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Flashcards in Agency Deck (51)
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What does the law of agency address?


The legal consequences of the agent action on behalf of and subject to the control of the principal.


Agency law governs what type of liabilities?

Ageny relationships involve contractual and tortious acts.


How is an agency relationship created?

Generally, a principal appoints an agent (expressed orally or in a writing.

An agency relationship can also be created by:

  1. Implied through a principal's conduct, or
  2. The Third-Party misinterpreting the relationship between the apparent agent and the principal.


When is an agency relationship created?

  1. A principal manifest assent to an agent,
  2. the agent acts on the principal's behalf,
  3. the agent's actions are subject to the principal's control, and
  4. the agent manifests assent or otherwise consents.


Who can be a principle?

Any individual or entity (including a government, an organization, or an association) that:

  • has the legal capacity to possess rights, and
  • has the legal capacty to incur obligations.


What are principal's authorized to do?

  • Delegate task
  • Give instructions
  • Direct their agent's tasks
  • Monitor their agent's activities


What is the principal's control?

An agent agrees to be subject to the principal's control, and the principal agrees to be bound by its agent's acts within the scope of the agent's authority.


What type of individual can be a principal?

Any individual who has contractual capacity in the jurisdiction.


What is a "master" in agency law?

A principal who employs an agent to perform services, and who has the right to controls the physical conduct of the agent's performance.

Also refered as an employer.


What are the factors used to distinguish servants/employees from independent contractors?

  • The principal exercises signifcant control over the details of the worker's day-to-day activities
  • The principal supplies the tools at the place of employment
  • The principal pays the worker on a structured pay period
  • The worker's skill level is specialized
  • The principal directs the work to completion


Under agency principals, who is an entrepreneur?

Any business owner who has the legal capacity to contract with a person to represent him and conduct business on his behalf.


Who are a corporation's principal? Agent?

The corporation is the principal. All employees, directors, and officers are the corporation's agents.


Generally, what is required to be an agent?

Due to the consensual nature of agency relationships, an agent must:

  • have minimal capacity,
  • manifest assent and consent to act on the principal's behalf, and
  • manifest assent to be subject to the principal's control.


What is required for an individual to be an agent?

Any individual with minimal capacity has the requisite capcity.


Under agency law, what is minimum capcity? What is the consequence of this definition?

Minimum capcity is some understanding that a contract is being initiated and the general nature of its subject matter.

As such, minors can be agents.


What is a servant in an agency relationship?

A servant is an agent who is subject to the principal's control with respect to the physical conduct of the employee's performance.

Servants are also call employees.


What are some factors the identify servants?

  • Master's pay servant's hourly or by time periods.
  • Their work is an integral part of the master's work.
  • Tasks are generally completed under the master's direction.
  • Servants are employed for long periods under the same master.


What factors generally distinguish an independent contractor from a servant?

Independent contractor

  • bear the risk and benefits from good management,
  • maintian a high level of independence,
  • are free to work for others,
  • agree to be paid a fixed fee,
  • recieve payment based on results,
  • is liable for work performed, and
  • accepts responsiblity to remedy defects at private expense.


What limits are placed upon gratuitous agents?



What are gratuitous agents?

Agents whose agency agreement lacks any consideration (monetary or otherwise). Gratuitous agents are still agents and principals are still liable in contract or tort.


What is a general agent?

A general agent is an agent with broad authority over a wide variety of tasks.


What are special agents?

Special agents have limited authority regarding specific transactions or a string of repetitious acts.


Are trustees agents?

A trustee is an agent and is subject to the control of the settlor of the trust or one or more of its beneficiaries.

A trustee maintians a fiduciary relationship with and holds property for the benefit of the settlor.


What is a subagent?

A subagent is a person appointed by an agent to perform functions that the agent has agreed to perform on behalf of a principal.


To whom and who are subagents liable?

The agent is liable to the principal for the conduct of the subagent.


How are agents empowered to appoint subagents?

An agent may only appoint subagents with actual authority or apparent authority.


What duties does a subagent hold? To whom does the subagent hold these duties?

A subagent owes a duty of loyalty to the principal as well as to the appointing agent.


Who is contractually liable for the subagents actions?

The agent is liable to the principal for the subagent's contractual conduct.

The principal is still bound by the subagents acts to the same extent as if the agent had undertaken the acts.


Who is toritiously liable for a subagent's conduct?

An agent who appoints a subagent may be vicariously liable for torts committed by the subagent.


What three persons are not generally able to serve as a principal?

Persons lacking the ability to contract cannot serve as principals. Accordingly, non-legal entities cannot serve as principals either.


  1. Minors
  2. Incompetents
  3. Unincorporated associations

cannot serve as a principal.