Flashcards in Agency Deck (47):
A principal is liable for the torts of an agent if
(1) there is a principal-agent relationship
(2) the tort was committed by the agent within the scope of that relationship
The requirements of a principal-agent relationship are
**The ABCs of the principal-agent relationship. An agent ASSENTS to the CONTROL of a principal for the principal’s BENEFIT.
The "assent" requirement of the principal-agent relationship test is satisfied by
an agreement between the principal and agent.
The "benefit" requirement of the principal-agent relationship test is satisfied if
the agent's conduct must be for the principal's benefit.
The "control" requirement of the principal-agent relationship test is satisfied if
the principal must have the right to control the agent by having the power to supervise the manner of its performance.
A principal is vicariously liable for torts committed by a sub-agent only if
there is assent, benefit, and control between the sub-agent and the principal.
**Typically the principal does not assent to the sub-agent's help or have the right to control.
A principal who borrows another principal's agent is vicariously liable for the borrowed agent's tort only if
there is assent, benefit, and control between the borrowed agent and the principal.
**The borrowing principal almost never has CONTROL over the borrowing agent.
If the right to control is missing, the relationship is likely that of
There is no right to ______ an independent contractor
There is no power to supervise the manner of their performance.
Generally, there (is/is no) vicarious liability for torts by an independent contractor.
There is vicarious liability for torts by an independent contractor for
(1) inherently dangerous activities; or
(2) estoppel if the principal holds out the independent contractor as an agent
Factors to consider when determining whether the tort was committed within the scope of the agency relationship are
(1) JOB DESCRIPTION; (2) ON THE JOB; (3) BENEFIT THE PRINCIPAL
(1) whether the conduct was of the kind the agent was hired to perform, i.e. inside the job description; or
(2) whether the conduct occurred on the job (MOST IMPORTANT); or
(3) the agent, even in part, intended to benefit the principal by its conduct
Frolic and detour is relevant to the ______ factor of the agency relationship.
"on the job"
A frolic is a
NEW and INDEPENDENT JOURNEY. NO vicarious liability.
A detour is a
MERE DEPARTURE from an assigned task. Vicarious liability still attaches.
A principal is liable for its _____ torts within the ______ of agency.
Generally, a principal (is/is not) vicariously liable for intentional torts committed by its agent.
Intentional torts are generally _________ of the agency relationship.
outside the scope.
An intentional tort is within the scope of agency and the principal is vicariously liable for the intentional torts of its agent in any one of the following situations:
(1) AUTHORIZATION; (2) NATURAL; (3) DESIRE
(1) the principal authorized the intentional tort; or
(2) the conduct was natural from the nature of employment (e.g. a bouncer); or
(3) motivated by a desire to serve the principal
A principal is liable for contracts entered into by its agent only if the principal _______ the agent to enter into the contract.
The four types of "authority" by which a principal can authorize an agent to enter a contract are
(1) actual express
(2) actual implied
Actual express authority arises when
the principal uses words to authorize the agent to enter into the contract.
Actual express authority need not be overt or written, but can be
oral and even private.
**Watch out for statute of frauds exception.
If the underlying contract itself must be in writing, then express authority must
also be in writing.
E.g. if Statute of Frauds applies to the underlying K, the express authority must also be in writing.
Express authority will be revoked by
(1) unilateral act of either the principal or agent; or
(2) death or incapacity of the principal
A principal is liable on its _______ contracts.
The death or incapacity of the principal _______ "express authority" unless there is
terminates; a durable power of attorney.
A durable power of attorney is a
written expression of authority to enter into a transaction that contains clear survival language.
Actual express authority is _____ construed.
Actual implied authority arises when
there is conduct or circumstances that give rise to authority.
Actual implied authority typically arises in the following three ways:
(3) prior acquiescence by the principal
Actual implied authority will arise through "necessity" when the implied authority is necessary
to accomplish an expressly authorized task.
Actual implied authority will arise through "custom" for all tasks which by custom are
performed by person's with the agent's title or position.
Actual implied authority will arise through "prior acquiescence by the principal" for all tasks which
the agent believes to be authorized to do from prior acquiescence by the principal.
Apparent authority arises when
(1) PRINCIPAL CLOAKED; (2) REASONABLE RELIANCE
(1) the principal "cloaked" the agent with the appearance of authority; and
(2) the third party reasonably relied on the appearance of authority.
A principal "cloaks" an agent with the appearance of authority when
the principal does SOMETHING to give the agent the appearance of authority.
A principal can "ratify" a previously-entered into contract if
(1) the principal has knowledge of all material facts regarding the K; and
(2) the principal accepts the benefits.
**The principal cannot not alter the K's terms. If alternation is attempted, there is no ratification.
Ratification _____ alter the terms of the contract.
An ______ agent is not liable on its _____ contracts.
If a principal is partially disclosed or fully undisclosed, an authorized agent may nonetheless be _________ at the ______ of the third party.
**Involves some concealment of the identity of the principal
***The principal can be liable too if the third-party so elects.
All agents owe principals the following three duties:
(1) duty of care
(2) duty to obey reasonable instructions
(3) duty of loyalty**
**Most important on the exam.
Under the duty of loyalty, an agent may not
(1) self-deal (receive a benefit to the detriment of the principal)
(2) usurp the principal's opportunity
(3) secret profits (undisclosed profits)
An agent engages in self-dealing by
receiving a benefit to the detriment of the principal.
Remedies: If an agent breaches a duty to the principal, the principal may
(1) recover losses that are caused by the agent's breach; and
(2) disgorge profits made by a breaching agent.
In order to form an agency relationship, the _________ must have the capacity to contract.
principal. The agent need not have that capacity.
An agency relationship may not be terminated unilaterally by the principal where
the agent has an interest in the subject matter of the agency.