Agency

Front 1

When does a principal-agent relationship exist?

Back 1

ABC

1. Assent- Formal or informal agreement between the principal and agent (both with capacity)

2. Benefit- Agent's conduct is for the principal's benefit

3. Control- Principal must have the right to control the agent by having the power to supervise the manner of the agent's performance.

Front 2

What factors determine whether an agent was acting within the scope of the principal-agent relationship?

Back 2

1. Was the action "of the kind" the agent was hired to perform?

2. Was the agent "on the job"? (frolic vs. detour)
- A frolic is a new and independent journey that destroys vicarious liability
- A detour is a near departure from an assigned task that doesn't destroy vicarious liability

3. Did the agent intend to benefit the principal?

Front 3

When are principals liable for the torts of their agents?

Back 3

If:

1. The principal agent relationship exists

2. The tort was committed by the agent within the scope of the principal-agent relationship

Front 4

Are principals liable for the torts of sub-agents of their agents?

Back 4

Generally not, because there still must be assent, benefit and control for a principal-agent relationship to be created and for vicariously liability to thereby attach.

Usually, assent does not exist between the principal and the sub-agent.

Front 5

Are principals liable for the torts of agents that they borrow from other principals("borrowed agents")?

Back 5

Generally not, because there still must be assent, benefit and control for a principal-agent relationship to be created and for vicariously liability to thereby attach.

Usually, the principal does not have control of the agents of another principal.

Front 6

What is the difference between agents and independent contractors? Are is there liability for the actions of an independent contractor?

Back 6

There is no right to control independent contractors, and, therefore there is no vicarious liability for their actions unless:

1. The activity independent contractor is hired to do is ULTRA-HAZARDOUS

2. Estoppel- If the independent contractor was under principal's control, the principal is estopped from disclaiming liability

Front 7

What types of activities are considered ultra-hazardous so that an employer of an independent contractor can be held liable for his torts?

Back 7

Any activity which the failure to do properly results in a significant likelihood of loss of life (e.g. brake repair).

Front 8

Are intentional torts within the scope of the principal-agent relationship?

Back 8

No, unless the conduct was:
1. Authorized by the principal
2. Natural in the nature of employment (e.g. bouncer)
3. Motivated by a desire to serve the principal

Front 9

When is a principal liable for contracts entered into by his agent?

Back 9

If the principal AUTHORIZED the agent to enter the contract.

Front 10

What are the types of authority by which an agent can enter a contract that binds the principal?

Back 10

1. Actual express authority
2. Actual implied authority
3. Apparent authority
4. Ratification

Front 11

What is actual express authority? How can it be given?

Back 11

Principal expressly authorized agent to enter contract.

- Must be narrow
- Can be private
- Can be oral (unless the contract involves an interest in land lasting more than on year)

Front 12

How can express authority be revoked?

Back 12

- Unilateral act of either party.

- Death or incapacity (if not durable power of attorney) of the principal.
* Even if the agent has not yet learned of the death or incapacity, the agent can still be solely bound if principal dies or becomes incapacitated before the contract is entered/

Front 13

What is actual implied authority? How can it be implied?

Back 13

Authority which the agent reasonably believes the principal has given, because of:

1. Necessity- there is implied authority to do all tasks expressly authorized.

2. Custom- there is implied authority to do all task which are customarily performed by persons of the agent's title or position.

3. Prior dealings between the principal and the agent.

Front 14

What is apparent authority?

Back 14

It is not actual authority, but it is reasonably relied upon by a third-party so the principal is held liable.

Apparent authority exists when :
1. The principal "cloaked" agent with the appearance of authority; and
2. Third party reasonably relies on that appearance of authority

Front 15

When is apparent authority usually an issue?

Back 15

1. If the agent has a secret limiting instruction - the agent acts beyond the actual authority he has, but his title indicates more actual authority ("don't sell that clock").

2. Lingering authority- Actual authority has been terminated but the agent continues to act on the principal's behalf.

Front 16

What is ratification?

Back 16

Authority can be granter after a contract has been enter if:
1. Principal has knowledge of all material facts regarding the contract; and
2. Principal accepts its benefits

Ratification CANNOT ALTER the terms of the contract (must be "complete ratification"). Partial ratification is no ratification.

Front 17

Who is liable for the contract if the principal has not authorized it?

Back 17

The agent.

Front 18

Is the agent also liable for the contract if he has entered it with authority?

Back 18

No.

Unless:
The principal is partially disclosed (identity of principal concealed) or undisclosed (fact of principal concealed), in which case the authorized agent may be liable at the election of the third-party.

Front 19

What duties does an agent owe to his principal?

Back 19

1. Duty to exercise reasonable care

2. Duty to obey reasonable instructions (but not to lie or break the law)

3. Duty of loyalty
- No self-dealing
- No usurping principal's opportunity
- No secret profits

Front 20

What remedies does a principal have against an agent who breaches his duties?

Back 20

- Recover losses caused by the breach
- Ask court to impose a constructive trust to avoid unjust enrichment