Liability of the Principal

Question 1

Background

Answer 1

Contract law, liability based on authority. Agent must act with authority in order to bind principal.

Tort law, liability comes by way of the doctrine of vicarious liability.

Question 2

Scope of Principal’s Authority

Answer 2

Actual
Apparent
Ratification

Question 3

Actual Authority

Answer 3

-What agent reasonable believes principal has directed him to do.

-Express actual authority: agent has clear, express instruction about what principal wants her to do.
Principal must communicate directly with the agent. 3rd party’s notice not relevant.

-Implied actual authority: agent can take whatever actions necessary to carry out principal’s express instructions.
CAPE
Custom: consistent with custom or trade
Acquiescence: acceptance of agent’s actions or failure to object
Position: someone as an agent
Emergency: reasonable actions necessary
Implied authority to delegate, agent has to believe that principal would approve of the authority.

Question 4

Apparent Authority

Answer 4

Principal acts in a manner causing 3rd party to reasonably believe agent had authority to act.

Actual authority and apparent authority.

Reasonable belief: past dealings, custom, industry standards, principal statements.

Imposter or actor someone pretending to be an agent. If 3rd party believes that principal has given the imposter authority to act, then those actions can bind principal.

Question 5

Termination

Answer 5

Terminate actual authority, must be some communication between principal and agent.

Revocation
Agreement
Changed circumstances
Passage of time
Termination after a reasonable period of time
Death of the principal when agent knows of death
Death of agent automatically terminates
Principal’s loss of capacity except durable power of att.
Agent’s breach of duty.

Apparent authority, must be communication between principal and 3rd party.

3rd party receive some notice of terminated to end apparent authority. Principal’s death will terminated if 3rd party has notice of death.

Question 6

Ratification

Answer 6

Principal ratify an act even when no actual or apparent authority for action.

Form of actual authority.

Look at these factors:
Action hast ob e ratified in its entirety.
Principal has to have the capacity.
Must be manifestation of assent.
Ratification must be timely; and
Principal must have knowledge of all material facts.

Question 7

Estoppel

Answer 7

Principal prevented from denying existence of an agency relations so long as a third party has been induced to detrimentally change her position based on a belief that the agent is act for the principals’ benefit.