Agen

Front 1

What is an agency?

Back 1

Agency refers to the legal relationship whereby an agent is authorized to represent a principal in business dealings with third parties

Front 2

Does an agent need to have contractual capacity?

Back 2

No, an agent needs only minimal capacity (just cannot have a total lack of mental capacity)

Front 3

Does a principal need to have contractual capacity?

Back 3

Yes, a principal is required to have contractual capacity

Ex: Minor's appointment of agent is voidable

Front 4

Can minors act as agents and/or principals?

Back 4

A minor can be an agent but not a principal

Front 5

When can an agent be disqualified?

Back 5

when representing both parties or failing to have a required license

Front 6

What formalities are necessary to create an agency relationship?

Back 6

Consent of both parties

A writing if subject matter is within the Statute of Frauds

Consideration is NOT required!!

Front 7

Can someone agree to serve as an agent gratuitously?

Back 7

Yes, because no consideration is required for agent to be held liable in an agency relationship

Front 8

How may an agency relationship be created?

Back 8

by an act of the parties

OR

by operation of law

Front 9

In what ways may parties create an agency by acts?

Back 9

by agreement between the principal and agent - ACTUAL AUTHORITY

holding out by the principal - APPARENT AUTHORITY

RATIFICATION

Front 10

In what ways may an agency be created by operation of law?

Back 10

ESTOPPEL (similar to apparent authority in that it requires third party reliance on principal's communication)
OR
STATUTE (usually designed to accomplish a limited purpose)

Front 11

What is actual authority?

Back 11

Authority that the agent reasonably believes she possesses based on the principal's dealings with her

Look to the interaction b/w the Principal and Agent

Front 12

What is apparent authority?

Back 12

Arises from the reasonable beliefs of a third party

Look at the interaction between the principal and the third party

Front 13

What are some situations where the principal may be bound by apparent authority even though the agent has no actual authority?

Back 13

(1) Imposters (prinicipal negligently permitted imposter to be in position having authority)
(2) Lingering Apparent Authority
(a) Notice may be necessary (even though terminated, an agent has apparent authority where 3rd parties with whom the principal knows the agent has dealt with in the past until they get actual or constructive notice of termination of agency)
(b) Writing manifesting authority (3rd parties rely on a written authority of agency)

Front 14

What are the two types of actual authority?

Back 14

Express

Implied

Front 15

What is express actual authority?

Back 15

that which is actually contained within the four conrers of the agency agreement;

it is effective even if it was granted mistakenly or because of misrepresenation

Front 16

What is implied actual authority?

Back 16

that which the agent reasonably belives she has as a result of the principal's actions;

Front 17

What does implied actual authority include?

Back 17

authority:
(1) incidental to express authority
(2) arising out of custom known to the agent
(3) resulting from prior aquiescence by the principal
(4) to take emergency measures
(5) to delegat authority in cases of ministerial acts, where circumstances require, where perfromance is impossible without delegation or where delegation is customary
(6) to pay for an accept delibery of goods where there is authority to purchase
(7) to give general warranties as to fitness and quality and grant customary covenants in land sales, collect payment, and deliver where there is authoirty to sell
(8) to manage investments in accordance with the prudent investor standard

Front 18

In what ways can actual authority terminate?

Back 18

(1) lapse of a specified or reasonable time
(2) the happening of a specified event
(3) a change in circumstances, including destruction of the subject amtter of the authority, insolvency of the agent or principal and a change in the law or business conditions
(4) agent's breach of fiduciary duty
(5) either pary's unliateral termination
(6) operation of law (death or loss of capacity of either party unless there is durable power of atty)

Front 19

When is an agency irrevocable?

Back 19

when coupled with an interest or power given as security if the agency was given to protect the agent's or thid party's rights and it is supported by consideration

Front 20

What happens to authority when a principal dies?

Back 20

Death or incompetency of principal terminates ALL AUTHORITY of agent without notice to either agent or third parties

There is a limited exception for banks honoring transactions for a customer's account until it learns of the customer's death or incompetency and has a reasonable time to act

Front 21

What are situations where the principal is bound even though the agent exceeded his authority?

Back 21

1) Prior act - principal previously permitted agent to exceed his authority

2) Position - a position that customarily carries certain responsibilities

Front 22

What is inherent authority?

Back 22

results in principal being bound even though agent had no actual authority to perform the particular act

policy is courts wanting to protect innocent third parties

Front 23

What is the effect of ratification?

Back 23

Retroactive effect unless the principal lacked contractual capacity at the time agent entered into the unauthorized transaction or it would interfere with intevening third party rights

Agent is relieved of liability for breach of implied warranty of authority

Front 24

What are two examples of inherent authority?

Back 24

(1) Respondeat superior

(2) Conduct is similar to acts authorized

Front 25

When will a principal be held liable for the imporper disposition of goods by an agent possessing them?

Back 25

if the agent was given some indicia of ownership or if the goods disposed of were sold by an agent who is a dealer in the particular goods

Front 26

When is an agency relationship created by ratification?

Back 26

when agent puports to act on behalf of a principal without any authority at all but the principal subsequently validates the act and becomes bound

Front 27

What are the prerequisites of ratification?

Back 27

(1) The principal must know or have reason to know all material facts,

2) accept the entire transaction, AND

3) have capacity (be competent and of legal age)

NOTE: Ratification is a unilateral act of the principal and requires no consideration

Front 28

What are some methods of ratifying?

Back 28

Express or implied through the principal's conduct

INCLUDES: Accepting the benefits of the transaction, and silence where there is a duty to disaffirm, and suing on the transaction

Front 29

What acts may be ratified?

Back 29

principal may ratify anything she may legally do, unless perfomance was illegal at the time of ratification, the third party has witdrawn, or there has been a material change in circumstances

Front 30

Who may ratify?

Back 30

only a dislosed or partially disclosed principal

-Agent may NOT treat the contract as his own

Front 31

What is the liability to 3rd parties of a principal?

Back 31

If the agent has authority to act, then the Principal is bound

Front 32

What is the liaiblity of an agent to a third party?

Back 32

If disclosed principal, then the principal is always liable on the contract and the agent is generally NOT liable. EXCEPTION: K intended agentto be liable, implied warranty that a principal with contractual capacity exists and agent had authority to contract for principal

Where partially disclosed and undisclosed principal, both principal and agent liable. 3rd party may sue both, and upon objection must elect a party to hold liable. 3rd party may sue the agent, and if he doesn't know the principal's identity, he can later sue the principal when identity discovered if the judgment not satisfied.

Front 33

What is a 3rd party's liability to a principal or agent?

Back 33

If disclosed principal, then only the principal may enforce the K.

If partially disclosed and undisclosed principal, then either the principal or the agent may enforce the K

NOTE: If agent enforces the K, the principal is entitled to all of the rights and benefits thereunder

Front 34

When is a principal not allowed to enforce a K?

Back 34

(1) There has been an affirmative fraudulent misrepresentation of the principal's identity or

2) if there is an unforeseen increased burden to the 3rd party due to the fact that performatnce is due to the principal and not the agent.

Front 35

What determines whether a party is an employee or a independent contractor?

Back 35

Look to the extent of control

With an employee, the principal exercises control over the job to be performed

With an independent contractor, the principal has no right to control the manner and method in which the job is performed

Front 36

When is a principal liable for employee's actions?

Back 36

When the act is within the scope of employment (who, what, when, where, why)

Front 37

When is the principal liable for independent contractor's actions?

Back 37

Activity involved was

1) inherently dangerous
2) duty nondelegable
3) principal was negligent in selecting the indep. contractor

Front 38

What is the doctrine of respondeat superior?

Back 38

it imputes joint and several liability to the employer-principal for torts committed by the employee-agent within the scope of the employee's employment

Front 39

How do an employee's defenses affect recovery from an employer?

Back 39

personal defenses of employee not going to liabilty do not bar recovery from the employer

also, employer may be liable for her own negligence in hiring or retaining employee or in supervising or entrusting an employee with specific responsibilities

Front 40

What factors should be considered in determining the right to control?

Back 40

(1) characterization by the parties
(2) whether the business is distinct
(3) customs of the locality regarding supervision of work
(4) degree of skill required on the job
(5) whose tools or facilities are used
(6) what the period of employment is
(7) what the basis of compensation is
(8) what the understanding of the parties is
(9) whether the person was hired to further the principal's business

Front 41

Can an employer ratify an employee's torts?

Back 41

Yes, as long as all prerequisites for ratification are met including the requirement that employer have knowledge of all material facts

Front 42

Are intentional torts considered within the scope of employment?

Back 42

Not unless a natural incident of the employee;s duties (where force is authorized), where the employee is promoting the employer's business or where the nature of the work gives rise to hostilities

Front 43

When is a principal liable for an agent's misrepresentation?

Back 43

if the agent had actual, apparent, or inherent authority to make statements concerning the subject matter involved