Principal/Agent Terms Flashcards
Agency Rule
(1) Assent (2) Benefit (3) Control must be present for a principal to be held vicariously liable for their agent’s art
Assent
Informal Agreement between the principal and agent
Control
the principal must have the right to control the agent by having the power to supervise the manner of the agent’s performance
Independent Contractor Rule
(1) Assent (2) Benefit; There can be NO vicarious liability for an independent contractor’s torts
Exception to Independent Contractor Rule: Ultra-Hazardous Exception
If the tort committed is ultra-hazardous activity, meaning public facing, then the principal WILL be vicariously liable for the torts of an IC
Estoppel
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
Scope of the Principal-Agency Test
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?
Frolic v. Detour
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
Intentional Tort Liability
assault and battery are OUTSIDE of the scope of agency
Excepetion to Intentional Tort Liability
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
Liability of Principal for Contracts entered into by Agents
The principal is liable to third parties for contracts entered into by an AUTHORIZED agent
Types of Authority
Actual Express Authority, Actual implied authority, Apparent authority, or authority granted retrospectively through ratification
Actual Express Authority
some form of verbal communication in which the principal grants the agent authority to ace on their behalf
Actual Implied Authority
Authority where the agent REASONABLY believes the principal
(1) necessity
(2) custom
(3) prior dealings
Actual Apparent Authority
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
Ratification
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
Duties an Agent owed to Principal
Duty to exercise reasonable care, duty to obey reasonable instructions, and a duty of loyalty
Duty of Loyalty
No self dealing, no usurping opportunities, and no secret profits
Disclosed v. Undisclosed Principal Liability
Disclosed = principal is liable
Undisclosed or Partially Disclosed = agent OR principal may be liable at the election of teh third party
Lingering Authority
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
Rules to Revoke Express Authority
(1) a unilateral act by EITHER party
(2) Invalidating Authority/Deathlike Capacity
Invalidating Authority (Deathlike Capacity)
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 *
Secret Limiting Instructions
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,
