Agency

Question 1

Requirements for an Agency Relationship

Answer 1

CONSENT & CONTROL

(1) Consent by both P & A that A will act for the P’s benefit

AND

(2) A is subject to the P’s control

Question 2

Agency Termination

Answer 2

Authority to act for the P can terminate in several ways, including the P manifesting a desire to the A to discontinue the relationship

Question 3

When is P liable to a 3rd party for breach of K

Answer 3

actual (express or implied) or apparent authority or ratification

Question 4

Common Agency Hypos

Answer 4

(1) Torts = Respondeat Superior

(2) P retains A, A Ks w 3P–> K is breached.

Question 5

When is an A liable to a 3rd Party for Breach of K

Answer 5

(1) Breach of Implied Warranty: had no actual or apparent authority to act

(2) Failure to Disclose P

(3) Partially Disclosed P (not P’s identity AND acted without authority [unless A & 3P had agreed otherwise/novation])

Question 6

Actual Authority

Answer 6

(1) Express - A is expressly given authority to act for P. Where P tells A what to do, and A follows perfectly

(2) Implied - When P’s conduct leads the agent to reasonably believe it has authority. Implied by custom, past course of conduct by the P, necessity, or an emergency circumstance. Implied authority terminates after a reasonable time or following a change in circumstances, death, or incapacity of the principal

Question 7

Apparent Authority

Answer 7

(1) the person dealing w the agent must do so with a reasonable belief in the agent’s authority

(2) the belief must be generated by some act or neglect on the part of the principal

Question 8

Ratification

Answer 8

Even if the agent did not have the authority to enter into a transaction, the principal can ratify the acts (and thus become liable) by expressly or impliedly affirming or accepting the benefit of the acts, so long as the P knew the material facts and had capacity

Question 8

When is a P liable for the torts committed by his agent.

Answer 8

Can be held directly or vicariously liable

(1) Vicarious Liability/Respondeat Superior:
Agent/Employee’s SMI

a.) scope of employment

b.) made a minor deviation (detour) from employment (rather than a frolic) OR

c.) committed an intentional tort only if it was BAN: for P’s benefit, bc P authorized it, or one that arose naturally due to the nature of the employment. Agent is liable too under a theory of J & S liability.

(2) Indemnification: P can recover against the A for indemnification if the A acts beyond his authority

(3) Direct Liability: P is directly liable for his own negligence if he negligently hired the agent, failed to fire the agent, or failed to properly supervise the agent

Question 8

Agent’s Duties to the Principal

Answer 8

(1) Duty of Care

(2) Duty of Loyalty: not to engage in self-dealing, not to profit without disclosure, duty to follow instructions

Principal may recover losses from and profits made by the breaching agent

Question 8

If breach of K and P, A, and 3P are only parties in fact pattern

Answer 8

If P is not liable–> then A MUST be liable

Question 9

General Partners + Authority

Answer 9

General partners have actual and apparent authority to bind the partnership in Ks entered into in the ordinary course of business

Question 10

Members in an LLC + Authority

Answer 10

Members in an LLC have actual and apparent authority to bind the LLC in Ks entered into in the ordinary course of business