Agency

Question 1

5 Fiduciary Duties

Answer 1

1. Loyalty (ALWAYS include)
2. Obedience of Instructions
3. Care
4. Account (money or property received)
5. Not to Compete/Not be a Dual Agent

Question 2

Remedies for Breach of Fiduciary Duties

Answer 2

1. Standard Contract Measure (put P. in position as if no breach had occurred)
2. Forfeiture of Salary/Commission
3. Constructive Trust (any profits, bonuses, bribes, ect go to Principle)

Question 3

Types of Agent Authority

Answer 3

1. Actual: Reasonable Belief
   a. Express: In Writing
   b. Implied: Reasonable Belief based on P’s actions
2. Apparent:
   a. P holds out A to 3rd Parties (reasonably relies)
   b. No holding out, but P. somehow negligently allows 3rd Party reliance
3. Ratification: P accepts A’s transaction (must be done in entirety) P.s Knowledge of Material Facts

Question 4

Agent Liability

Answer 4

1. Impostor
2. Act beyond the scope of authority
   - -Then the Principal is NOT liable (Breach of Warranty of Authority)

Question 5

Termination of Actual Authority

Answer 5

When agency ends, authority ends immediately. (Death hypo)

Question 6

Methods of Termination

Answer 6

1. Contract term specifying date/time
2. Death of principal
3. Mental incapacity
4. Unilateral act of cancellation (Possible K breach)

*Exception: If death/incapacity, agent has vested-present interest and power to carry out act

Question 7

Apparent Authority

Answer 7

Principal

1. Causes 3rd party to reasonably believe agent has authority to make contract
2. Leads 3rd party to reasonably rely on appearance of authority (Holding out theory)

Question 8

Secret Limiting Instructions

Answer 8

Principal secretly limits actual authority of agent, Agent exceeds authority granted by principal, Principal bound if 3rd party reasonably believes and relies on that belief

Question 9

Lingering Appearance of Authority

Answer 9

Principal still bound. Principal ends Agents authority but fails to notify 3rd party and agent continues to act on behalf of principal.

To Avoid Liability:

1. Timely and Personal notice to 3d parties
2. Notice by Publication to the rest of universe

Question 10

Written Authority Terminated

Answer 10

P. Gives A. written grant of authority and fails to recover the writing after canceling

Question 11

Ratification

Answer 11

Affirmation of authority after-the-fact (i.e. didn’t have authorization to act but P. accepts the outcome)
– Knowledge requirement: P. must have known MATERIAL FACTS

Methods:

1. Expressly with words
2. Impliedly by conduct

Question 12

No Ratification

Answer 12

1. No partial ratification of contract
2. Not effective if 3d party dies or mental incapacity
3. 3rd Party withdraws
4. Undisclosed principal

Question 13

Agent Liability to 3rd Party

Answer 13

1. Agent exceeds authority (breach of warranty of authority)
2. Agent only partially disclosed principal
3. Agent fails to disclose principal

Question 14

Fraudulent Concealment of Principal

Answer 14

An undisclosed principal cannot enforce a contract against a 3rd party, if there was fraudulent concealment of the principal

Question 15

Vicarious Liability / Respondeat Superior

Answer 15

Employer will be liable for tort of its agent

1. Agent was an employee (not ind. contractor)
2. Tort committed while employee within scope of employment

–Employee ALWAYS liable for their own torts

Question 16

Independent Contractor v. Employee

Answer 16

The more control an employer has over a person the more likely they are an employee; less control, more likely independent contractor.

• • Factors:
    1. Regularity of the work
    2. Compensation (salary or by the job)
    3. Tools (who owns)
    4. Fringe Benefits
    5. CONTROL OVERRIDING FACTOR

Question 17

Independent Contractor Employer Liability

Answer 17

Ultra-hazardous or Inherently Dangerous work
e.g.:
Use of explosives
High voltage electricity
Poisons/Toxic Chemicals
Construction
Demolition 
Fire-arms

Question 18

Scope of Employment Fact Test: NEED ALL 3

Answer 18

1. Was the conduct of the kind the employee was hired to perform?
2. Tort occur on the job?
3. Did the employee intend to benefit the employer? (part of motivation, not necessarily all)

Question 19

Liability in a Nutshell

Answer 19

Contract:

1. If A has any authority, P liable
2. A no authority: Breach of Warranty of Authority; A liable to 3rd Party, P not liable
3. P undisclosed: both A&P liable to 3rd Party

Tort: Respondeat Superior
Depends on whether A was employee/independent contractor
- P liable w/in scope of employment, or if A acting to benefit P-probably liable

Question 20

Frolic v. Detour

Answer 20

Frolic - beyond scope of employment, A liable

Detour - minor deviation, P liable