Liability of Principal & Agent to 3rd Parties Flashcards
What is express actual authority?
Oral or written words; clear, direct and definite language; or specific, detailed terms and instructions
What Intent is req’d for
express actual authority?
- P’s manifestation must cause A to believe that A is doing what P wants (subjective standard),
AND - A’s belief must be reasonable (objective standard)
How can P dissent to A’s actions in response to express actual authority
**P must give clear notice if
P disagrees with A’s actions
What is Implied Actual Authority?
Allows A to take whatever actions are properly necessary to achieve P’s objectives, based on A’s reasonable understanding of the manifestations and objectives of P.
How does custom affect
implied actual authority?
Absent contrary instructions, A has implied authority to act w/in accepted business customs or general trade usage w/in an industry.
Acquiescence is implied by what?
By P’s acceptance of A’s acts or P’s failure to object to unauthorized actions of A that affirm A’s belief regarding P’s objectives and support A’s perceived authority to act in the future.
Can agent delegate express or implied actual authority to a 3rd party?
No, not unless he has P’s express authorization.
How does apparent authority arise?
It derives from P’s words or behavior
over a period of time to a 3rd party
Based on the reasonable reliance of a 3rd party on that party’s perception of the level of authority granted to A by P’s behavior (over a period of time)
For apparent authority, the 3rd party’s reasonable belief can be based upon:
- Past dealings b/t P and A
- Trade customs
- Relevant industry standards
- P’s written statements of authority
- Transactions that do NOT benefit P
- Extraordinary transactions for P
How does A’s position affect apparent authority?
By appointing A to a specific position (such as VP or GM), P makes a manifestation to the public that A has the customary level of authority of that position.
How can an agency r/ship be terminated?
- Revocation / Renunciation
- Agency Agreement
- Change of Circumstances
- Passage of time (reasonable period)
- P’s death or suspension of powers (A must know about it)
- P’s loss of capacity (A must know about it)
- A’s death or suspension of powers (automatic)
- Statutorily mandated termination
- A’s breach of fiduciary duty
What sort of change in circumstances could result in the termination of an agency r/ship?
Should cause A to reasonably believe that P no longer consents to A acting on P’s behalf
ex: change in law, insolvency, dramatic change in business conditions, destruction of subject matter, etc.
When does estoppel apply to enforce an agency r/ship?
When a 3rd party is justifiably induced to make a detrimental change in position because that 3rd party believed the transaction was entered into for P and P failed to take reasonable steps and use ordinary care.
What is req’d for P to ratify an unauthorized act by an agent?
P must ratify the entire act/transaction,
P must have legal capacity,
P must have knowledge of the material facts involved in the original act.
In what circumstances can P be vicariously liable to 3rd parties for A’s torts?
-
Respondeat Superior (employer/employee)
scope of employment, frolic, detour -
A’s apparent authority
reasonably believed; traceable to P’s manifestation -
Reliance upon care and skill
Someone who represents that another is an A and causes 3rd party to justifiably rely on the care and skill of such apparent A is subject to liability for harm caused by LACK of care and skill.
When does P have ACTUAL liability
to 3rd parties?
- A has actual authority or P’s ratification
-
Negligence
in selecting, supervising or controlling -
Non-delegable duties
a responsibilty that is so important to the community that a person should NOT be permitted to transfer it to an agent (inherently dangerous activities)
What is A’s liability to a contract when
the P has been disclosed?
Agent doesn’t become party to K if he enters into on behalf of P and 3rd party has notice of both the existence and identity of P.
What is A’s liability to a contract when
the P has been PARTIALLY disclosed?
Agent WILL become a party to the K when the 3rd party only has notice of P’s existence (and not P’s identity).
What is A’s liability to a contract when
the P has NOT been disclosed?
If A binds P to K, and the 3rd party has no notice of P’s existence, then both P and A are parties to the K.
What is a 3rd party’s contract liability to an undisclosed P?
Liable unless P is excluded by the K’s terms or P’s existence was fraudulently concealed.
What is an undisclosed principal’s
contract liability to a 3rd Party?
Liable if the 3rd party detrimentally changes position because of A w/out actual authority, AND…
P knew of A’s conduct and did not take reasonable steps to notify the 3rd party.
When does Agent breach an
implied warranty of authority?
If agent lacks power to bind P,
then a breach has occured.
If agent does bind P, then A is not liable under this implied warranty EVEN IF agent exceeded authority
Is A liable for P’s torts?
A is liability to a 3rd party for negligent and intentional conduct, but it is NOT liable for P’s torts.
