Principal/Agent Terms

Question 1

Agency Rule

Answer 1

(1) Assent (2) Benefit (3) Control must be present for a principal to be held vicariously liable for their agent’s art

Question 2

Assent

Answer 2

Informal Agreement between the principal and agent

Question 3

Control

Answer 3

the principal must have the right to control the agent by having the power to supervise the manner of the agent’s performance

Question 4

Independent Contractor Rule

Answer 4

(1) Assent (2) Benefit; There can be NO vicarious liability for an independent contractor’s torts

Question 5

Exception to Independent Contractor Rule: Ultra-Hazardous Exception

Answer 5

If the tort committed is ultra-hazardous activity, meaning public facing, then the principal WILL be vicariously liable for the torts of an IC

Question 6

Estoppel

Answer 6

if the third party justifiable is induced to make a detrimental change in position because the transaction is believed to be on the person’s account IF (1) the person intentionally or carelessly caused such belief, (2) having notice of such belief and that it might induce others to change their positions, the person did not take reasonable steps to notify them of the facts

Question 7

Scope of the Principal-Agency Test

Answer 7

within the scope = principal is liable
outside of the scope = agent is liable
(1) if the conduct was “of the kind” the agent was hired to perform
(2) Did the tort occur “on the job”? (frolic v. detour)
(3) Did the agent intent to benefit the principal through their conduct?

Question 8

Frolic v. Detour

Answer 8

Frolic = a new independent journey OUTSIDE of the scope of agency
Detour = mere departure from an assigned task and which is WITHIN the scope of agency

Question 9

Intentional Tort Liability

Answer 9

assault and battery are OUTSIDE of the scope of agency

Question 10

Excepetion to Intentional Tort Liability

Answer 10

bouncer at a bar exception
the conduct is WITHIN the scope of agency IF
(1) specifically authorized by the principal
(2) natural from the nature of employment
(3) motivated by a desire to serve the principal

Question 11

Liability of Principal for Contracts entered into by Agents

Answer 11

The principal is liable to third parties for contracts entered into by an AUTHORIZED agent

Question 12

Types of Authority

Answer 12

Actual Express Authority, Actual implied authority, Apparent authority, or authority granted retrospectively through ratification

Question 13

Actual Express Authority

Answer 13

some form of verbal communication in which the principal grants the agent authority to ace on their behalf

Question 14

Actual Implied Authority

Answer 14

Authority where the agent REASONABLY believes the principal
(1) necessity
(2) custom
(3) prior dealings

Question 15

Actual Apparent Authority

Answer 15

Requires the act be
(1) absolutely necessary
(2) principal to have cloaked the agent with the appearance of authority
(3) third party must have reasonable relied on the principal’s authority

Question 16

Ratification

Answer 16

authority granted AFTER the contract has been entered into if the principal ratifies it
requires:
(1) principal must have knowledge of ALL material facts regarding the contract
(2) principal accepts the benefits that result from the contract

Question 17

Duties an Agent owed to Principal

Answer 17

Duty to exercise reasonable care, duty to obey reasonable instructions, and a duty of loyalty

Question 18

Duty of Loyalty

Answer 18

No self dealing, no usurping opportunities, and no secret profits

Question 19

Disclosed v. Undisclosed Principal Liability

Answer 19

Disclosed = principal is liable
Undisclosed or Partially Disclosed = agent OR principal may be liable at the election of teh third party

Question 20

Lingering Authority

Answer 20

the actual authority has been terminated but the agent CONTINUES to act on their behalf without authority but engages with a third party who has reason to believe they are still an authorized agent, the principal is still liable if they have not made the agents termination PUBLIC or at least clear to parties interacting with those agents

Question 21

Rules to Revoke Express Authority

Answer 21

(1) a unilateral act by EITHER party
(2) Invalidating Authority/Deathlike Capacity

Question 22

Invalidating Authority (Deathlike Capacity)

Answer 22

express authority may NOT be revoked if there is a durable power of attorney (POA being a written expression of authority granting them authority to enter into a transaction)
a POA is durable if it has conspicuous survival language
if it has this, revocation may NOT occur
* the deathlike capacity of the principal invalidated the authority granted unless the agreement had conspicuous survive language *

Question 23

Secret Limiting Instructions

Answer 23

where the agent has actual authority but the principal has secretly limited their authority
by instruction and then the agent now acts beyond the scope of the limitation
the principal is liable since a third party doesn’t have any reason to know or believe they do not have authority (thus, they have apparent authority unless limited instruction is stated for patrons to view)
i.e., sales clerk, appears to be able to sell books, but principal told them not to sell one specific book, but they do it anyways,