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19 Cards in this Set

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What are the three main agency problems?
1) Liability of principal to 3rd. parties for torts of an agent
2) Liability of principal to 3rd parties for contracts entered by an agent
3) Duties which agents owe to principals
LIABILITY OF PRINCIPAL FOR TORTS OF AN AGENT: When will the principal be liable for torts commited by an agent?
When (1) a principal-agent relationship exists and (2) the tort was committed by the agent within the scope of that relationship.
LIABILITY OF PRINCIPAL FOR TORTS OF AN AGENT: What are the requirements of the principal-agent relationship?
Remember A B C

1) Assent (between agent & principal)
2) Benefit (principal's benefit)
3) Control (by principal)
LIABILITY OF PRINCIPAL FOR TORTS OF AN AGENT: Can liability arise for sub-agent's torts?
No liability unless there is 1) assent 2) benefit 3) control
LIABILITY OF PRINCIPAL FOR TORTS OF AN AGENT: Can there be liability for borrowed agents?
There can be no vicarious liability for the borrowed agent's tort unless there is assent, benefit and control.

Never assume the right to control.
LIABILITY OF PRINCIPAL FOR TORTS OF AN AGENT: Is there liability for independent contractor's torts?
Rule: No vicarious liability for independent contractor's torts

Because there is no right to control an independent contractor as there is no power to supervise the manner of performance.
LIABILITY OF PRINCIPAL FOR TORTS OF AN AGENT: Are there any exceptions to the no liability rule by independent contractors?
Yes
1) Ultra-hazardous activities
2) Estoppel, if you HOLD OUT your IC w/the appearance of agency you will be estopped from denying vicarious liability.
LIABILITY OF PRINCIPAL FOR TORTS OF AN AGENT: Factors considered to determine whether a tort occurred within the scope of the principal-agent relationship?
1) Was conduct of the kind agent was hired to perform?

2) Did the tort occur on the job ?(a) frolic: new and independent journey (b) detour: a mere departure from the assigned task, still within his job

3) Did the agent intend to benefit the principal even in part?
LIABILITY OF PRINCIPAL FOR TORTS OF AN AGENT: Is the principal liable for intentional torts of an agent?
No, Intentional torts are outside the scope of agency.
LIABILITY OF PRINCIPAL FOR CONTRACTS ENTERED BY AGENTS: Is the principal liable?
Principal is liable for contracts entered into by its agent if the principal authorized the agent to enter the contract.
LIABILITY OF PRINCIPAL FOR CONTRACTS ENTERED BY AGENTS: Types of authority
4 types:

1) Actual express authority
2) Actual implied authority
3) Apparent authority
4) Ratification
LIABILITY OF PRINCIPAL FOR CONTRACTS ENTERED BY AGENTS: What is actual express authority?
There is actual express authority when the principal used words to express authority to agent.

Exception: Equal dignities doctrine which states that if K needs to be in writing so does the express authority.
LIABILITY OF PRINCIPAL FOR CONTRACTS ENTERED BY AGENTS: Ways to revoke an express authority?
1) By unilateral act of either party

2) Death or incapacity of the principal
LIABILITY OF PRINCIPAL FOR CONTRACTS ENTERED BY AGENTS: When is the express authority irrevocable?
When the principal gave a power of attorney to the agent to enter into a transaction(s).

Look for conspicuous survival language.
LIABILITY OF PRINCIPAL FOR CONTRACTS ENTERED BY AGENTS: What is actual implied authority?
Authority which agent reasonably believes the principal has given because of necessity (necessary to accomplish a task), custom or prior dealings.
LIABILITY OF PRINCIPAL FOR CONTRACTS ENTERED BY AGENTS:
What is apparent authority?
Two part test (1) principal has cloaked agent with the appearance of authority (2) third party reasonably relies on appearance of authority
LIABILITY OF PRINCIPAL FOR CONTRACTS ENTERED BY AGENTS:
What is ratification?
Authority can be granted after the contract has been entered, if:

a) Principal has KNOWLEDGE of all the material facts regarding the K

b) Principal accepts its BENEFITS

c) Except: ratification CANNOT ALTER the terms of a K.
LIABILITY OF PRINCIPAL FOR CONTRACTS ENTERED BY AGENTS: General rules on contract liability?
1) If no authority, agent is liable, not the principal.

2) If authority, principal is liable not the agent.

Exception: if principal is PARTIALLY DISCLOSED or UNDISCLOSED, the authorized agent may nonetheless be liable at the election of the third party.
DUTIES AGENT OWES TO PRINCIPAL
1) Duty to exercise reasonable care
2) Duty to obey reasonable instructions
3) Duty of loyalty (no self-dealing, no usurping, no secret profits)