Agency

Question 1

Forming agency relationships

Answer 1

• test for existence is objective
• does not need to be contractual, there is no requirement of consideration (technically work without pay)

Question 2

Agent’s Duties to Principal

Answer 2

1. Duty of Loyalty
2. Obey reasonable actions
3. Act with reasonable care and skill
4. Duty to Account
5. Keep principal informed

Question 3

Duty of Loyalty

Answer 3

agent’s acts for principal’s benefit - not for agent’s own benefit at principal’s expense
* no conflicts of interest
* maintain confidentiality

Question 4

Duty to Account

Answer 4

segregate funds and keep good records

Question 5

Principal’s Duties to Agent

Answer 5

1. Honor agreements
2. Compensate Agent (if agreed upon)
3. Reimburse Agent
4. Indemnify agent
5. Inform agent of known risks

Question 6

Indemnify agent

Answer 6

for contract or tort liability agent incurs by acting on a principal’s behalf (unless unauthorized)

Question 7

I ASK YOU TO STRONG-ARM YOUR FRIENDS INTO SELLING THEIR BASKETBALL TICKETS TO MY BUSINESS. YOU ARE MY AGENT, MUST YOU DO THIS?

Answer 7

No because it is unreasonable instructions - “the boss made me do it” is not an excuse

Question 8

YOU GET QUOTES FROM TWO LUMBER PROVIDERS. ONE OF THE PROVIDERS ANTICIPATES THAT IF THIS VENTURE GOES WELL YOU MAY BE BUILDING MORE BOOTHS. HE OFFERS TO GIVE YOU AN ALL EXPENSE PAID WEEK OF SKIING AT VAIL IF YOU BUY LUMBER FROM HIM. SHOULD YOU DO IT

Answer 8

this is a conflict of interest, called kickback – to clear this you must go straight to principal and have full disclosure

Question 9

I DIDN’T SAY ANYTHING ABOUT THE TYPE OF BOOTH I WANTED, SO YOU HASTILY NAIL SOME LUMBER TOGETHER TO MAKE A BOOTH. THE FIRST PERSON THAT COMES TO BUY TICKETS IS INJURED WHEN SHE LEANS ON THE BOOTH’S COUNTER, DO YOU OWE A DUTY?

Answer 9

Yes, lack of reasonable care

Question 10

I HAVE A COUPLE OF GOOD SOURCES FOR OBTAINING TICKETS. I GIVE YOU MY SOURCES CONTACT INFO BUT YOU USE THEM TO GET YOUR FRIENDS TICKETS

Answer 10

This is violating a duty of loyalty and violation to keep principal informed

Question 11

How does an agent get the power to act for the principal?

Answer 11

1. actual express authority
2. actual implied authority
3. Apparent Authority
4. Ratification

Question 12

Actual Implied Authority

Answer 12

principal’s authorization of the agent is implied from parties’ conduct or position granted to agent

Question 13

Test based on questions of fact (implied authority)

Answer 13

• Was the agent doing the sort of activity that would be expected of a person in that role?
• Was the agent doing something that helped accomplish the goals of the agency?
• Did the principal know about and not do anything to stop the agent’s acts?
• Was the agent acting reasonably in an emergency?

Question 14

Apparent Authority

Answer 14

words or conduct by the principal to a third party that cause the third party to reasonably believe that the agent has authority to act for the principal, even if principal has not actually authorized the agent to so

Question 15

When does the agency relationship end?

Answer 15

• goal of the agency is accomplished
• parties agree to terminate
• death of either the principal or agent
• either party always has the power to terminate the agency on their own, but not always the right to do so

Question 16

Apparent authority of the agent will continue until…

Answer 16

the principal gives notice to the third parties that the agency has terminated

Question 17

Ratification

Answer 17

occurs when a principal voluntarily decides to honor an agreement, even though the agent was not authorized to enter the agreement

Question 18

Disclosed Principal

Answer 18

third party knows that the agent is working for a principal, and knows who the principal is = agent is not liable on contract

Question 19

Disclosed Principal (excpetion)

Answer 19

If agent does not disclose identity or fact of the principal to the third party, or if principal doesn’t exist at time of deal, the agent is personally liable

Question 20

Agent can either be _____ or ______

Answer 20

an employee or independent contractor

Question 21

Nearly all employees are _____ of their employers

Answer 21

agents

Question 22

An independent contractor is not an ____ but is sometimes an _____

Answer 22

not an employee but is sometimes an agent (realtor, lawyer)

Question 23

When does the principal have more obligations (i.e wages, benefits)

Answer 23

when the agent is an employee

Question 24

Employee vs. Independent Contractor

Answer 24

1. employer’s right to require compliance with instructions
2. extent of any training provided by employers
3. degree of integration of the worker’s services into the business of the employer
4. requirement that the services be provided personally by worker
5. extent to which the worker hires, supervises, and pays assistants
6. existence of a continuing relationship

Question 25

2 ways a principal may be liable for an agent’s tort

Answer 25

1. Respondeat Superior
2. Direct Liability
3. Joint and several liability and idemmnification

Question 26

Respondeat Superior

Answer 26

only for employee/employer relationships not independent contractor
* employer is liable when employee commits tort within the scope of employment

Question 27

For respondeat superior, consider whether the agent was:

Answer 27

• acting on work time
• acting at the work location
• motivated by the employers interests

Question 28

Direct Liability

Answer 28

for both employees and independent contractors
- principal is directly liable for agent’s tort if the principal authorized the tortious conduct

Question 29

Negligent Hiring or Supervision

Answer 29

principal will be directly liable if principal was negligent in hiring agent

Question 30

Joint and Several Liability and Idemnification

Answer 30

In certain situations where several tortfeasors have caused damages to a plaintiff, courts can hold all of the tortfeasors jointly and severally liable for plaintiff’s injuries