Liability to Third Parties Flashcards
When is a principal bound by a contract that an agent entered into on their behalf?
- The principal authorized the agent to enter into the contract; and
- The agent acted with legal authority
What are the four types of legal authority?
- Actual express authority
- Actual implied authority
- Apparent authority
- Ratification
How does a principal create actual express authority?
By using words (written or spoken) to convey authority to the agent
What is the requisite intent for actual express authority?
- Subjective: the agent must believe they’re doing what the principal wants
- Objective: the believe must be objectively reasonable
Upon death of the principal, when does actual express authority terminate?
When the agent has actual knowledge of the principal’s death
Upon death of the agent, when does actual express authority terminate?
Upon the death of the agent
For actual authority, look to the communication between the _________ and the _____
principal; agent
How does a principal create actual implied authority?
By using words (written or spoken) or other conduct to convey authority to the agent to take whatever steps are necessary to achieve the principal’s objectives
With actual implied authority, what does the agent have authority to do?
To act within the accepted business custom or general trade usage
For apparent authority, look to the communication between the _________ and the ___________
principal; third party
How does a principal create apparent authority?
By using words (written or spoken) that cause the third party to reasonably believe that the principal consents to have acts done on the principal’s behalf by the agent
In an agency relationship, what does ratification require?
- The principal has knowledge of the material terms of the contract; and
- The principal accepts the contract’s benefits
What are the three types of principals?
- Disclosed
- Partially disclosed
- Undisclosed
When is a principal disclosed?
The third party knows:
- The agent is acting on behalf of a principal; and
- The principal’s identity
If the principal is disclosed, who are the parties to the contract?
- The third party
- The principal
When is a principal partially disclosed?
The third party knows that the agent is acting on behalf of a principal, but NOT the identity of the principal
If the principal is partially disclosed, who are the parties to the contract?
- The third party
- The principal
- The agent
When is a principal undisclosed?
The third party does NOT know:
- The agent is acting on behalf of a principal
- The identity of the principal
If the principal is undisclosed, who are the parties to the contract?
- The third party
- The agent
Note: Whether the principal is a party depends on whether the agency had authority to bind the principal to the contract
What are the requirements for vicarious liability (respondeat superior)?
- Sufficient control that it’s an employer-employee relationship; and
- The agent was acting within the scope of employment
What signals sufficient control for a employer-employee relationship?
The principal has control (or the right to control) the physical conduct (manner and means) of the agent’s performance
When does a principal have vicarious liability for torts committed by an independent contractor?
- The task is inherently dangerous
- The principal was negligent in hiring the independent contractor
- The principal retains control over certain tasks and the tort occurs within those tasks
What is a frolic?
A significant deviation from an assigned path (outside the scope of employment)
What is a detour
A de minimis deviation from an assigned path (within the scope of employment)
In general, is a principal vicariously liable for an intentional tort?
No, as intentional torts are outside the scope of employment
When might a principal be vicariously liable for an intentional tort?
- The conduct occurred within the general space and time limits of employment
- The agent was motivated in some part to benefit the principal
- The act is of a kind that the agent was hired to perform
