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Flashcards in Agency Deck (26)
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1
Q

When will agent incur personal liability in transaction with third party?

A
  • When principal is not disclosed

- When principal is partially disclosed

2
Q

When is agent presumed to be party to third-party contract?

A

When agent is not disclosed.

To escape liability, agent must make clear he is acting on principal’s behalf.

3
Q

Explain effect of disclosing principal after contract entered into.

A

Agent is still liable.

4
Q

Can third party sue both agent and principal?

A

No. Must choose one.

5
Q

When does apparent authority arise?

A

When third party reasonably believes, because of an overt action, that agent has authority to act on principal’s behalf.

6
Q

What is effect of apparent authority?

A

Principal is liable if third party’s belief is reasonably and traceable to manifestation by principal.

7
Q

When is principal liable for agent’s acts that exceed his authority?

A

When principal negligently or knowingly allows agent to exceed scope of authority.

8
Q

When does agency by estoppel exist?

A
  1. principal intentionally/carelessly caused reasonable belief that agency existed;
  2. principal didn’t try to correct mistaken belief once he gets notice; and
  3. third party detrimentally changed his position in reliance.
9
Q

When is actual authority created?

A
  1. manifestation of principal;

2. for agent to act for benefit of principal

10
Q

Define express authority.

A

Agent has authority to take specific action on behalf of principal.

11
Q

Define implied authority.

A

Exists from actions incidental to agent’s carrying out actions of primary authority.

12
Q

Explain effect of ratification on illegitimate transaction.

A

Principal can give authority for agent’s action via ratification, but it does NOT legitimate otherwise illegitimate transaction.

13
Q

Ratification requires:

A
  1. act that principal is seeking is otherwise valid when performed;
  2. principal existed when act was performed;
  3. act was done on principal’s behalf; and
  4. ratification done with formalities required of initial authorization.
14
Q

Explain “partial ratification”

A

Principal cannot partially ratify contract. Partial ratification will ratify the entire contract.

15
Q

Define “borrowed employee”

A

One who becomes employee of another for purposes of transaction.

An employee will be considered a borrowed employee when new employer has right of control.

16
Q

What are factors to determine independent contractor vs. employee?

A
  • amount of control master exerts over agent;
  • how long agent is employed;
  • who supplies tools for agent’s work?
  • whether agent is paid hourly or by job;
  • whether principal/agent intend to create employment relationship
17
Q

List the default obligations of principal to his agent.

A
  • compensate agent for services rendered;
  • indemnify him for liability arising out of non-negligent performance;
  • reimburse agent for reasonable expenses incurred;
  • cooperate with agent in performance of duties;
  • exercise due care toward agent.
18
Q

What defenses can principal assert against agent’s conduct?

A
  • agent disobedience

- contributory negligence

19
Q

Define “business opportunity”

A

something so closely related to business that it is “incidental to business.”

An agent may not usurp business opportunities.

20
Q

Describe duty of confidentiality in agency relationship.

A

Agent may not use information obtained from the principal to the detriment of the principal.

21
Q

List the 4 consequences of entering into agency:

A
  1. duties arise between principal and agent;
  2. agent can bind principal;
  3. principal can be liable for acts of agent; and
  4. knowledge of agent imputed to principal.
22
Q

What is burden of proof to show agency relationship?

A

Party claiming its existence bears burden.

Must prove by preponderance of the evidence.

23
Q

Does employee act within SOE while driving to and from work?

A

Maybe, if employer provided him a vehicle or exerted control over use of that vehicle.

24
Q

When is principal liable for tort of independent contractor?

A
  1. inherently dangerous activity;
  2. non-delegable duty;
  3. negligent selection of contractor.
25
Q

Can minor/incompetent person act as agent?

A

Yes.

26
Q

When is termination of agency effective?

A

If principal notifies agent. UNLESS:

  1. agency naturally expires on completion of action; or
  2. agency set to expire at particular time.