Agency

Question 1

Agency

Answer 1

Relationship between the principal and the agent where the agent acts on the principal’s behalf and is subject to the principal’s control.

Question 2

Agent

Answer 2

The agent owes a duty of care; duty of loyalty; and a duty of obedience to the principal. The principal may recover losses from, and profits made by the breaching agent.

Duty of Care: Agent must carry out agency with reasonable care with a duty to notify.

Duty of Obedience: Agent must obey principal’s lawful instructions.

Duty of Loyalty: Agent gives undivided loyalty to the principal not to engage in self-dealings and not to profit without disclosure

Question 3

Principal

Answer 3

The principal owes a duty of compensation; duty of reimbursement; and duty of cooperation to the agent.

Duty of Compensation: Principal must compensate the agent reasonably unless they have a gratuitous agreement.

Duty of Reimbursement: Principal must indemnify agent for all expenses or losses reasonably incurred.

Duty of Cooperation: Principal must cooperate with the agent to help the agent carry out agent functions.

Question 4

Authority

Answer 4

The principal is bound to any contact entered into by the agent if the agent had authority to enter into the contract. There are two types of authority: actual authority and apparent authority.

Question 5

Actual Authority (Agency)

Answer 5

Is authority that the agent reasonably thins he possesses based on the principal’s dealing with him. Actual authority can be express or implied from the actions of the principal.

Question 6

Apparent Authority (Agency)

Answer 6

Is when the principal holds out the agent to having authority to act on the principal’s behalf and the principal’s conduct causes a third-party to reasonably rely on the agent’s authority.

Question 7

Third-Party Liability

Answer 7

A principal to be liable in contract to a third party, the agent must have had authority to enter into the disputed contract or the principal must ratify the contract.

Question 8

Vicarious Liability

Answer 8

The employer is liable in tort for the acts of an agent or employee if the agent or employee was acting in the scope of employment, made a minor deviation from employment, or committed an intentional tort only if it was for the principal’s benefit, because the principal authorized it, or one that arose naturally due to the nature of employment.

In determining whether an individual is an employee or independent contractor is whether the principal has a right to control the method and manner of the individual’s work

Question 9

Independent Contractor

Answer 9

A principal is not liable for an independent contractor’s torts.

Question 10

Estoppel

Answer 10

Can be raised when the principal creates the appearance that an employer-employee relationship exists, and a third-party relies on that relationship.

Question 11

Direct Liability

Answer 11

The principal is directly liable for his own negligence if he negligently hired, failed to fire, or failed to properly supervise the agent.