Agency Flashcards
(15 cards)
How is an agency relationship created?
Priority: High
An agency relationship is created when a principal manifests assent to an agent, the agent acts on the principal’s behalf, the agent’s actions are subject to the principal’s control, and the agent manifests assent or otherwise consents.
When is a principal undisclosed? What kind of authority can exist when there is an undisclosed principal?
A principal is undisclosed if the third party has no notice of the principal’s existence.
Actual authority only. Apparent authority cannot exist when there is an undisclosed principal
When is a principal lable for contracts his agent enters into?
A principal is subject to liability on a contract the agent enters into on the principal’s behalf if the agent had the power to bind the principal to the contract.
When does an agent have the power to bind the principal to a contract?
An agent has the power to bind the principal to a contract when the agent has actual or apparent authority, or the principal is estopped from denying the agent’s authority.
What is express authority?
Actual authority may be express or implied. Express authority occurs when the principal has explicitly told the agent that the agent may act in a particular manner.
When does apparent authority exist?
Apparent authority exists when a third party reasonably believes that the agent has authority to act on behalf of the principal as a result of the principal’s manifestations.
When does actual authority exist?
Actual authority exists when the principal makes a manfiestation that causes the agent to reasonably believe that the agent is authorized to act on the principal’s behalf.
How does an undisclosed principal affect an agent’s liability?
An agent who enters into a contract on behalf of an undisclosed principal becomes a party to a contract.
Thus, when the agent does not inform a third party of the identity or the existence of the principal, the agent becomes liable to the third party on the contract.
When is a principal partially disclosed?
A principal is partially disclosed if the third party has notice of the principal’s existence but not the principal’s identity.
What is an agent’s contract liability when a principal is partially disclosed?
Unless the agent and the third party agree otherwise, an agent who enters into a contract on behalf of a partially disclosed principal becomes a party to the contract (and, therefore, liable).
What is ratification, and what are the elements?
A principal can subsequently ratify an act that was done on the principal’s behalf without authority.
There are four requirements for ratification:
- The principal must ratify the entire contract.
- The principal and the third party must have legal capacity to enter into the contract.
- The ratification must occur before the third party withdraws from the contract.
- The principal must know the material facts of the transaction.
What is vicarious liability?
The doctrine of vicarious liability asserts that a principal may be held liable for the acts of an agent, even if the principal wasn’t directly responsible for any wrongdoing.
What is respondeat superior?
Under the doctrine of respondeat superior, a principal may be vicariously liable for a tort committed by an agent acting within the scope of his employment.
When is an employee acting within the scope of employment?
An employee acts within the scope of employment when either performing work assigned by the employer or engaging in a course of conduct subject to the employer’s control.
When an employee acts independently of any intent to serve any purpose of the employer, the employer may escape liability.
When can a principal be liable for an agent’s torts if respondeat superior does not apply?
A principal is liable for a tort committed by an agent with apparent authority when the agent’s appearance of authority enables him to commit a tort or conceal its commission.
