Agency

Question 1

Define Agency

Answer 1

Agency concerns the relationship that exists between Agent & principal;

where the Agent acts on principals behalf;

And is subject to principal’s control

Question 2

How do you create an Agency relationship?

Answer 2

Consent: parties expressly/impliedly agree to enter an agency relationship;

Control: agent is subject to the principal’s control

Or, just remember A.B.C.

Question 3

How is an Agency relationship ended?

Answer 3

An agency relationship can end by act or

by agreement of the parties or

by operation of law.

Question 4

Can an Agency relationship be terminated by the parties?

Answer 4

Yes, agency can be terminated by parties where:

Parties desire;

Expiration of relationship;

Purpose fulfilled

Question 5

What 3 duties does an Agent owe to a Principal?

Answer 5

Loyalty - fiduciary duty of undivided loyalty.

Obedience - Agent must obey Principal’s lawful instructions

Care - Agent must carry out her duties with reasonable care.

Remember: L.O.C.

Question 6

What 3 duties does an Principal owe to an Agent?

Answer 6

Compensation - reasonable compensation, unless Agent acts gratuitously;

Reimbursement - Principal must indemnify agent for all reasonably incurred expenses and losses in carrying out duties;

Cooperation - Principal must cooperate with Agent to help Agent carry out functions

Question 7

What is actual authority?

Answer 7

Actual authority is the authority the Agent reasonably believes he possesses based on his dealings with Principal.

Question 8

What is Express Actual Authority?

Answer 8

Authority expressly provided to Agent by Principal.

Provided in writing or orally

Question 9

What is Implied Actual Authority?

Answer 9

Authority Agent reasonably believes he has based on the Principal’s actions, by words or by conduct.

Includes incidental acts taken by agent that are reasonably necessary to complete a task or transaction.

Question 10

If an Agent doesn’t have Actual Authority, might he still have some other Authority to act on Principals behalf?

Answer 10

Yes, if Agent doesn’t have Actual Authority he might have Apparent Authority.

Question 11

If a third party knows the Agent doesn’t have Actual Authority, can there still be Apparent Authority?

Answer 11

No, if a third party already knows the Agent doesn’t have Actual authority then Apparent Authority does not exist.

Question 12

2 elements for an Agent to act with Apparent Authority?

Answer 12

(1) Principal holds Agent out as having authority to act on Principal’s behalf; and

(2) Principal’s conduct causes a third party to reasonably rely on the Agent’s appearance of authority.

Question 13

What does “Holding Out” mean for Apparent Authority?

Answer 13

When the Principal affirmatively acts or fails to act in a way that causes the third parties’ reasonable belief.

Question 14

Major difference between Actual Authority and Apparent Authority?

Answer 14

Apparent authority arises from the reasonable belief of third parties

Actual arises from the reasonable belief of the Agent himself

Question 15

Can a Principal be bound by Agent’s acts where the Agent lacked authority?

Answer 15

Yes, if:

Agent purported to act on Principal’s behalf;

Principal has knowledge of material facts of K;

Principal affirmed conduct.

Question 16

If the Principal is disclosed to third party, who is liable?

Answer 16

Principal is liable, Agent is not.

Question 17

If the Principal is not disclosed or identified to third party, who is liable?

Answer 17

Both Agent and Principal are liable to third party and either can enforce the K

Question 18

What is Respondeat Superior in Agency?

Answer 18

Doctrine that holds Principal liable for torts committed by Agent within scope of Agency/Employment.

Question 19

Are Principals liable for torts committed by hired Independent Contractors?

Answer 19

Generally, no because Principal generally doesn’t have right to control manner and method by which a person performs their job.

Question 20

What is the major distinguishing factor between Independent Contractors and Employees

Answer 20

Employee relationship - employee is compensated on time basis and Employer has right to control manner and method of how to carry out task.

Independent Contractor - are hired and paid to do a job and Principal has limited rights to control manner and method.

Question 21

What 2 instances will Principal be liable for torts committed by ICs?

Answer 21

(1) inherently dangerous activity

(2) principal knowingly hired incompetent IC