Nature of Agency Relationship

Question 1

Agency relationship definition

Answer 1

Voluntary, fiduciary relationship between a principal and an agent

Principal authorizes Agent to act on Principal’s behalf

Question 2

Types of agency relationships

Answer 2

Gratuitous agency
Contractual agency

Question 3

Gratuitous Agency

Answer 3

Principal doesn’t compensate Agent for his work on Principal’s behalf

Question 4

Contractual Agency types

Answer 4

(1) Employer-employee, or
(2) employer-independent contractor

Question 5

Employer-employee relationship

Answer 5

Employer has the right to control what Employee does and how Employee does it

Question 6

Employer-independent-contractor relationship

Answer 6

Employer has the right to control only what independent contractor does, but not how the independent contractor does it

§ I.e., the independent contractor controls the means of accomplishing the end

Question 7

Factors to determine the employer’s right to control

Answer 7

§ Whether the work is typically performed by specialists without supervision
§ Who supplies Agent with tools and a place to perform the work
§ Length and exclusivity of the employment relationship
§ Whether Agent was paid by the job (more likely to be an independent
contractor) or at regular intervals (more likely to be an employee)
§ Whether the work is part of Employer’s regular business

Question 8

Equitable doctrines in agency

Answer 8

Agency by estoppel and apparent authority are equitable doctrines invoked to protect a third party from damage or loss.

Question 9

Effect of invoking equitable agency doctrines

Answer 9

Parties may appeal to these equitable doctrines when there is no actual agency (no agent is acting within the scope of actual authority granted by a principal).

When invoked parties are treated as if agency had existed and Agent acted within scope of authority granted by Principal