Agency Flashcards
(26 cards)
When will agent incur personal liability in transaction with third party?
- When principal is not disclosed
- When principal is partially disclosed
When is agent presumed to be party to third-party contract?
When agent is not disclosed.
To escape liability, agent must make clear he is acting on principal’s behalf.
Explain effect of disclosing principal after contract entered into.
Agent is still liable.
Can third party sue both agent and principal?
No. Must choose one.
When does apparent authority arise?
When third party reasonably believes, because of an overt action, that agent has authority to act on principal’s behalf.
What is effect of apparent authority?
Principal is liable if third party’s belief is reasonably and traceable to manifestation by principal.
When is principal liable for agent’s acts that exceed his authority?
When principal negligently or knowingly allows agent to exceed scope of authority.
When does agency by estoppel exist?
- principal intentionally/carelessly caused reasonable belief that agency existed;
- principal didn’t try to correct mistaken belief once he gets notice; and
- third party detrimentally changed his position in reliance.
When is actual authority created?
- manifestation of principal;
2. for agent to act for benefit of principal
Define express authority.
Agent has authority to take specific action on behalf of principal.
Define implied authority.
Exists from actions incidental to agent’s carrying out actions of primary authority.
Explain effect of ratification on illegitimate transaction.
Principal can give authority for agent’s action via ratification, but it does NOT legitimate otherwise illegitimate transaction.
Ratification requires:
- act that principal is seeking is otherwise valid when performed;
- principal existed when act was performed;
- act was done on principal’s behalf; and
- ratification done with formalities required of initial authorization.
Explain “partial ratification”
Principal cannot partially ratify contract. Partial ratification will ratify the entire contract.
Define “borrowed employee”
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.
What are factors to determine independent contractor vs. employee?
- 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
List the default obligations of principal to his agent.
- 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.
What defenses can principal assert against agent’s conduct?
- agent disobedience
- contributory negligence
Define “business opportunity”
something so closely related to business that it is “incidental to business.”
An agent may not usurp business opportunities.
Describe duty of confidentiality in agency relationship.
Agent may not use information obtained from the principal to the detriment of the principal.
List the 4 consequences of entering into agency:
- duties arise between principal and agent;
- agent can bind principal;
- principal can be liable for acts of agent; and
- knowledge of agent imputed to principal.
What is burden of proof to show agency relationship?
Party claiming its existence bears burden.
Must prove by preponderance of the evidence.
Does employee act within SOE while driving to and from work?
Maybe, if employer provided him a vehicle or exerted control over use of that vehicle.
When is principal liable for tort of independent contractor?
- inherently dangerous activity;
- non-delegable duty;
- negligent selection of contractor.
