortious act is completed.

Question 19

Superseding cause

Answer 19

A superseding cause is any intervening cause that breaks the chain of proximate causation between the defendant’s tortious act and the plaintiff’s harm, thereby preventing the original defendant from being liable to the plaintiff.
**Most courts hold that an unforeseeable intervening cause is a superseding cause that therefore breaks the chain of causation between the defendant and the plaintiff.

Question 20

Implied warranty of authority

Answer 20

an agent purporting to be acting for a principal gives an implied warranty of authority to the third party. If the agent lacks the power to bind the principal, then a breach of the implied warranty has occurred, and the agent is liable to the third party

Generally, if the agent lacks the power to bind the principal, then a breach of the implied warranty has occurred, and the agent is liable to the third party for breach. However, in cases when the principal is bound to the third party after its agent acted with apparent authority in binding them, the agent is not liable on the contract.

Question 21

Agent avoiding being liable

Answer 21

In order to avoid becoming liable on the contract, the agent needs to enter into the contract on behalf of a disclosed principal, disclose that principal to the third party, and not agree to become a party to the contract.