Agency Law Flashcards

Front 1

Agency exists where...

Back 1

One person (the Principal) manifests assent to another (the Agent) that A shall act on P's behalf and subject to P's control and A consents to act

Front 2

Agency Triangle

Back 2

Principal_________Agent
\ /
\ /
\ /
Third Party

-Agency relationship between P and A
-A's dealings with T
-Create legal liability between P and T

Front 3

Implied Agency

Back 3

-An agency that occurs when a principal and an agent to not expressly create an agency

-The agency is implied from the conduct of the parties
-The extent of the agent's authority is determined from the particular facts and circumstances of the particular situation

Front 4

Test for if an Agency Relationship Exists

Back 4

Rest. 3d § 1.01
-The manifestation of assent by P to A that A shall act on
--P's behalf
--Subject to P's control
-And A manifests assent or otherwise consents

Front 5

Ways an Agent Binds the Principal to a Contract

Back 5

-Authority (either express or implied)
-Undisclosed principals--"inherent agency power"
-Ratification
-Estoppel

Front 6

Actual Express Authority

Back 6

Looks at A's reasonable belief based on P's express manifestation

Front 7

Actual Implied Authority

Back 7

Looks at A's reasonable belief based on P's express manifestations, and includes acts necessary or incidental to accomplish P's objectives, as A reasonably understands

-Includes custom or past dealings

Front 8

Apparent Authority

Back 8

Looks at T's reasonable belief traceable to P's manifestations

Front 9

Undisclosed Principals

Back 9

-History of inherent agency power or inherent authority where P was bound, but didn't fit into the other categories of cases

-When A has actual authority and doesn't disclose there is a P or its identity, both A and P are liable

Front 10

Ratification

Back 10

-The retroactive approval of a previously unauthorized act

-When ratified, an act is given effect as if it had been authorized in the first instance (e.g. as if done by A with actual authority). Both P and T are bound and the purported A is discharged

Front 11

Ratification occurs when...

Back 11

A) by manifesting assent to the act
B) conduct that justifies a reasonable assumption that the person so consents

-At the time of ratification, the purported P must have knowledge of all material facts, and T must not have already withdrawn from the transaction

Front 12

Estoppel

Back 12

-Raised where purported agent didn't have actual or inherent authority, but a court may hold P liable due to some fault of P. P is estopped from raising the lack of authority defense

-Estoppel is a one-way street. Only the principal is liable.

Front 13

Agent's Contract Liability:
Fully Disclosed Agency within Scope of Authority

Back 13

-When the P is fully disclosed and A is acting within the scope of authority, P is liable to T and A is not

-Exception: if A intends/agrees to be bound to the contract.

Front 14

Agent's Contract Liability:
Undisclosed or Unidentified Principal

Back 14

-When the P is undisclosed, both the P and A are liable to the T if the P fails to perform the contract.

-Almost always the same when the P is unidentified

Front 15

Agent's Contract Liability:
Agent Exceeding the Scope of Authority

Back 15

-An A who enters into a K on behalf of another impliedly warrants that he or she has the authority to do so (unless A notifies T or T knows A acts without actual authority)

-If the A acted without authority or exceeded the scope of authority, and P did not ratify, A is liable to T for breaching the implied warranty of authority

-A also may be liable for fraud if intentionally misrepresented his or her authority

Front 16

Principal's Liability to T for Agent's Tort:
Direct Liability

Back 16

-A acts with actual authority to commit tort or P ratifies A's conduct
-P is negligent in selecting, supervising, or otherwise controlling A
-P delegates performance of a duty to use care to protect persons or property and A fails to perform duty

Front 17

Principal's Liability to T for Agent's Tort:
Vicarious Liability

Back 17

-A is an employee who commits a tort while acting within the scope of employment
-A commits a tort when acting with apparent authority in dealing with T on or purportedly on behalf of P

Front 18

Vicarious Liability Classifications

Back 18

-Employee: P liable if within scope of employment {P controls results and physical conduct}

-Non-Employee Agent/Independent Contractor (agent-type): P not liable except in special cases {P has no control over physical conduct}

-Non-Agent (service provider)/Independent Contractor (non-agent): P not liable in agency law {P has less control over results and does not control physical conduct}

Front 19

P Liability for Non-Employee Agent

Back 19

Not Liable Except When:
-P retains control over the aspect of the work in which the tort occurs (e.g. treated as employee with respect to some limited part of work)
-P hires an incompetent contractor
-Nondelegable duty (e.g. a land occupier has a duty to keep land safe for business invitees)
-Activity contracted for is inherently dangerous (e.g. demolition or blasting)

Front 20

A's duties to P

Back 20

-Duty of loyalty
-Duty not to acquire a material benefit from a T for actions taken on behalf of P or through A's use of position
-Duty not to act as adverse party to P
-Duty to refrain from competing with P during agency relationship
-Duty of confidentiality; duty not to use P's property for A's own purposes
-Duty to act in accordance with any contract with P
-Duty of care, competence, and diligence
-Duty to act only within scope of actual authority and duty to obey
-Duty of good conduct
-Duty to notify P of info that A knows or has reason to know P would want to know

Front 21

Principal's Consent

Back 21

-Conduct by A that would otherwise breach a duty listed below does not constitute a breach if P consents, provided that A acts in good faith and discloses all material facts in obtaining the consent:

-duty of loyalty, duty not to acquire material benefit from a T, duty not to act adverse or to compete, duty of confidentiality

Front 22

P's Obligations to A

Back 22

-P has a duty to indemnify A for the terms of any contract between them, when A makes a payment within the scope of actual authority, or that is beneficial to P unless A acts officiously in making the payment, or when A suffers a loss that fairly should be borne by P in light of their relationship

-Duty to deal with A fairly and in good faith

Front 23

Terminating Actual Authority

Back 23

-Agreement of Parties (K says when it ends)
-By lapse of time (within a reasonable time period or stated time)
-Any time by either party after notice
-By change of the circumstances that should cause A to realize P would want to terminate authority
-Fulfillment of the purpose of the agency relationship
-By operation of law (e.g. upon death or loss of capacity of either)

Front 24

Terminating Apparent Authority

Back 24

-Termination of actual authority does not end any apparent authority held by A
-Apparent authority ends when it is no longer reasonable for T to believe that A continues to act with actual authority.
-The test is whether T knows or reasonably should have known of the termination of A's authority