Second Restatement Agency (Statute Breakdowns)

Question 1

1(1) Agency

Answer 1

1. Agency is the fiduciary relation which results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act.

Question 2

1(2) Principal

Answer 2

2. The one for whom action is to be taken is the principal.

Question 3

2(1) Master

Answer 3

A master is a principal who employs an agent to preform service in his affairs and who controls or has the right to control the physical conduct of the other in the performance of the service.

Question 4

1(3) Agent

Answer 4

3. The one who is to act is the agent.

Question 5

2(2) Servant

Answer 5

A servant is an agent employed by a master to preform service in his affairs and who controls or has the right to control the physical conduct of the other in performance of the service.

Question 6

2(3) Independent Contractor

Answer 6

An independent contractor is a person who contracts with another to do something for him but who is not controlled by the other nor subject to the other’s right to control with respect to his physical conduct in the performance of the undertaking. He may or may not be an agent.

Question 7

7. Authority

Answer 7

Authority is the power of the agent to affect the legal relations of the principal by acts done in accordance with the principal’s manifestations of consent to him.

Question 8

8. Apparent Authority

Answer 8

Apparent authority is the power to affect the legal relations of another person by transactions with third persons, professedly as agent for the other, arising from and in accordance with the other’s manifestations to such third persons.

Question 9

8A. Inherent Agency Power

Answer 9

A term used to indicate the power of an agent which is derived not from authority, apparent authority or estoppel, but solely from the agency relation and exists for the protection of persons harmed by or dealing with a servant or other agent.

Question 10

26. Creation of Authority - General Rule

Answer 10

Except for the execution of instruments under seal or for the performance of transactions required by statute to be authorized in a particular way, authority to do an act can be created by written or spoken words or other conduct of the principal which, reasonably interpreted, causes the agent to believe that the principal desires him so to act on the principal’s account.

Question 11

27. Creation of Apparent Authority - General Rule

Answer 11

Except for the execution of instruments under seal or for the conduct of transactions required by statute to be authorized in a particular way, apparent authority to do an act is created as to a third person by written or spoken words or any other conduct of the principal which, reasonably interpreted, causes the third person to believe that the principal consents to have the act done on his behalf by the person purporting to act for him.

Question 12

33. General Rule of Interpretation

Answer 12

An agent is authorized to do, and only to do, what is reasonable for him to infer that the principal desires him to do in the light of the principal’s manifestation and the facts as he knows or should know them at the time he acts.

Question 13

34. Circumstances Considered in Interpreting Authority

Answer 13

An authorization is interpreted in light of all accompanying circumstances including among other matters:

a) the situation of the parties, their relations to one another, and the business in which they are engaged;
b) the general usages of business, the usages of trades or employments of the kind to which they are engaged;
c) facts of which the agent has notice respecting the object which the principal desires to accomplish;
d) the nature of the subject matter, the circumstances under which the act is to be performed and the legality or illegality of the act; and
e) the formality or informality, and the care, or lack of it, with which an instrument evidencing the authority is drawn.

Question 14

35. When Incidental Authority is Inferred

Answer 14

Unless otherwise agreed, authority to conduct a transition includes authority to do acts which are incidental to it, usually accompany it, or are reasonably necessary to accomplish it.

Question 15

82. Ratification

Answer 15

The affirmance by a person of a prior act which did not bind him but which was done or professedly done on his account, whereby the act, as to some or all persons, is given effect as if originally authorized by him.

Question 16

144. General Rule

Answer 16

A disclosed or partially disclosed principal is subject to liability upon contracts made by an agent acting within his authority if made in proper form and with understanding that the principal is a party.

Question 17

145. Authorized Representation

Answer 17

In actions brought upon a contract or to rescind a contract/conveyance to which he is a party, a disclosed or partially disclosed principal is responsible for authorized representations of an agent made in connection with it as if made by himself, subject to the rules as to the effect of knowledge of, and notifications given to, the agent.

Question 18

159. Apparent Authority

Answer 18

A disclosed or partially disclosed principal is subject to liability upon contracts made by an agent acting within his apparent authority if made in proper form and with the understanding that the apparent principal is a party. The rules as to the liability of a principal for authorized acts, are applicable to unauthorized acts which are apparently authorized.

Question 19

160. Violation of Secret Instructions

Answer 19

A disclosed or partially disclosed principal authorizing an agent to make a contract, but imposing upon him limitations as to incidental terms intended not to be revealed, is subject to liability upon a contract made in violation of such limitations with a third person who has no notice of them.

Question 20

161. Unauthorized Acts f General Agent

Answer 20

A general agent for a disclosed or partially disclosed principal subjects his principal to liability for acts done on his account which usually accompany or are incidental to transactions which the agent is authorized to conduct if, although they are forbidden by the principal, the other party reasonably believes that the agent is authorized to do them and has no notice that he is not so authorized.

Question 21

186. General Rule

Answer 21

An undisclosed principal is bound by contracts and conveyances made on his account by an agent acting within his authority,, except that the principal is not bound by a contract which is under seal or which is negotiable, or upon a contract which excludes him.

Question 22

194. Acts of General Agents

Answer 22

A general agent for an undisclosed principal authorized to conduct transactions subjects his principal to liability for acts done on his account, if usual or necessary in such transactions, although forbidden by the principal to do them.

Question 23

195. Acts of Manager Appearing to be Owner

Answer 23

An undisclosed principal who entrusts an agent with the management of his business is subject to liability to third persons with whom the agent enters into transactions usual in such businesses and on the principal’s account, although contrary to the directions of the principal.

Question 24

219(1). When Master is Liable for Torts of His Servants

Answer 24

A master is subject to liability for the torts of his servants committed while acting in the scope of their employment.

Question 25

219(2). When Master is Liable for Torts of His Servants

Answer 25

A master is not subject to liability for the torts of his servants acting outside the scope of their employment, unless:

a) the master intended the conduct or the consequences, or
b) the master was negligent or reckless, or
c) the conduct was violated by a non-delegable duty of the master, or
d) the servant purported to act or to speak on behalf of the principal and there was reliance upon apparent authority, or he was aided in accomplishing the tort by the existence of the agency relation.

Question 26

220(1). Definition of Servant

Answer 26

A servant is a person employed to perform services in the affairs of another and who with respect to the physical conduct in the performance of the services is subject to the other’s control or right to control.

Question 27

220(2). Definition of Servant

Answer 27

In determining whether one acting for another is a servant or an independent contractor, the following matters of fact, among others, are considered:

a) the extent of control which, by the agreement, the master may exercise over the details of the work;
b) whether or not the one employed is engaged in a distinct occupation or business;
c) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision;
d) the skill required in the particular occupation;
e) whether the employer or the workman supplies the instrumentalities, tools, and the place of work for the person doing the work;
f) the length of time for which the person is employed;
g) the method of payment, whether by the time or by the job;
h) whether or not the work is a part of the regular business of the employer;
i) whether or not the parties believe they are creating the relation of master and servant; and
j) whether the principal is or is not in business.