Agency Law (De Specific)

Front 1

When is an agency created?

Back 1

When one party manifests assent to another person that the agent shall act on the principal's behalf and subject to the principal's control, and the agent manifests assent or otherwise consents so to act

Need capacity

No presumption of agency; look to circumstances (written or spoken words or conduct)

Front 2

What can an agent be appointed to do?

Back 2

Any act except an act, by its nature, public policy, or contract that requires personal performance by the principal

Front 3

What capacity is required for each party?

Back 3

Principal - has contractual capacity himself
- no minors, incompetents, or unincorporated associations; corporations can be

Agent - any person may be
- minors, incompetents, corporations, attorneys
- but cannot represent both parties, or self deal

Front 4

What are the modes of creating an agency relationship?

Back 4

1. Act of the parties
- actual authority
- apparent authority
- inherent authority
- ratificication

2. operation of law
- estoppel, reliance by third party on manifestation from the principal that leads third party to believe is authorized to act as P's agent
- statue

Front 5

wWhat is actual authority?

Back 5

Actually appoint someone to act on the principal's behalf; can be express or implied

Requires (1) consent, (2) No consideration, (3) generally no, unless underlying K is within SOF

Front 6

What are the types of actual authority?

Back 6

1. express - contained within the four corners of the agreement
- agent may act as reasonably believes the principal intended
- can exist by mistake or misrepresentation

2. implied - agent reasonably believes they may act on behalf of P
- may use all reasonable means
- can act according to custom and usage
- can result from P's acquiescence which reasonably leads A to believe has authority to do same act in the future
- A can delegate ministerial acts, when required by circumstances, custom, impossibility.

Front 7

When is there authority to purchase, sell or deliver with actual authority?

Back 7

1. to purchase - when given, impliedly has authority to pay and received
2. to sell - when given, implied has authority to warrant, collect (if has possession of goods and can only take case), and deliver

Front 8

How is actual authority terminated?

Back 8

1. lapse of time
- specified time
- time not specified = reasonable time period
2. happenening of an event
3. change of circumstances - material change
4. breach of agent's fid duty
5. unilateral act of principal or agent - either can unilateraly terminate
6, operation of law (death, loss of capacity, etc...)
7 irrevocable agencies - where A has interest in the subject matter of the agency and where the A has a power given for security

Front 9

What is apparent authority?

Back 9

P by manifestation to a third party who relies, may authorize the agent to act on his behalf
- can be knowingly or negligent
- cannot be derived from agent's acts alone

Front 10

What are the types of apparent authority?

Back 10

1. where agent has no actual authority of any type
- imposters
- lingering apparent authority – P knows of dealings
between past A and third party, must give notice to third party; if third party does not know or reasonably should have known, A continues to have apparent authority - death or incompetence – terminates all authority without notice
2. where agent has some present actual authority
- secret instructions ineffective unless communicated to third parties – directly or indirectly

Front 11

What is inherent authority?

Back 11

P, by actually authorizing the A to act, may be liable for acts done by the agent that are similar to the acts authorized

Ex. respondent superior, mere possession of goods
insufficient to entitle A to sell or transfer

Front 12

What is ratification?

Back 12

P’s ratification of the actions of one who purported to be acting on his behalf binds P

Not have retroactive validity where it would operate to prejudice third parties who have acquired rights that would be jeopardized if the transaction were valid retroactively

Front 13

What constitutes ratification?

Back 13

1. prerequisites
- principal must know material facts
- principal must accept the entire transaction
- principal must have capacity
- no consideration needed
2. methods
- express affirmance
- implied affirmance – acceptance of benefits, silence, lawsuit involving transaction
3. who can?
- only P, no ratification by undisclosed P

Front 14

What can be ratified?

Back 14

General rule - anything P could have legally done

Exceptions:
1. performance illegal
2. withdraw by third party
3. material change of circumstances
4. where 3rd party knows agency relationship lacking

Front 15

What are the rules for a disclosed principal situation (third party v. P or A)?

Back 15

Disclosed P is one whose existence and identity are
known to the third party
1. disclosed P liable always for authorized agent
2. A generally not liable unless intended to be party to
contract or breach of implied warranty

Front 16

What are the rules for partially disclosed or undisclosed principal situations (third party v. A or P)?

Back 16

Partially – existence, but not identity is known to the
third party
1. both A and P liable
2. third party can elect who to hold liable

Front 17

What are the rules for right to hold third parties liable on contract?

Back 17

1. only P may hold third party liable
2. P may not enforce contract if fraudulent concealment of P’s identity or increase of burden to third party

Front 18

What are the duties of A to P?

Back 18

1. loyalty – duty to disclose information that is relevant to the agency entrusted to him; reasonable standard – important to relationship or transaction?
2. obedience – must obey all reasonable direction of his P; A will be liable to P for any loss that P suffers
- look to nature of work, contractual understanding and custom
3. care – A owes a duty to P to carry out agency with
reasonable care, in light of local community standards and taking into account any special skills of the agent
- if gratuitous A, compare to other without compensation

Front 19

What are the remedies of the P?

Back 19

1. action for damages – in contract or tort
- breach of contract for compensated agent
- tort – all agents
2. action for secret profits – breaches duty and secretly profits
3. accounting – determine A’s liability to the P for profits or property obtained by the agent in violation of the A’s duties to the P
4. withholding of compensation – when A intentionally commits a tort or intentionally breaches fiduciary duty, P may refuse to pay the A for any un-apportioned compensation

Front 20

What are the duties of sub-agent to P and A?

Back 20

1. Same duties as agent
2. A is liable for breaches by sub-agents
3. sub-agent liable to A
4. unauthorized sub-agent – no duties owed to P

Front 21

What are duties of P to A?

Back 21

1. duties imposed by operation of law
- compensation – reasonable
- reimbursement – expenses or losses reasonably
incurred in discharging any authorized duties
2. duties imposed by contract

Front 22

What are the remedies of A?

Back 22

1. breach of contract remedies
2. A possessory lien for any money due except
compensation for services

Front 23

When is a P liable to third parties for torts committed by A under respondent superior?

Back 23

1. master servant relationship – key is control
- independent contractor – no right to control
- can be through estoppel – appearance that exists and third party relies
- borrowed servants – original master still liable
- liable for independent contractor if (1) inherently dangerous activity (2) selection of incompetent IC (knowingly for total liability; negligent liable for negligence in selection), (3) hospitals/physicians
2. conduct within scope of employment

Front 24

How is it determined if something is within the scope of employment?

Back 24

Look to:
1. was the conduct of the same general nature as or incident to that which the servant was employed to perform?
2. was the conduct substantially removed from the authorized time and space limits of the employment?
- small or minor deviations from employer’s directions fall within scope of employment (detour); majority deviations fall outside
(frolic)
3. was the conduct actuated at least in part by a purpose to serve the master?
- dual purpose rule – look for a way to connect