Agent

Question 1

Agent Outline

Answer 1

1. Creation
2. Termination
3. Liability of Principal
   - contract (actual, apparent, ratification)
   - tort (vicarious, apparent, direct)
4. Liability of agent
5. Agent fiduciary duties and agent duties

Question 2

Creation of Agency

Answer 2

an agency relationship is created when one (principal) manifests intent that another (agent) act on his behalf and be subject to his control

Assent- agent and principal manifest assent
Benefit- A agree to work on behalf of P and for P’s benefit
Control - action are subject to P’s control

Question 3

Termination

Answer 3

—either party may unilaterally terminate the agency relationship

A’s authority may be revoked by P,
-by agreement,
-changed circumstances
-passage of time
- A’s death
-P’s death or incapacity after notice to A
-P’s incapacity or death may not
- terminate A’s durable power of attorney.

Question 4

Principal Contract Liability

Answer 4

A principal is subject to liability on a contract that the agent enters into on the principal’s behalf if the agent has the power to bind the principal to the contract. An agent has the power to bind the principal to the contract when the agent has actual authority or apparent authority

Actual
Apparent
Ratification

Question 5

Principal Tort Liability

Answer 5

Vicarious Liability
Apparent Authority
Direct Authority

Question 6

Express Actual Authority

Answer 6

For an agent to enter into a contract on behalf of the principal can be created via oral or written words; clear, direct and definite language; or specific detailed terms and
instructions

Question 7

Implied Actual Authority

Answer 7

The agent reasonably believes the principal gave him authority because of necessity, custom, or prior dealing

Question 8

Apparent Authority

Answer 8

Apparent authority results when a principal causes a third party to reasonably believe that the agent has authority to act. If the third party reasonably believes the agent has authority to act, the principal will be bound to the contract

• note trade and customs & agent’s position

Question 9

Ratification

Answer 9

A principal can ratify (affirm/approve) an act performed by an agent, even if the agent did not
have authority to act, and therefore be bound to a contract with a third party. Ratification
requires:

(1) The principal ratifies the entire contract or transaction by express assent or conduct that
indicates affirmation;
(2) The ratification must be timely (before the third party withdraws from the contract); and
(3) The principal must have knowledge of the material facts involved in the original act.

Question 10

Principal Tort Liability

Answer 10

A principal can be vicariously liable and directly liable to a third party who is harmed by a tort committed by an agent

Question 11

Vicarious Liability

Answer 11

A principal may be vicariously liable for a tort committed by an agent acting within the scope of
his employment

Exceptions:

Frolic (not minor detour)
Commuting
P’s benefit

Question 12

Principal Direct Liability to Third Parties

Answer 12

A principal may also be directly liable to a third party harmed by an agent’s conduct if the

-principal authorizes or ratifies the agent’s conduct;

-is negligent in hiring/supervising the agent

-delegates a non-delegable duty to the agent.

Question 13

Duties of the Agent

Answer 13

Duty of loyalty
Duty of Reasonable care
Duty of obedience
Duty of notification and acccounting

Question 14

Duties of the Principal

Answer 14

Duty to compensate
Duty to deal fairly and in good faith
Duty to cooperate
Duty to indemnify

Question 15

Agent Contractual Liability

Answer 15

It depends on whether the third party depends upon the principal’s status

Disclosed part (notice + identity)- A is not liable

Partially disclosed (notice)- A is liable

Undisclosed principal- A is liable

Agent lacks power to bind: A is liable for damages

Question 16

Agent Tort Liability

Answer 16

A is liable to the 3P for her own torts but not those committed by P

Question 17

Vicarious Liability (employee vs. IC)

Answer 17

Employer-employee relationship—P has the right to control the manner and means of
A’s performance (unlike an independent contractor), e.g., provides tools, structures pay,
directs the way the agent is to complete the tasks

exception (independent contractor)

• P retains control over the irem/task
• P hires independent contractor to perform nondelegable task
• IC has apparent authority
• P is negligent in selecting, training, or supervising independent contractors

Question 18

Direct Liability

Answer 18

P may be directly liable to a 3P for:

• authorizing or ratifying tortious conduct A

negligently selecting, training, or supervising A

-Delegating a non-delegable duty