R7- Agency Flashcards
What is Agency?
- Agency is when one person
- appoints another person or entity
- to act on his behalf
What are the requirement of Agency Creation?
- Principal with Capacity and consent
i. e. minor or incompetent - Writing not req’d unless Land or More than 1 yr
- Agency need not have capacity
- Consideration not req’d
- Power of Attorney- Written Authorization of agency
What are the duties of an agent to the Principal?
Fiduciary duty
1.Duty of Loyalty- Act in interest of Principal
2.Duty of Obedience- Obey reasonable instructions
do not exceed authority
3. Duty of reasonable care- Liable if negligent to principal, and 3rd parties
4.Duty to account
5.Subagent
What are the principal’s remedies if agent breaches?
a. Tort Damages
b. Contract damages- if compensated agent
c. Recovery of secret profits
d. Witholding compensaton
What are the duties of principal to the agent?
- Compensation
- Reimbursement
- Remedies of the agent
a. sue the principal
b. mitigate damages
When is agency terminable?
At will
but sue for damages
Exception: Agency coupled with interest
What is agency coupled with interest?
Agent is a creditor of principal
Only agent can terminate
Death, incapacity or bankruptcy of principal will not end an agency coupled with interest
What is Actual authority?
is what is expressly granted
or
is implied by the duties you expect the agent to carry out
What is implied authority?
When an authority is expressly granted
it is implied that th agent can carry out the duties
ex: authority to pay bills and manage employees if the duty is to run a store.
What is apparent authority?
is based on third party’s perspective
they believe that the agent has the authority to enter into a contract based on prior dealings with the agent
-giving a title or position
Actual vs apparent authority?
Actual authority Apparent
a. is to be granted a. what 3rd parties believe
b. Both are binding on the principal
General Agent vs Special Agent?
General Agent- continuity of service
Special Agent- One or more transactions not continuity
How to terminate apparent authority?
a. Actual Notice- to old customers, everybody the agent interacted
b. Constructive notice- to new customers
When is there no notice required to terminate apparent authority?
by operation of law
- Death of the principal or agent
- Incapacity of the principal
- the principal discharged in bankruptyc
What is Ratification?
Ratification allows a principal
to choose to become bound
by a previously unauthorized act
of his agent
What are the requirement for Ratification?
a. agent acting on behalf of the principal
b. all facts disclosed to the principal
c. the principal must ratify entire transaction, not partially
d. the third party knew about the principal i.e. he wasn’t an undisclosed principal
When is principal liable?
if agent had authority actual or apparent
or Principal ratified
if Undisclosed principal, only if agent has actual authority
When is agent liable?
a. disclosed principal- not liable if authorized
b. partially disclosed and undisclosed principal- agent liable for contract
when is 3rd party liable?
only principal can hold 3rd party liable
exception:
a. if principal’s identity fraudulently concealed
b. performance of the principal would increase inthe burden on 3rd party
What is Tort liability?
Wrongful act
Intentional or negligent
What is Respondeat Superior?
Principal is not liable for torts committed by agent-
ONly agent is liable
Exceptions for employers
an employer may be liable for torts of employee committed within the scope of employment
not for independent contractors
