Specific Liability of Principals to 3P for Contracts

Question 1

Introduction

Answer 1

Three types of fact patterns on bar:

1. activity that arguably constitutes the formation of an agency relationship between the princpal and the agent
2. the agent will do the work, either by entering into a k on behalf of the principal or by doing a task in whcih the gent commits a torts
3. principal is going to be sued by 3P

Question 2

Legal Authority - List

Answer 2

1. Actual Express Authority
2. Actual Implied Authority
3. Apparent Authority
4. Ratification

Principal may be found liable if agent exercised proper authority.

Question 3

Legal Authority - Actual Exress Authority

Answer 3

Key - look to communication between agent and principal

Rule - principal uses words (written or spoken) to convey authority to the agent and agent subjectively believes he is diong what the principal requested and such belief is reasonable

Subjective Intent - agent must subjectively believe that he is doing what the principal wants him to do

Objective Intent - belief must be reasonble

Death - upon death of principal, actual express authority terminates when the agent has actual knwledge of the principal’s death; terminates immediately upon death of agent

Question 4

Legal Authority - Actual Implied Authority

Answer 4

Key - look to communication between agent and principal

Rule - created when principal uses words (written or spoken) or other conduct to convey authority to the agent to take steps necessary to achieve the principal’s objectives

Scope - agent has AIA to act within general business customs or past customs to achieve that objective

Question 5

Legal Authority - Apparent Authority

Answer 5

Key - look to communication between principal and 3P

Rule - created when principal’s words (writen or spoken) which cause the third party to reasonably believe that the principal consents to have acts done on principals behalf by the agent.

Question 6

Legal Authority - Ratification

Answer 6

Key - theres no pre-act communication to consider

Rule - created when:

1. principal has knowledge of all the material facts of the contracts and
2. the principal then accepts the benefits ofthe contract

Question 7

Disclosure of Principals - Three Types

Answer 7

Disclosed

Partially Disclosed

Not DIsclosed

Question 8

Disclosure of Principals - Disclosed Principal

Answer 8

Disclosed Principal - exists when third party knows:

1. the agent is acting for a principal and
2. the identity of the principal

Note - in these scenarios, the parties to the K are the third party and the principal

Question 9

Disclosure of Principals - Partially Disclosed Principal

Answer 9

Partially Disclosed Principal - exists when third party knows the agent is acting for a principal

Note - in these scenarios, the parties to the K are the 3P, principal, and agent

Question 10

Disclosure of Principals - Nondisclosed

Answer 10

Exists when the 3P knowns neither the identify of the principal nor that the agent is working for him

Note - parties to the K are the 3P and the agent if the principal is undisclosed and the agent does not have authority to act on behalf of the principal. If agent does have authority, and principal undisclosed, then both the agent and principal are parties to the K