Agency

Question 1

Agent definition

Answer 1

Person that does things on behalf of principal

Question 2

Principal definition

Answer 2

Directs agent’s acts, and almost always responsible for them

Question 3

When can a principal be liable?

Answer 3

In contract or tort

Question 4

How is an agency relationship created?

Answer 4

1. Assent
2. Benefit
3. Control

Question 5

What does assent require (for creating an agency relationship)?

Answer 5

That both parties manifest assent to work with one another.

Question 6

What does benefit require (for creating an agency relationship)?

Answer 6

Agent agrees to work for principal’s benefit.

Question 7

What does control require (for creating an agency relationship)?

Answer 7

Agent agrees to work subject to principal’s control.

Question 8

Is consideration required to create agency relationships?

Answer 8

No

Question 9

Do parties need to know they are in an agency relationship?

Answer 9

No

Question 10

What if one or more parties disclaim an agency relationship?

Answer 10

Court looks to manifestation of assent. Can be manifested formally, spoken and informal, physical assent, etc.

Question 11

Who can legally be a principal? (Who is included vs. excluded?)

Answer 11

Almost any [legal] person or entity that has legal capacity.

Excludes: minors and the incapacitated (bc of illness or drugs); unincorporated associations

Includes: employers, LLCs, corporations, partnerships, other business entities

Question 12

If principal more heavy handed, more or less liable?

Answer 12

More, and vise versa.

Question 13

Which entities cannot be principals?

Answer 13

Unincorporated associations (bc lack legal capacity)

Question 14

Who can be an agent? (Who is included vs. excluded?)

Answer 14

Any legal person or entity that has minimal capacity.

Includes: minors and almost any type of business entity

Question 15

Can agents have more or less capacity than principals?

Answer 15

Less

Question 16

Can a minor serve as an agent?

Answer 16

Yes

Question 17

To have min capacity, agent must be able to…

Answer 17

1) assent to agency relationship
2) perform the tasks
3) be subject to the principal’s control

Question 18

Can you be a gratuitous agent?

Answer 18

Yes

Question 19

Do you need evidence in writing to create an agency relationship?

Answer 19

No

Question 20

What are the different types of agents?

Answer 20

1) Servant/employee-type:
a) Dominated by principal
b) Employer has right to control agent’s physical conduct of work

2) Independent contractor:
a) under less control
b) principal does not control or have right to control agent’s physical conduct of work

Question 21

Independent contractor characteristics:

Answer 21

1. Maintain high level of independence
2. Free to work for others
3. Typically paid fixed fee (as opposed to salary)
4. Typically owns own tools

Question 22

Which agency relationship comes with more or less liability—employee-type or independent contractor?

Answer 22

Employee-type

Question 23

How do you get out of an agency relationship?

Answer 23

Either party can terminate unilaterally. Other party doesn’t need to agree to it. But remember that if based on apparent authority, P needs to tell third party or still liable.

Question 24

When is a principal liable for a contract created by agent?

Answer 24

1) Principal has authorized agent to enter into it, or

2) Agent has acted with legal authority

Question 25

What are the different kinds of legal authority?

Answer 25

1) Actual express 2) Actual implied 3) Apparent 4) Ratification

Question 26

If principal communicates with agent, more likely to be ___ authority. If principal communicates with third party, more likely to be ___ authority.

Answer 26

actual; apparent

Question 27

What is actual express authority?

Answer 27

When principal uses words, written or spoken, to convey authority to agent.

Question 28

What is the test for actual express authority?

Answer 28

1. Did agent subjectively believe what they were doing was right? 2. Was that objectively reasonable?

Question 29

What happens to actual express authority when principal dies?

Answer 29

It terminates when agent has actual knowledge of principal's death.

Question 30

What happens to actual express authority when agent dies?

Answer 30

It terminates immediately.

Question 31

Principal creates actual implied authority by doing what? What does this give the agent authority to do?

Answer 31

(Think Godfather:) Using words, written or spoken, or other conduct to convey authority to agent to take whatever steps necessary to achieve principal's objective. Gives agent authority to act within accepted business custom or general trade usage.

Question 32

Principal creates apparent authority by doing what?

Answer 32

Using words--written or spoken--that cause third party to reasonably believe principal consents to have acts done on the principal's behalf by the agent. Comms is between principal and third party.

Question 33

How do you know if third party belief about apparent authority is reasonable?

Answer 33

Look at their business dealings in the past.

Question 34

What if there is apparent authority, but then principal specifically tells agent not to do something. Is principal still liable for that thing?

Answer 34

Yes, still bound by apparent authority.

Question 35

What if principal fires agent but then agent keeps using apparent authority?

Answer 35

Still liable until apparent authority revoked with third party.

Question 36

What is a ratification agency relationship? What does it require?

Answer 36

No comms between principal or anyone before contract entered into. Requires that principal has knowledge of material contract, and then principal accepts contract's benefits.

Question 37

What does it mean to say that a principal is disclosed? And who is liable on the contract when that is the case?

Answer 37

3rd party knows that agent is acting on behalf of principal, and the principal's ID. Principal and 3rd party are liable on the contract.

Question 38

What does it mean to say that a principal is partially disclosed? And who is liable on the contract when that is the case?

Answer 38

3rd party knows that agent is working for someone but doesn't know ID of principal. Any of the three parties can be sued.

Question 39

What does it mean to say that a principal is undisclosed? And who is liable on the contract when that is the case?

Answer 39

3rd party doesn't know about existence of principal at all. Parties to contract are just 3rd party and agent alone. Can't sue the principal. Agent is responsible for it.

Question 40

Vicarious liability/respondeat superior definition

Answer 40

When principal can be liable to a third party victim for tortious acts of agent.

Question 41

When does vicarious liability/respondeat superior apply?

Answer 41

1. Employee-type agency (bc principal has sufficient control over agent) 2. Tort committed in scope of employment

Question 42

Is a principal vicariously liable for independent contractors?

Answer 42

Generally not. Exceptions: 1. Task is inherently dangerous 2. Neg in hiring independent contractor 3. Principal retains control over certain tasks and tort occurs within those tasks

Question 43

Test for whether something is within the scope of employment:

Answer 43

1. Did agent intend to benefit principal? 2. Was agent's conduct of the kind he was hired to perform? 3. Did tort occur on the job?

Question 44

Frolic vs. detour

Answer 44

Frolic: Not within scope of employment. Significant deviation from assigned path. Detour: Within scope of employment. De minimis deviation from assigned path.

Question 45

Are intentional torts within or outside scope of employment?

Answer 45

Typically outside, so principal not liable. Exceptions: 1. Conduct occurs within general space and time limits of the employment, 2. Agent motivated in part to benefit principal, and... 3. Agent is doing the kind of act he was hired to do.

Question 46

What fiduciary duties do agents owe principals?

Answer 46

1. Duty to exercise reasonable care 2. Duty to obey reasonable instructions 3. Duty of loyalty

Question 47

Do the agents owe their principals duties if gratuitious?

Answer 47

Yes

Question 48

Under the duty of loyalty, an agent cannot...

Answer 48

1. Usurp a business opportunity. (Usual cure is to disclose the conflict.) 2. Take in secret profits. 3. Compete in a competing business with the principal.

Question 49

What happens if agents violate their fiduciary duties?

Answer 49

Could be liable.

Question 50

Estoppel:

Answer 50

If P learned that someone was going around telling third parties that A had authority to enter into contracts on P's behalf, and P does nothing to tell third parties that's not true, P will be estopped from claiming no agency relationship or liability to third party.