Liability Flashcards
Actual authority
The authority the agent reasonably believes they possess based on the P’s dealings with them
Express authority
That which is actually contained within the four corners of the agency agreement.
Implied authority
Authority the agent reasonably believes they have as a result of the P’s words or actions
Termination of Actual Authority
Can happen by an event happening; lapse of a reasonable time; a change in circumstances; A’s breach of fiduciary duty; either party’s unilateral termination; operation of law
Apparent authority
Exists when the P holds out another as possessing authority and based on this, a third party is reasonably led to believe that authority exists
What is the policy behind apparent authority?
Protecting inoccent third parties who rely on the P’s holding out someone as their agent
Situations where A exceeds authority but P still bound
Prior act; power of position
Inherent authority
Derived solely from the agency relationship and results in P being bound even though A had no authority to perform the particular act.
Ratification
Effectively serves as a substitute for before-the transaction authority
Methods of Ratification
Oral or written affirmation of a contract; when P accepts the benefits of the contract; silence (if there is a duty to disaffirm or is sueing on the transaction)
Requirements for ratification
P must:
Have knowledge of all material facts regarding the contract
Accept the entire transaction
Have capacity
P may ratify anything unless
Performance was illegal; 3P has withdrawn; material change in circumstances
3P vs. P liability
P is liable to 3P on a contract entered into by A if A had valid authority to act
3P vs. A liability
If A had authority to enter contract for P, or if P ratified a previously unauthorized contract, A cannot be held personally liabile.
3P liability to P
Disclosed P: only P may enforce the contract and hold 3P liable
Undisclosed P: either P or A may enforce the contract
Two theories under which P may be vicariously liable for torts of A
Respondeat superior; apparent authority
When is a P responsible under reasonpondeat superior
Liable for the torts of an employee committed within the scope of the employment
Independent contractor
Where P does not have the right to control the manner in which the work is performed
Scope of employment
Conduct of the kind A was hired to do; Tort occurred on the job; Conduct in part to benefit P
Frolic and detour
Detour is a small deviation. Frolic is a major deviation
Intentional torts
Employer may be liable for torts if within scope of employment
Apparent authority liability
Where A appears to communicate on behalf of P and A’s apparent authority enables A to commit a tort or conceal its commission
