Agency Flashcards
“Agency”
“Legal relationship whereby one person (P) manifests assent that another person (A) shall act on her behalf and under her control, and the agent consents to so act.”
(1) Assent, (2) Benefit, & (3) Control (manner and method of performance)
Writing requirement of agency?
No writing requirement UNLESS underlying K has writing requirement (falls under SOF — transactions involving land)
Agent’s duties to Principal
(1) Contractual duties +
(2) Reasonable care under circs +
(3) obedience +
(4) loyalty (no self-dealing, no usurping opportunities, no secret-profiting)
Principal’s remedies for Agent’s breach of duties
(1) K actions (against compensated agents, not gratuitous agents)
(2) tort actions (against all agents)
(3) actions for secret profits (disgorge profits)
(4) actions for an accounting
(5) withholding compensation for intentional torts/intentional breaches of duty
(6) terminate the agency relationship prior to any contractual termination date (b/c breach of duty = material breach of K)
“Subagent”
(1) Appointed by an agent (2) to perform the functions that the agent has consented to perform on the principal’s behalf
Liability of agent to P for subagent
An agent has absolute liability to the P for breaches by a subagent
Liability of P for subagent tort
Only if (1) assent (2) benefit & (3) control
- but often, P won’t know about subagent so no assent to subagent
Duties of subagent to P & A
(1) if appointed with proper authority –> subagent owes P the same duties as the agent
(2) if subagent is unauthorized –> he owes no duty to the P, but does owe duties to the A
Principal’s duties Agent
(1) duties imposed by K +
(2) reasonable compensation* (but not to subagent, even if agent had authority to hire subagent, unless agreed otherwise)
(3) reimbursement of expenses
(4) should cooperate with agent
(5) should not unreasonably interfere with agent’s performance
Agent’s remedies for P’s breach of duties
(1) Usual contractual remedies BUT agent has duty to mitigate damages
(2) right to possessory lien for any money due from P, including compensation for services
P’s liability to 3rd parties for K’s entered into by A: General Rule
P will be liable for K’s A was “authorized” to enter into.
Actual Express Authority, Actual Implied Authority, Apparent Authority, Ratification
Actual Authority (Express or Implied) vs. Apparent Authority
Actual Authority - authority that the A reasonably believes the A possesses based on the P’s dealings with the A (btwn P & A)
Apparent Authority - authority that a 3rd party reasonably believes the A possesses based on the P’s dealings with the 3rd party (btwn P & 3rd party) (AA = not real authority!)
Actual Express Authority
Authority which is actually contained in the 4 corners of the agency agreement; P used words to express authority to A
- effective even if granted by mistake or misrepresentation
- narrowly tailored to actual words used
Actual Implied Authority
Authority which the agent reasonably believes she has as a result of P’s conduct OR the circumstances
- incidental to express authority (necessary to accomplish authorized task)
- arising out of custom known to agent by title/posititon
- resulting from prior acquiescence by the P (reasonably leads A to believe he has the authority to do the same in the future)
- to pay for and accept delivery of goods where there is authority to purchase
- to give general warranties as to fitness and quality and grant customary customs in land sales; collect payment; and deliver, where there is authority to sell
Termination of actual authority
Several circumstances, including:
(1) lapse of reasonable time
(2) agent’s breach of fiduciary duty
(3) either party’s unilateral termination (though may constitute breach of K)
(4) operation of law (death OR loss of capacity EXCEPT where there is durable power of attny = no termination of agency)