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17 Cards in this Set

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  • Back
When is a principal liable for the torts of his agent?
Two-part test: Principal will be liable for torts committed by agent if:
1) a PRINCIPAL AGENT relationship exists; AND
2) the tort was committed by the agent within the scope of that relationship.
When is a principal/agent relationship created?
Principal-agent relationship requires:
1. Assent – an informal agreement between the principal who has capacity and the agent
2. Benefit – the agent’s conduct must be for the principal’s benefit.
3. Control – principal must have right to control agent by having power to supervise the manner of agent’s performance.
Are principals liable for the torts of sub-agents?
There can be no vicarious liability for a sub-agent’s tort UNLESS:
there is Assent, Benefit, and right to control the TORTFEASOR (sub-agent

*won’t find assent or control on a bar exam question.
Is borrowing principal liable for the borrowed agent’s tort?
There can be no vicarious liability for a borrowed agent’s tort UNLESS: there is Assent, Benefit, and right to Control borrowed agent tortfeasor

*There will be no right to control borrowed agent on bar exam – original principal will retain liability on that agent’s tort.
What are the rules concerning vicarious liability for independent contractors?
Rule: without a right to control IC, there can be no vicarious liability for IC’s torts.

1. Ultra-hazardous activity: if IC commits tort whilst engaged in ultra-hazardous activity, ther ewill be vicarious liability for IC’s tort (brake repair is ultra hazarous)
2. Estoppel: if you HOLD OUT your IC with the appearance of agency, you will be estopped from denying vicarious liability for IC’s torts
How do you determine whether the agent was acting within the scope of his agency relationship?
1. Was conduct “of the kind” agent was hired to perform? If conduct was in job description, its likely in scope.

2. Did the tort occur “on the job”? Frolic v. Detour, where and when
- Frolic – a new and independent journey – outside the scope
- Detour – a mere departure from an assigned task – still within the scope of agency

3. Did the agent intend to benefit the principal? If you find the agent even in part intended to benefit the principal, that’s enough to call it within the scope.
Are intentional torts within the scope of agency relationship?
Rule: Intentional torts are outside the scope of agency

Exceptions – intentional torts are within the scope if the conduct was:
1. Specifically authorized by principal
2. natural from the nature of employment
3. motivated by a desire to serve the principal (think bouncer in a bar)
Is a principal liable for the contracts entered into by his agent?
One Test: Principal is liable for contracts entered into by agents if principal AUTHORIZED the agent to enter the contract
What are the different types of authority agents can have to enter into contracts for the principal?
1. Actual Express
2. Actual Implied
3. Apparent
4. Ratification
What is actual express authority?
Principal used words to express authority to the agent.

**Rule: ORAL, PRIVATE, NARROW (narrowly tailored to the ACTUAL WORDS)

**Except: land. If the contract involves real estate lasting more than one year, then express authority to enter into the contract must be in writing (SOF)
When can an express authority be revoked?
1. Unilateral act of either party, OR
2. Death or incapacity of the princiapl

NOTE: If an agent acts without authority, the agent has entered into the contract personally, and will be held personally liable for the contract.

**Except: express authority cannot be revoked if:
1. the principal has given an agent DURABLE POWER OF ATTORNEY.
2. Power of Attorney means a WRITTEN expression of authority to enter into a transaction or transactions.
3. Durable means CONSPICUOUS SURVIVAL LANGUAGE, such as “power survives death.”
What is implied actual authority?
Authority which agent reasonably believes the principal has given, because:
1. Necessity: implied authority to do all task which are NECESSARY to accomplish an expressly authorized task
2. Custom: implied authority to do all tasks customarily performed by persons with agent’s title or position
3. Prior dealings between principal and agent - implied authority to do all tasks which agent believes to have been authorized from prior acquiesence by the principal
What is apparent authority?
Two part test: 1) principal “Cloaked” agent with the APPEARANCE OF AUTHORITY and 2) 3rd party reasonably relies on appearance of authority.

Two typical situations:
1. Secret Limiting Instruction: Agent has actual authority, but principal has secretly limited that authority. Agent acts beyond the scope of the limitation
2. Lingering Authority: Actual authority has been terminated. Afterwards, agent continues to act on principal’s behalf – customers may continue to rely UNTIL they receive notice of the termination
What is ratification?
Authority can be granted AFTER the contract has been entered, if:
1. Principal has KNOWLEDGE of all material facts regarding the contract AND
2. Principal ACCEPTS the BENEFITS.

Except: ratification CANNOT ALTER the terms of the contract – ratification MUST BE COMPLETE.
What are the rules of liability on the contract entered into by the agent?
General Rules:
1. If NO AUTHORITY, principal is NOT liable on the contract. If no authority, AGENT is liable on the contract.
2. If AUTHORITY, principal is LIABLE on the contract. If authority, AGENT is NOT liable on the contract.

Exception: if PRINCIPAL is PARTIALLY DISCLOSED or UNDISCLOSED, authorized agent may nonetheless be liable at the election of the 3rd party.
What duties are owed from the agent to the principal?
1. Duty to Exercise Reasonable Care
2. Duty to Obey Reasonable Instructions (i.e., not break the law)
3. DUTY OF LOYALTY – most often tested
- Self-dealing – Agent cannot receive a benefit to the detriment of the principal.
- Usurping the principal’s opportunity, or
- Secret profits
What happens if the agent breaches the duty of loyalty?
Principal's remedies are to recover for the loss caused by the breach AND to DISGORGE the profits made by the breaching agent.