Agency

Question 1

What is an agent?

Answer 1

An agent is a person who is authorized and agrees to act on behalf of and subject to the control of another.

Question 2

Why does agency matter?

Answer 2

1. Principles are vicariously liable for their agents’ actions that are within the scope of the agency relationship.
2. Agents owe fiduciary duties to their principal.

Question 3

What are some types of agency relationships?

Answer 3

1. Employer and employee
2. Lawyer and Client
3. Broker and client

Question 4

How is an agency relationship created?

Answer 4

Assent, Behalf, Control

the principal manifests assent to have the agent act on the principal’s behalf and under the principal’s control and the agent manifests assent or otherwise consents to act.

Question 5

T or F: Parties must enter into a written contract to form an agency relationship.

Answer 5

False. A written contract is not necessary to create an agency relationship.

As long as there is assent from both the principal and agent, the agent acts on behalf of the principal and that principal is under the control of the agent, there is an agency relationship.

Question 6

T or F: If a party declares “I am not your agent,” this declaration is sufficient to always negate the finding of an agency relationship between you and this party?

Answer 6

False, actual intent to enter into an “agency” relationship or to be an agent is not necessary to create an agency relationship.

This means that agency relationship can arise by implication and actions, regardless of the parties’ intent.

Any kind of manifestation of assent.

Question 7

Do you have to use the words “agents” or “principal” in a written agreement for there to be an agency relationship?

Answer 7

NO. Whether a relationship is characterized as agency in an agreement between parties or in the context of industry or popular usage is not controlling. RTA 1.02

Example, I can write I’m the manager of x and exhibit my assent to be x’s manager and x agrees. Plus that I’m acting on behalf of x and x is under my contorl. Then, in this example, there is an agency relationship even though I didn’t use the word agency in the agreeemnt.

Question 8

Legal Consequences of agency

Answer 8

1. Vicarious liaiblity
2. Duty of Loyalty: acting in the benefits of the principal.

Question 9

Yost v Wabash College

Answer 9

1. There is neither evidence that wabash assented to such an arrangement nor evidence that the local fraternity manifested assent to take action on behalf of wabash.
2. Local fraternity does not represent the college and there are no assents between the two.
3. There is no agency relationship, so the actions of the local fraternity and its members cannot be imputed to wabash under a theory of vicarious liability.

Question 10

Does agency relationship exists between franchisor and franchisee?

Answer 10

Depends. An agency relationship is more likely when the purported principal’s authority encompasses the problem before the court.

Question 11

Duties Principals and Agents owe to each other

Answer 11

Principles’ Duties:

1. Performance of Contract Obligations
2. Indemnification
3. Good faith and fair dealing.

Agent’s duties:

1. Performance of contract obligations
2. Duty of Care
3. Duty of Competence
4. Duty of Diligence
5. Duty of Disclosure
6. Duty of Loyalty.

Question 12

What is duty of loyalty?

Answer 12

1. a duty not to communicate confidential informaiton of the principal for the agent’s own purposes or those of a third party.
2. a duty not to compete with the principal in any matter within the scope of the agency relationship and
3. a duty not to act as an adverse party to the principal in a transaction connected with the agency relationsihp.
4. a duty not to acquire a material benefit from a third party in connection with transactions on behalf of the principal.

Question 13

Remedies for a breach of duty of loyalty

Answer 13

1) Damages

2) Disgorgement of profits

Question 14

What does disgorgement of profits mean?

Answer 14

Disgorgement is an equitable remedy requiring a party who profits from wrongful acts to give up any profits they made as a result of that illegal or wrongful conduct.

Question 15

Food Lion Inc. v Capital Cities

Answer 15

Employees are agents of their employer

Employees owe a duty of loyalty to their employer while under their employment

Reporters breached their duty to their employer by promoting the interests of their other employer (ABC) to the detriment of Food Lion with “the requisite intent to act against the interests of Food Lion.

Question 16

Non-compete agreements

Answer 16

Employers are subject to applicable legal requirements to protect themselves from competition with their former employees by requiring a non-compete agreement as a condition of employment.

Non-compete is reasonable as long as they are 1. Limited in time, space and scope of work.

Question 17

Does doing a side-project violate the duty of loyalty?

Answer 17

Yes, because the duty of loyalty requires that the agent put the principal’s interest first. And doing side projects would compete.

The agent should negotiate in his contract with the firm about his ability to consult during off hours.

Question 18

What is Express Actual Authority

Answer 18

P manifests to A that it wishes A to so act

Question 19

What is implied actual authority?

Answer 19

Covers all things necessary or incidental to exercise to express actual authority

Question 20

What is apparent authority

Answer 20

Even in the absence of actual agency relationship or actual authority, if a third party reasonably believes - based on manifestations by the principal - that the Agent is authorized to act on their behalf then principal may be liable for A’s acts.

Question 21

When does actual authority created?

Answer 21

Actual Authority is created by a principal’s manifestation to an agent that as reasonably understood by the agent, expresses the principal’s assent that the agent take action on the principal’s behalf.

Question 22

How does one manifest assent?

Answer 22

A person manifests assent or intention through written or spoken words or other conduct.

Question 23

What is the scope of actual authority?

Answer 23

An agent has actual authority to take action designated or implied in the principal’s manifestations to the agent and acts necessary or incidental to achieving the principal’s objectives, as the agent reasonably understands the principal’s manifestations and objectives when the agent determines how to act.

Question 24

What are some elements to constitute implied authority?

Answer 24

Ex. the housing and transportation issues of workers are well within the implied authority of the company because these are necessary components of sub-company’s recruitment process.

It was “essential to the success” of sub-company’s hiring process of workers with housing.

Question 25

T or F: If the sub-company acted outside of its actual authority, then the parent company cannot be vicariously liable for sub-company’s actions.

Answer 25

False. One person may bind another in a transaction with a third person, even in the absence of actual authority, when the third person REASONABLY BELIEVES - based on manifestations by the purported principal - that the actor is authorized to act on behalf of the purported principal. - Apparent authority.

Question 26

What is apparent authority?

Answer 26

Apparent authority is the power held by an agent or other actor to affect a principal’s legal relations with third parties when a third party reasonably believes the actor has authority to act on behalf of the principal and that belief is TRACEABLE TO THE PRINCIPAL’S MANIFESTATIONS.

Even in absence of actual authority, if third party reasonably believes - based on manifestations by the purported P - that A is authorized to act on behalf of purported P, then purported P may be liable for A’s action.