Liability of the Principal and Agent to 3rd Parties Flashcards
When does the agent have the ability to bind the principal to a contract?
1) Actual authority (express or implied)
2) apparent authority
3) Principal is estopped from denying the agent’s authority
4) Principal ratifies the contract
When does express actual authority exist?
1) Agent believes he’s doing what the principal wants (subjective standard)
2) Agent’s belief is reasonable (objective standard)
Implied actual authority exists when:
The agent takes whatever actions are properly necessary to achieve the principal’s objectives based on the agent’s reasonable understanding of the principal’s objectives.
Can an agent normally delegate?
No. But it can happen when its a small job, customary or would be impossible to do acts w/o sub agent
When does apparent authority exist?
When a third party reasonably relies on its perception of the level of authority granted to the agent.
Estoppel occurs when:
3rd Party detrimentally changes its position because:
1) principal carelessly caused belief in agency relationship, or
2) Failed to take reasonable steps to notify that agency relationship didn’t exist after knowing that 3rd party thought one existed.
When does ratification occur?
1) Principal ratifies the entire act
2) Principal has legal capacity to ratify the act at the time it occurs
3) Principal’s ratification was timely
4) Principal has knowledge of the material facts
When is an employer vicariously liable?
1) The agent is an employee. Right to control the employee’s conduct.
2) Acting within the scope of the employment relationship
When is an employer vicariously liable for an intentional tort?
1) Conduct is within the space and time limits of the employment
2) agent was motivated to act for the employer’s benefit
3) the act was the kind of act that the employee was hired to perform
Frolic & Detour
Frolic - Employee outside the scope of work when significant deviation from the path that would otherwise be taken.
Detour - de minimis departure from the assigned route and still w/in scope of work.
Principal’s direct liability to 3rd Parties:
1) Principal authorizes or ratifies the agent’s conduct
2) The principal is negligent in selecting supervising or otherwise controlling the agent
3) The principal delegates to an agent performance of a non-delegable duty to use care to protect other persons or their property
Is an agent liable on a contract if they have disclosed the principal?
No.
What is required on a contract for the principal to be disclosed?
1) Contract entered into on behalf of the principal
2) Affirmatively disclose to the third party the existence and identity of the principal
3) Not agree to become a party to the contract
Does an agent become party to a contract if the principal is only partially disclosed?
Yes.
What does the election of remedies doctrine provide?
Once a principal has been disclosed to a 3rd party in an undisclosed principal contract, that 3rd party must elect to hold either the agent or the principal accountable.
