R7 Agency

Question 1

Agency

Answer 1

Principal with Capacity and Consent appoints another person/entity( Agency ) to act on his behalf

1. Wiring is generally not required UNLESS
   MYLEGS
   L- selling lands
   Y - cannot be performed in one year
2. Capacity
   - Only principal must be competent
   - Agent need not have capacity - minor or mentally incompetent person can be appointed as agent
3. Consideration
   - Is not required to form an agency relation ( for. eg parents can act as agent)

Question 2

1. Power of Attorney

2. Rights and Duties of Agent to principal

Answer 2

1. Power of Attorney:
   -written authorization of agency
   - it just means that the agent has the power to act on behalf of the principal
   - only the principal is required to sign the power of attorney
   - normally limited to specific transactions “special agents”
   ;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;
2. Rights and Duties of Agent to principal

2.1 Duties of Agent to principal
- Fiduciary “LORA”
L - loyalty: no self dealing, no competing (kickbacks)

O - Obedience:
must obey Resonable directions

R- Reasonable care
duty not to be negligent

A - Duty to Account
- can not commingle principal and agents property

Question 3

Principal remedies if agent breaches

Duties of Principal to agent

Answer 3

1. Tort Damages
   Negligent
   OR Intentional
2. Contract Damages
3. Recovery of Secret Profits (kickback)
   Constructive trust
4. Withhold Compensation

---------------------------------
Duties of Principal to Agent 
Implied:
1. Compensation 
2. Reimbursement/indemnification (reasonable expenses) 

3. Remedies of the agent
   - bring an action against the principal for any damages

Question 4

Power to terminate the relationship

Answer 4

Either party has generally the power to terminate

Vs. Right to terminate

• don’t have the right to terminate
• this means terminating without other party suing you

Exceptions:
Principal has no power or right to terminate
Agency coupled with interest

Question 5

Agent’s power to contractually bind principal

to 3rd parties

Answer 5

1. A grant of actual authority ( power and right)
2. Apparent authority or estoppel ( power but no right)
3. Ratification ( power but no right)
4. Actual Authority
   - Express: Oral/written instruction
   - Implied: reasonably necessary to carry out the agency

Question 6

Termination of Actual Authority

Answer 6

1. Act of parties
   - Agent quits or gets fired
   - if termination violated the parties contact, damages could be available
2. Accomplishment of objective or expiration of stated period
3. Automatic termination of Actual Authority :
   No actual or apparent authority anymore, thus, notice not required

• Death of either party
• Incapacity of Principal
• Discharge of bankruptcy of the principal
• failure to acquire a necessary license
• destruction of the subject matter
• subsequent illegality

Question 7

Apparent Authority

Answer 7

principal does something or donest do something that makes the third party believe that someone is their agent

1. from the position 
give titles ( partner, manager, officer) 

2. Agent quits but principal fails to notify the third party

###Apparent authority is not affected by "secret" limiting instructions to third party ###
Agent might not have actual but will still have apparent authority 

give actual notice to old customers
constrictive notice to other customers
………………………………………..

Ratification
- only principal can ratify

Requirements
- agent have apparent authority

• all material facts must be disclosed to principal
• must ratify entire transaction
• does not require consideration or telling third party about it
• may ratify expressly or impliedly ( accept benefit of the transaction)

Genreally, may ratify unless performance would be illegal or the thrs party withdraws prior to ratification

Question 8

General Agent vs. Special agent

Answer 8

General: continuity of service ( business manager)

Special: one or more transaction not involving continuity of the service (e.g Realtor)

Question 9

Contractual liability
1) “When is principal liable to 3rd party?”

2) when is agent liable?
3) third party laibility

Answer 9

1. • Liable if Agent had Actual/Apparent authority
     OR Principal ratified ( only disclosed principal can ratify)
2. Agents liability
   - disclosed principle then Agent is NOT liable

• partial/ undisclosed principal
  Agent is liable

Once 3rd party finds principal exact ID
3rd party can chose either principal or agent

3. Third party liability
   generally only principal can hold third party liable

Question 10

Tort liabilty

Answer 10

Wrongful act

• unintentional - negligence
• intetional - fraud

General Rule:
Principal not liable for agent’s tort ( mere independent contractor , unless authorized tortious act or ultra-hazardous activity)

UNLESS they have employer-employee relationship AND the tort is committed within the scope of employment

...........
employer-employee relationship: 
-control manner of performance
-works fulltime for the employer 
-uses employers facilities or tools 
-compensated on time basis 
- and subject to supervision of the principal 

………………….
employer generally laible only for negligence BOT for intentional tort of employee
……………….

cannot limit liability by agreement with employee
- third party can still make the employer liable