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52 Cards in this Set

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Agency refers to
legal re/ship in which one party, the agent, acts on behalf of the other party, the principal, in bus dealings w/ 3rd parties
What capacity must principal have?
capacity to contract (ie. minor's appt of agent voidable; incompetents & most unincorporated orgs cannot be principals. But partnerships & other orgs can be principals & appoint agents).
Does an agent need contractual capacity?
No. Agent may be disqualified for representing both parties or by failing to have a required license.
Formalities required for agency
1. Consent of both
2. Consider/n not required
3. Wrtiting--generally not required except when K in which agent is to enter into w/in SoF.
equal dignities rule
Doctrine, adjunct to SoF, applies when a signatory to K acted through an agent--if writing required for K, then agent's authority to sign must be set forth in a writing.
Modes of creating agency
act of parties or operation of law
Act of parties which create agency
1. express agreement b/n principal & agent (actual authority)
2. holding out by principal (apparent authority)
3. ratification (confirmation by principal after the act which makes it valid from time it was done)
Way agency created by operation of law
1. estoppel--3rd party's reliance on the principal's communication
2. stat. (usually for some limited purpose. e.g. appointing secretary of state as out of state motorist's agent for service of process)
Agent's duties
1. Express Kual duties
2. care
3. loyalty
4. obey reasonable directions
5. disclose all relevant info.
Principal's remedies
1. K actions (for paid agents)
2. Tort actions
3. Actions for secret profits
4. Equitable actions for accounting
5. W/holding of pay for intentional torts of breaches of fid. duty.
6, Principal may recover the actual profits or properties held by the agent whether or not the agent's profit has caused the principal any loss.
Subagent
person appointed by agent to perform some task in re to the agency. Agent has absolute liability to the principal for breaches by subagent.
Duties of subagent
If appointed w/ proper authority, subagent owes same duties as agent. If unauthorized, subagent owes no duty to principal but does to agent.
Principals duties
1. All express K duties
2, Reasonable compensation (for compensated agent)
3. reimbursement for expenses
4. General cooperation & avoiding of unreasonable interference w/ agent's duties
Agent's remedies
1. K remedies for compensated agent (but agent has duty to mitigate)
2. Right to possessory lien for $ due
2 types of real estate broker's Ks
1. nonexclusive--entitiles agent to compensation when agent brings ready, willing & able buyer even though sale not consumated.
2. Exclusive Ks--gets commission when anyone brings a ready, willing able buyer.
Types of authority possessed by agent
1. actual
2. apparent
Actual authority is
that power agent reasonably believes she possesses based on the principal's dealings w/ her.
Actual authority is either
Express or implied
Express authority is
that power which is actually contained w/in the 4 corners of the agency agreement. Effective even if obtained through mistake or misrepresentation.
Implied authority is
that which the agent reasonably believes he posses as a result of principal's actions.
Implied authority includes
1. authority incidental to express authority
2. customary practices
3, previous acquiescence by principal
4. taking action in an emergency
5, delegating authority for ministerial acts, where sit. require, where performance is impossible otherwise, where customary.
6. paying for delivery of goods
7. give gen. warranties as to fitness & quality, collect paymt, deliver
8. manage investments.
How termination of actual authority may occur
1. lapse of time
2. happening of a specific event
3. change in circumstances
4. agent's breach of fid duty
5. either party's unilateral termination
6. operation of law (e.g. death)
When is an agency irrevocable?
agency coupled w/ an interest or power given as security
Apparent authority arises from
reasonable belief of 3rd parties based on what principal did to indicate to the 3rd party that the agent had authority.
Examples of situation in which agent has no actual authority but principal may still be bound
1. Imposter--principal neg permitted impostor to be in a position to appear to have agency authority & 3rd parties believe agent had power b/e of something the principal did.
2. lingering apparent authority when actual authority has terminated. Notice of termination may be necessary to protect principal unless due to death or incapacity.
Situations in which principal still bound though agent exceeds authority
1. Prior act--when principal previously allowed agent to exceed authority & 3rd party knows about it.
2. Nature of position which customarily carries certain responsibilities.
Inherent authority or inherent agency results
in the principal being bound even though the agent had no actual authority to perform the particular act. Occurs b/e courts wish to protect innocent 3rd parties
Examples of inherent authority
a. respondeat superior--principal is held liable for the torts of her employee committed w/in the scope of employment
b. conduct similar to that authorized
When will principal be held liable for disposition of his goods by an agent?
if 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.
Ratification is
confirmation & acceptance of a previous act thereby making the act valid from the moment it was done.
Upon ratification of an agent's actions,
the principal is deemd to have adopted (the K or whatever) & agent is relieved of liability.
What are requirements of principal for ratification to be effective?
1. have capacity
2. know (or have reason to know) all material facts
3. accept the entire trans/n.
4. Consideration not required.
Agent's liability to 3rd party depends
on whether or not principal was disclosed.
Principals' liability to 3rd party on a K entered into by agent depends on whether
the agent had valid authority to act.
When principal disclosed, who is generally liable? Exceptions?
Disclosed principal generally liable, not agent.
Exceptions:
1. if parties to K intended the agent to be liable
2. agent may be liable to 3rd party under implied warranty that a principal w/ kual capacity exists and that he the agent had authority to K for the principal.
Liability of partially disclosed or undisclosed principal
results in liability for both principal & agent. MAJ of courts permit a 3rd party to file suit against both the principal & agent, but upon objection of either D, the 3rd party must elect prior to judgment wh party he wishes to hold liable. If 3rd party obtains a judgment against the agent w/o knowledge of the principal's ID, he can later sue the principal when her ID is discovered if the judgment has not been satisfied.
When may principal/ agent enforce a K & hold 3rd party liable?
If principal disclosed--only the principal, not the agent, may enforce the K & hold 3rd party liable.
If principal undisclosed, either may enforce
When may principal NOT enforce K w/ the 3rd party?
1. when fraudulent misrepresentation of the principal's ID
2. when increased burden to 3rd party due to the fact performance is due the principal & not the agent
3rd party liability to principal & agent when agent partially disclosed or undisclosed
either the principal or agent may enforce the K & hold the 3rd party liable. If agent enforces K, the principal is entitled to all of the rights & benefits thereunder.
Generally, principal is bound when agent has
valid authority (actual, apparent, by ratification)
Generally agent is bound when
principal's existence +/or ID not disclosed or partially disclosed (also can be liable for breach of implied warranty of authority)
Generally 3rd party is bound
to principal if agent had valid authority, bound to agent if principal partially disclosed or undisclosed & agent enforces K but principal entitled to K benefits.
Whether principal is liable for torts committed by agents under respondeat superior theory depends first on
whether agent is an employee or independent Kor. Generally, principal is liable only for torts committed by agents who are employees.
How to determine if agent is employee or independent Kor.
analyze right to control. If principal has no way to control manner & method of job performance, probably an ind Kor,
Factors to consider when analyzing right to control in respondeat superior ?s
1. how parties characterized
2. whether bus is distinct
3. customs
4. degree of skill required
5, whose tools or facililites are used
6. what period of employment (short, definite likely ind Kor.)
7. type of compensation
8. understanding of the parties
9. whether person was hired to further principal's bus (nonbus purpose e.g. mowing the lawn--more likely ind Kor)
What is principal's liability for subservants?
Doctrine of respondeat superior also applies. Authorization to hire subs can be express or implied. Employer generally not liable for torts of a sub if sub engaged w/o authority
Liability for acts of borrowed employees depends on
whether the borrowing or loaning principal has the primary right to control.
Employer-employee by estoppel
Where a principal creates the appearance of an employer-employee re/ship upon wh a 3rd party relies, the principal will be estopeed from denying the re/ship and will be liable under the doctrine of respondeat superior.
Principal will incur liability for acts of indepdent Kors when
1. inherently dangerous activities
2. nondelagable duties
3. when principal knowingly selected an incompetent independent Kor. (if principal neg, only liable for his own neg in selection, not for the Kor's neg.)
Scope of employment
range of reasonable & foreseeable activities that an employee engages in while carrying out employer's bus.
Frolic & detour
Frolic is minor deviation of employee from his employer's bus for his own purposes--considered still w/in scope of employment. Detour--an employee's major deveiation in time or geographic from his employer's bus for his own purposes--considered outside of the scope of employement.
Whether intentional torts are w/in scope of employment
depends on whether the activites are a natural incident of employee's duties.