Restatement of Agency

Question 1

1.01 - Agency Defined

Answer 1

The fiduciary relationship that arises when one person manifests assent to another person that the agent shall act on the principal’s behalf and subject to the principal’s control, and the agent manifests assent or otherwise consents to the act.

Question 2

1.02 - Labeling and Popular Usage Not Controlling

Answer 2

An agency relationship arises only when the elements stated in 1.01 are present. Agreement between parties, context of industry, or popular usage IS NOT CONTROLLING.

Question 3

1.03 - Manifestation

Answer 3

A person manifests assent or intention through written or spoken words or other conduct.

Question 4

1.04 - Coagents

Answer 4

Have agency relationships with the same principal. A coagent may be appointed by the principal or by another agent actually or apparently authorized by the principal to do so.

Question 5

1.04 - Disclosed Principal

Answer 5

When an agent and third party interact, the third party has notice that the agent is acting for the principal.

Question 6

1.04 - Undisclosed Principal

Answer 6

When an agent and third party interact, the third party has NO notice that the agent is acting for the principal.

Question 7

1.04 - Unidentified Principal

Answer 7

When an agent and third party interact, the third party has notice that the agent is acting for the principal, but does not know who the principal is.

Question 8

1.04 - Power of Attorney

Answer 8

An instrument that states an agent’s authority.

Question 9

1.04 - Subagent

Answer 9

A person appointed by an agent to perform functions that the agent has consented to perform on behalf of the agent’s principal.

Question 10

1.04 - Trustee and Agent-Trustee

Answer 10

Holder of property who is subject to fiduciary duties to deal with the property for the benefit of charity or for one or more persons, at least one of whom is not the sole trustee. Subject to the control of the settlor or one or more beneficiaries.

Question 11

2.01 - Actual Authority

Answer 11

At the time of taking action that has legal consequences for the principal, the agent reasonably believes, in accordance with the principal’s manifestations to the agent, that the principal wishes the agent so to act.

Question 12

2.03 - Apparent Authority

Answer 12

When a third party reasonably believes an actor has authority to act on behalf of the principal and that belief is traceable to the principal’s manifestations.

Question 13

2.04 - Respondeat Superior

Answer 13

When an employer is liable for the torts committed by employees while acting within the scope of their employment.

Question 14

2.05 - Agency by Estoppel

Answer 14

When due to a purported principal’s refusal to exercise reasonable care, a TP (1) reasonably believes that the purported agent is acting with actual authority and (2) foreseeably, reasonably, and detrimentally changes position in reliance on the authority.

Question 15

2.06 - Liability of Undisclosed Principal

Answer 15

An undisclosed principal is subject to liability to a third party who is justifiably induced to make a detrimental change in position by an agent acting on the principal’s behalf and without actual authority if the principal, having notice of the agent’s conduct and that it might induce others to change their positions, did not take reasonable steps to notify them of the facts.

Question 16

2.07 - Restitution of Benefit

Answer 16

If a principal is unjustly enriched at the expense of another person by the action of an agent or a person who appears to be an agent, the principal is subject to a claim for restitution by that person

Question 17

3.01 Creation of Actual Authority

Answer 17

Actual authority, as defined in § 2.01, is created by a principal’s manifestation to an agent that, as reasonably understood by the agent, expresses the principal’s assent that the agent take action on the principal’s behalf

Question 18

3.02 Formal Requirements

Answer 18

If the law requires a writing or record signed by the principal to evidence an agent’s authority to bind a principal to a contract or other transaction, the principal is not bound in the absence of such a writing or record. A principal may be estopped to assert the lack of such a writing or record when a third party has been induced to make a detrimental change in position by the reasonable belief that an agent has authority to bind the principal that is traceable to a manifestation made by the principal.

Question 19

3.03 Creation of Apparent Authority

Answer 19

Apparent authority, as defined in § 2.03, is created by a person’s manifestation that another has authority to act with legal consequences for the person who makes the manifestation, when a third party reasonably believes the actor to be authorized and the belief is traceable to the manifestation

Question 20

3.04 Capacity to Act as Principal

Answer 20

An individual has capacity to act as principal in a relationship of agency as defined in § 1.01 if, at the time the agent takes action, the individual would have capacity if acting in person

Question 21

3.05 Capacity to Act as Agent

Answer 21

Any person may ordinarily be empowered to act so as to affect the legal relations of another. The actor’s capacity governs the extent to which, by so acting, the actor becomes subject to duties and liabilities to the person whose legal relations are affected or to third parties.

Question 22

3.06 Termination of Actual Authority–In General

Answer 22

An agent’s actual authority may be terminated by:

(1) the agent’s death, cessation of existence, or suspension of powers as stated in § 3.07(1) and (3); or
(2) the principal’s death, cessation of existence, or suspension of powers as stated in § 3.07(2) and (4); or
(3) the principal’s loss of capacity, as stated in § 3.08(1) and (3); or

(4) an agreement between the agent and the principal or the occurrence of circumstances on the basis of which the agent should reasonably conclude that the principal no longer would assent to the agent’s taking action on the principal’s behalf, as stated in § 3.09;
or

(5) a manifestation of revocation by the principal to the agent, or of renunciation by the agent to the principal, as stated in § 3.10(1); or
(6) the occurrence of circumstances specified by statute.

Question 23

3.15 Subagency

Answer 23

A subagent is a person appointed by an agent to perform functions that the agent has consented to perform on behalf of the agent’s principal and for whose conduct the appointing agent is responsible to the principal.

Question 24

3.16 Agent for Coprincipals

Answer 24

Two or more persons may as coprincipals appoint an agent to act for them in the same transaction or matter.

Question 25

4.01 - Ratification

Answer 25

Occurs when one person manifests assent that another person’s actions will bind them, provided the other person was acting or purporting to act on behalf or as their agent. Principal needs to know all material facts for it to be effective.

Question 26

5.03 Imputation of Notice of Fact to Principal

Answer 26

For purposes of determining a principal’s legal relations with a third party, notice of a fact that an agent knows or has reason to know is imputed to the principal if knowledge of the fact is material to the agent’s duties to the principal, unless the agent

(a) acts adversely to the principal as stated in § 5.04, or
(b) is subject to a duty to another not to disclose the fact to the principal.

Question 27

5.04 An Agent Who Acts Adversely to a Principal

Answer 27

§ 5.04 An Agent Who Acts Adversely to a Principal
For purposes of determining a principal’s legal relations with a third party, notice of a fact that an agent knows or has reason to know is not imputed to the principal if the agent acts adversely to the principal in a transaction or matter, intending to act solely for the agent’s own purposes or those of another person. Nevertheless, notice is imputed

Question 28

6.01 Agent for Disclosed Principal

Answer 28

When an agent acting with actual or apparent authority makes a contract on behalf of a disclosed principal,

(1) the principal and the third party are parties to the contract; and
(2) the agent is not a party to the contract unless the agent and third party agree otherwise.

Question 29

6.02 Agent for Unidentified Principal

Answer 29

When an agent acting with actual or apparent authority makes a contract on behalf of an unidentified principal,

(1) the principal and the third party are parties to the contract; and
(2) the agent is a party to the contract unless the agent and the third party agree otherwise.

Question 30

6.03 Agent for Undisclosed Principal

Answer 30

When an agent acting with actual authority makes a contract on behalf of an undisclosed principal,

(1) unless excluded by the contract, the principal is a party to the contract;
(2) the agent and the third party are parties to the contract; and
(3) the principal, if a party to the contract, and the third party have the same rights, liabilities, and defenses against each other as if the principal made the contract personally, subject to §§ 6.05-6.09.

Question 31

6.04 Principal Does Not Exist or Lacks Capacity

Answer 31

Unless the third party agrees otherwise, a person who makes a contract with a third party purportedly as an agent on behalf of a principal becomes a party to the contract if the purported agent knows or has reason to know that the purported principal does not exist or lacks capacity to be a party to a contract.

Question 32

6.10 Agent’s Implied Warranty of Authority

Answer 32

A person who purports to make a contract, representation, or conveyance to or with a third party on behalf of another person, lacking power to bind that person, gives an implied warranty of authority to the third party and is subject to liability to the third party for damages for loss caused by breach of that warranty, including loss of the benefit expected from performance by the principal, unless

(1) the principal or purported principal ratifies the act as stated in § 4.01; or
(2) the person who purports to make the contract, representation, or conveyance gives notice to the third party that no warranty of authority is given; or
(3) the third party knows that the person who purports to make the contract, representation, or conveyance acts without actual authority.

Question 33

6.11 Agent’s Representations

Answer 33

When an agent for a disclosed or unidentified principal makes a false representation about the agent’s authority to a third party, the principal is not subject to liability unless the agent acted with actual or apparent authority in making the representation and the third party does not have notice that the agent’s representation is false.

Question 34

7.01 Agent’s Liability to Third Party

Answer 34

An agent is subject to liability to a third party harmed by the agent’s tortious conduct. Unless an applicable statute provides otherwise, an actor remains subject to liability although the actor acts as an agent or an employee, with actual or apparent authority, or within the scope of employment.

Question 35

7.02 Duty to Principal; Duty to Third Party

Answer 35

An agent’s breach of a duty owed to the principal is not an independent basis for the agent’s tort liability to a third party. An agent is subject to tort liability to a third party harmed by the agent’s conduct only when the agent’s conduct breaches a duty that the agent owes to the third party.

Question 36

7.03 Principal’s Liability–In General

Answer 36

(1) A principal is subject to direct liability to a third party harmed by an agent’s conduct when
(a) as stated in § 7.04, the agent acts with actual authority or the principal ratifies the agent’s conduct and
(i) the agent’s conduct is tortious, or
(ii) the agent’s conduct, if that of the principal, would subject the principal to tort liability; or
(b) as stated in § 7.05, the principal is negligent in selecting, supervising, or otherwise controlling the agent; or
(c) as stated in § 7.06, the principal delegates performance of a duty to use care to protect other persons or their property to an agent who fails to perform the duty.
(2) A principal is subject to vicarious liability to a third party harmed by an agent’s conduct when
(a) as stated in § 7.07, the agent is an employee who commits a tort while acting within the scope of employment; or
(b) as stated in § 7.08, the agent commits a tort when acting with apparent authority in dealing with a third party on or purportedly on behalf of the principal.

Question 37

7.04 Agent Acts with Actual Authority

Answer 37

A principal is subject to liability to a third party harmed by an agent’s conduct when the agent’s conduct is within the scope of the agent’s actual authority or ratified by the principal; and

(1) the agent’s conduct is tortious, or
(2) the agent’s conduct, if that of the principal, would subject the principal to tort liability.

Question 38

7.05 Principal’s Negligence in Conducting Activity Through Agent; Principal’s Special Relationship with Another Person

Answer 38

(1) A principal who conducts an activity through an agent is subject to liability for harm to a third party caused by the agent’s conduct if the harm was caused by the principal’s negligence in selecting, training, retaining, supervising, or otherwise controlling the agent.
(2) When a principal has a special relationship with another person, the principal owes that person a duty of reasonable care with regard to risks arising out of the relation

Question 39

7.07 Employee Acting Within Scope of Employment

Answer 39

(1) An employer is subject to vicarious liability for a tort committed by its employee acting within the scope of employment.
(2) An employee acts within the scope of employment when performing work assigned by the employer or engaging in a course of conduct subject to the employer’s control. An employee’s act is not within the scope of employment when it occurs within an independent course of conduct not intended by the employee to serve any purpose of the employer.