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Flashcards in Agency Deck (52):

what are the 3 types of agency problems?

1) liability of P to 3rd party for TORTS of an agent
2) liability of P to 3rd party for K's entered into by agent
3) Duties which agents owe to P


when is a P liable for torts committed by its agent (2 )

1) there was a principal- agent relationship AND
2) the tort was committed by the agent w/i the SCOPE of that relationship


what does the principal relationship require? (3 things)

1) assent
2) benefit
3) control


what is assent for principal relationship

an informal agreement b/w P (who has capacity) and A


what is benefit for P-A

agents conduct must be for P's Benefit


what is control for P-A

Principal must have
1) RIGHT to control agent by having the
2) POWER to SUPERVISE the manner of the agents performance


when will the P be vicariously liable if its agent gets the help of a "sub-agent" and the sub-agent commits tort?

P will be liable for sub-agent only if there is
1) assent
2) benefit and
3) control b/w the P and the sub-agent


typically does P assent to the sub-agent or have control of a sub-agent>

NO. therefore w/o assent, benefit and control, not vicariously liable


when will a P be vicariously liable for a borrowed agent?

the P will be liable for the borrowed agents tort only if there is
1) assent
2) benefit and
3) control b/w the borrowing P and borrowed agent


typically does the P have control over a borrowed agent?

No. typically the borrowing principal does not assume any right to control the borrowed agent, therefore cannot be held vicariously liable


what is the difference b/w an agent and an independent contractor?

there is no right to control an independent contractor because there is no
1) power to supervise the manner of its performance


what is the general rule for vicarious liability for independent contractors torts>

generally there is NO vicarious liability for an independent contractors torts


what are the X/C for when a P IS liable for the independent contractors torts

1) inherently dangerous activity
2) Estoppel


what is the inherently dangerous activity x/c for independent contractors torts?

if independent K commits torts while doing inherently dangerous activity, P will be vicariously liable


what is the estoppel x/c for when a P is vicariously liable for independent K

if P "holds out" independent K of appearance of agency, you will be estopped from denying vicarious liability


what are the 3 questions dealing with scope for P vicariously liable for agents torts

1) was conduct "of the kind" agent was hired to perform?
2) did the tort occur "on the job" (frolic v. detour)
3) did the agent INTEND to benefit the P?


what is the "was the conduct of the kind" agent was hired to perform for scope of agency for torts?

was conduct w/i the job description, if so likely w/i scope of P-A relationship


what is the difference b/w frolic and detour?

frolic: is a new and independent journey and therefore agent is outside scope
detour: is MERE departure from assigned task, and therefore is still w/i scope


what words to look for with detour?

"on the way back"


what is the part for scope that "did the agent intend to benefit the principal"

if agent even in part intended to benefit the P by its conduct, that is even to be w/i scope


what is the general rule for intentional torts and vicarious liability?

GR: Intentional torts are generally outside the scope of employment


what are the x/c for when a P is vicariously liable for agents intentional torts?

1) AUTHORIZED by the P or
2) NATURAL from the nature of employment (security guard, bouncer)
3) MOTIVATED by a desire to serve the P


when is a P liable for contracts entered by its agent to 3rd party? (authority)

P is liable for K's entered into by A only if the P AUTHORIZED the agency to enter into K


what are the 4 types of authority that A enters into a K

1) actual expressed authority
2) actual implied authority
3) apparent authority
4) ratification


what is actual express authority?

P used words to express authority to A


can actual express words be oral and even in privacy?



what is the X/C that actual express authority must be in writing?



how will actual express authority be revoked (2 ways)

unilateral act of either P or the agent
2) DEATH or incapacity of P


what is the x/c that death or incapacity terminates actual express authority

durable power of attorney
if P gives A durable power of attorney (written expression of authority to enter into transaction)


what to look for with durable power of attorney

"survives death"


how is actual express authority construed?



what is actual implied authority?

authority which P gives A through conduct or circumstance


what are the 3 ways for actual implied authority

1) necessity
2) custom
3) prior acquiescence by the P


what is neccessity for actual implied authority

there is implied authority to do ALL tasks


what is custom for actual implied authority

there is implied authority to do all tasks
1) by custom that are performed by person by agents title or position (ex: CEO)


what is prior acquiescence by P for actual implied authority

there is implied authority to do all tasks which
agent believes authorized to do so by prior acquiescence by the P
(ex: doing something for so long)


what are the 2 part tests for apparent authority

1) P "cloaked" agent with the appearance of authority and
2) 3rd party REASONABLY RELIED upon the appearance of authority


whose actions and conduct do you look at for apparent authority?

what P did do the 3rd party?


what is ratification

authority can be granted AFTER the K has been entered if
1) p has KNOWLEDGE of all material facts regarding the K and
2) P accepts the BENEFITS


When is ratification?

after the K was entered


can the ratification by the P ALTER the k?

NO. cannot alter the terms of the K, must accept in whole or reject in whole


what is the general rule for A's liability on a K entered into for P?

general rule: the P is liable on its authorized contracts, and therefore as a rule
1) authorized agents ARE NOT liable for their authorized contracts


what are the X/C when agent is liable for the K entered for P?

1) if P is PARTIALLY DISCLOSED (only the identity of the P concealed or
2) UNDISCLOSED (fact of P concealed) authorized agent MAY nonetheless be liable at the election of 3rd party


what are the agents duties to P (3)

1) duty of care
2) duty to obey instructions that are reasonable
3) duty of loyalty


what may the A never do under the duty of loyalty

1) self dealing: agent cannot receive a benefit to the detriment to the P
2) USURPING the P's opportunity
3) secret profits: making a profit at the P's expense w/o disclosure


what are the P's remedies if A self deals?

P may recover
1) any loses that caused by the breach including idemity from agent and also
2) disgorge the profits made by the breaching agent
(get the profits from agent)


are both the agent and P both liable on a K entered it by an AUTHORIZED agent on behalf of a disclosed P

YES. But must have the authority to enter into the K. if the A was not authorized to enter into the K, then they may be the only person held liable on the K.


are both P and A liable for K entered into by AUTHORIZED A when the agent partially discloses principal

YES. But must have authority to enter into K.


In IL can an undisclosed P ratify a K

NO. undisclosed P cannot ratify a K b/c the agent must have purportedly been acting on behalf of a P.


In IL what type of P can ratify a K

only a disclosed or unidentified P may ratify (b/c requires that agent purport to be acting on behalf of the P)


what if the agent exceeds his actual authority by violating directions but acts with apparent authority

against is liable agent will be liable to he P for any loss that the P suffers
- UNLESS P ratifies the transaction.


when does a A bind a P to K

when agent had authority, P is liable to 3rd party