Marbes Questions- Agency Flashcards
How is an agency relationship created?
the manifestation of consent by one person (the principal) to another (the agent) that the other shall act on P’s behalf and subject to P’s control, and consent by the agent so to act.
Who are the parties to an agency relationship?
Principal, which is the one for whom the action is to be taken; and
Agent, which is the one who is to act.
How is agency different from other forms of business enterprises?
Partnership – each partner has an equal vote and ability to bind. Partnership is likely liable for the actions of each partner?? Pass through taxation.
Corporation – ownership and control are separate (shareholders own; officers & directors control). The owners as individuals have limited liability. Able to handle larger size tasks; greater liquidity due to capital structure. More permanent organization.
Hybrid Entities (LPs, LLPs, LLLPs, LLCs, etc.). Some owners manage the business on behalf of other owners in a LP. Likely that some of the partners (limited partners) have limited liability and others (general partners) do not.
How is actual authority created?
Authority can generally be created by written or spoken words or other conduct of the principal which, reasonably interpreted, causes the agent to believe that the principal desires him to act on the principal’s account.
How is incidental/implied authority created?
Rule 35. Unless otherwise agreed, authority to conduct a transaction includes authority to do acts which are incidental to it, usually accompany it, or are reasonably necessary to accomplish it.
Also, Rule 33. General Principle of Interpretation provides that an agent is authorized to do ONLY what is reasonable for him to infer that the principal desires him to do in light of the principal’s manifestations AND the facts he knows or should know at the time he acts.
Eric: created once actual authority is established b/t A&P, authority is implied b/c it gives the agent ability to accomplish those acts that are incidental to the acts needed to reasonably accomplish the acts which the agent has actual authority.
How is apparent authority created?
RSA 27. Can generally be created as to a third person by written or spoken words or any other conduct of the principal which, reasonably interpreted, causes the third person to believe that the principal consents to have the act done on his behalf by the person purporting to act for him.
How is inherent agency power established?
Eric: IAP is established when the general agent conducts an unauthorized act for which the agent’s power is reasonably derived from the agency relationship and not actual or apparent authority or estoppel.
Inherent agency power is a term used in the restatement to indicate the power of an agent which is derived not from authority, apparent authority or estoppel, but solely from the agency relation and exists for the protection of persons harmed by or dealing with a servant or other agent. (need to be a general agent)
Unauthorized Acts of General Agent. A general agent for a disclosed or partially disclosed principal subjects his principal to liability for acts done on his account which usually accompany or are incidental to transactions which the agent is authorized to conduct if, although they are forbidden by the principal, the other party reasonably believes that the agent is authorized to do them and has no notice that he is not so authorized.
When is a principal estopped (prevented) to deny liability for an agent’s actions?(reworded: when is the principal liable for the agent’s actions under the estoppel theory)
When persons have changed their positions because of their belief that the transaction was entered into by or for him, if:
He intentionally or carelessly caused such belief, OR
Knowing of such belief and that others might change their positions because of it, he did not take reasonable steps to notify them of the facts.
[does there need to be actual damages?] no. can be change of position which can be payment of money, expenditure of labor, suffering a loss or subjection to legal liability.
How is an agent’s unauthorized action ratified?
Eric: the P knows of the material facts of the act and affirms acceptance of the act verbally, in writing or by conduct.
When the principal affirms an agent’s prior act which did not bind him but which was done or professedly done on his account. The act is then given effect as if originally authorized by him.
Affirming the act can be done by either:
(a) a manifestation of an election by one on whose account an unauthorized act has been done to treat the act as authorized; or
(b) conduct by him justifiable only if there were such an election
What is the difference between authority and power?
Power is an ability on the part of a person to produce a change in a given legal relation by doing or not doing a given act.
Authority is the power of the agent to affect the legal relations of the principal by acts done in accordance with the principal’s manifestations of consent to him.
Why does authority matter to the principal?
If a principal grants authority to an agent, he is liable for the acts of the agent taken on his behalf. Because you cannot do everything yourself.
To the agent? If an agent acts outside the scope of his authority, she may be personally liable for her actions. [allows agent to have ability to conduct acts on behalf of P pursuant to agreement of the parties]
To the third party? Damages and liability. If an agent does not have authority to act on behalf of a principal, third party may or may not be able to claim damages against principal.
What is a master-servant relationship?
It is an agency relationship
- A master is a principal who employs an agent to perform service in his affairs and who controls or has the right to control the physical conduct of the other in the performance of the service.
- A servant is an agent employed by a master to perform service in is affairs whose physical conduct in the performance of the service is controlled or is subject to the right to control by the master.
How is a master/servant relationship created?
Look to the factors indicating a M/S relationship.
What is the difference between a servant and an independent contractor?
Primary difference is “control”. Master controls servant but not IC. Servant is always an agent; IC may or may not be an agent.
What are the duties of the principal to the agent?
Contractual Duties – duty to act in accordance with promises under contract
Compensate the Agent for Services
Indemnify from Certain Liabilities -
