Business Associations: Agency

Front 1

Creation of Apparent Authority; General Rule

Back 1

Apparent authority to do an act is created as to a third person by written or spoken words or other conduct of the principal, which reasonably interpreted, causes the third person to believe that the principal consents to have the act done on his behalf by the person purporting to act for him.

Front 2

Creation of Agency Relation by Creditor and Debtor

Back 2

A creditor who assumes control of his debtors business may become liable as principal for the acts of the debtor in connection with the business.

Front 3

Inherent Agency Power

Back 3

The power of an agent which is not derived from authority, apparent authority or estoppel, but solely from the agency relation and exists for the protection of persons hamred by or dealing with a servent or other agent.

Front 4

General Agent and Special Agent

Back 4

A general agent is an agent authorized to conduct a series of transactions involving a continuity of service.

A special agent is an agent authorized to conduct a single transaction or a series of transactions not involving a continuity of service.

Front 5

Acts of General Agents;
Undisclosed Principal

Back 5

A general agent for an undisclosed principal authorized to conduct transactions subjects his principal to liability for acts done on his account, if usual or necessary in such transactions, although forbidden by the principal to do them.

Front 6

Acts of Manager Appearing to be Owner

Back 6

An undisclosed principal who entrusts an agent with the management of his business is subject to liability to third persons with whom the agent enters into transactions usual in such businesses and on the principals account, although contrary to the directions of the principal.

Front 7

Unauthorized Acts of General Agent;
Disclosed or Partially Disclosed Principal

Back 7

A general agent for a disclosed or partially disclosed principal subjects his principal to liability for acts done on his account which usually accompany or are incidental to transactions which the agent is authorized to conduct, if although they are forbidden by the principal, the other party reasonably believes that the agent is authorized to do them and has no notice that he is not.

Front 8

Disclosed Principal, Partially Disclosed Principal, Undisclosed Principal

Back 8

(1) If at the time a transaction conducted by an agent the other party has notice the agent is acting for a principal AND of the principal's identity, the principal is a disclosed principal. (2) If the other party has notice that the agent is or may be acting for a principal but doesn't have notice of the principal's identy, the principal for whom the agent is acting is a partially disclosed principal. (3) If the other party has no notice that the agent is acting for a principal, the one for whom he acts is an undisclosed principal.

Front 9

Ratification

Back 9

The affirmance by a person of a prior act which did not bind him, but was done or professedly done on his account.

Ratification requires acceptance of the results of the act with an intent to ratify, and with full knowledge of all the material circumstances.

Front 10

Ratification Test

Back 10

(1) Was the act done on the party's behalf? (2) Did the party accept the act or the benefits of the act? (3) Did the party have full knowledge of all the material circumstances?

Front 11

Ways One Can Ratify

Back 11

Express Affirmance

Implied Affirmance
>Accept benefits of contract when its possible to decline.
>Implied through silence or inaction.
>Bringing a lawsuit to enforce the contract.

Front 12

Elements of Estoppel

Back 12

1. Act or omission of principal leads 3rd party to believe that someone is acting as agent of principal.
2. 3rd party relies on the act or omission.
3. 3rd party changes position based on that reliance.

Front 13

Agent's Liability on K, When Acting on behalf of Undisclosed or Partially Disclosed Principal

Back 13

When an agent acts on behalf of an undisclosed or partially disclosed principal, his is a party to the contract unless he specifically discloses his role as an agent and structures all contracts as between 3rd parties and the principal.

Front 14

Exceptions; when Principal WILL be liable for torts of his servants acting outside the scope of their employement

Back 14

(a) The master intended the conduct or consequences
(b) The master was negligent or reckless
(c) The conduct violated a non-delegable duty of the master
(d) The servant purported to act or speak on behalf of the principal and there was reliance upon apparent authority, or he was aided in accomplishing the tort by the existence of the agency relation.

Front 15

Servant

Back 15

A person employed to perform services in the affairs of another and who with respect to the physical conduct in the performance of the services is subject to the others control or right to control.

Front 16

Principal's Liability to 3rd Parties For Torts of His Servants; General Rule

Back 16

A master is subject to liability for the torts of his servants committed while acting in the scope of their employment.

A master is not liable for the torts committed by his servants who are independent contractors.

Front 17

Scope of Employment Doctrine

Back 17

(1) Conduct of a servant is within the scope of employment if, but only if:

(a) it is the kind he employed to perform
(b) it occurs substantially within the authorized time and space limits
(c) it is actuated, at least in part, by a purpose to serve the master; and
(d) if force is intentionally used by the servant by another, the use of force is not unexectable by the master.

(2) Conduct of a servant is not within the scope of employment if it is different in kind from that authorized, far beyond the authorized time or space limits, or too little actuated by a purpose to serve the master.

Front 18

Factors considered in determining whether someone is a servant or an independent contractor

Back 18

(a) the extent of control, which by the agreement, the master may exercise over the details of the work
(b) whether or not the one employed is engaged in a distinct occupation or business
(c) the kind of occupation, with reference to whether, in the locality, the work is usually done under the direction of the employer or by a specialist without supervision
(d) the skill required in the particular occupation
(e) whether the employer or the workman supplies the instrumentalities, tools and the place of work for the person doing the work
(f) the length of time for which the person is employed
(g) the method of payment, whether by the time or by the job
(h) whether or not the work is a part of the regular business of the employer
(i) whether or not the parties believe they are creating the relation of master and servant
(j) whether the principal is or is not in business

Front 19

Kind of Conduct Within the Scope of Employment (factors for consideration)

Back 19

(a) whether or not the act is one commonly done by such servants
(b) the time, place and purpose of the act
(c) the previous relations between the master and the servant
(d) the extent to which the business of the master is apportioned between different servants
(e) whether or not the act is outside the enterprise of the master, or if within the enterprise, has not been entrusted to any servant
(f) whether or not the master has reason to expect that such an act will be done
(g) the similarity in quality of the act done to the act authorized
(h) whether or not the instrumentality by which the harm is done has been furnished by the master to the servant
(i) the extent of departure from the normal method of accomplishing an authorized result
(j) whether or not the act is seriously criminal

Front 20

Exceptions; where Principal IS Liable for Torts of Independent Contractors

Back 20

1. Principal retains control over the aspect in which the tort occurs
2. Principal employs incompetent independent contractor
3. Financial irresponsibility (maybe)
4. Performance of contractor's task is inherently dangerous
5. Duty is non-delegable

Front 21

Agent as a Fiduciary

Back 21

An agent is a fiduciary with respect to matters within the scope of his agency

Front 22

Duty to Account for Profits Arising Out of Employment

Back 22

Unless otherwise agreed, an agent who makes a profit in connection with transactions conducted by him on behalf of the principal is under a duty to give such profit to the principal

Front 23

Acting as Adverse Party Without Principal's Consent

Back 23

Unless otherwise agreed, an agent is subject to a duty not to deal with his principal as an adverse party in a transaction connected with his agency without the principal's knowledge

Front 24

Acting For Adverse Party Without Principal's Consent

Back 24

Unless otherwise agreed, an agent is subject to a duty to his principal not to act on behalf of an adverse party in a transaction connected with his agency without the principal's knowledge

Front 25

Duty of Loyalty

Back 25

Unless otherwise agreed, an agent is subject to a duty to his principal to act solely for the benefit of the principal in all matters connected with his agency.

Front 26

Using Confidential Information After Termination of the Agency

Back 26

Unless otherwise agreed, after termination of the agency, the agent has a duty to the principal not to use or to disclose to third persons, on his account or on account of others, in competition with the principal or to his injury, trade secrets, written lists of names, or allow similar confidential matters given to him only for the principal's use or acquired by the agent in violation of duty. The agent can use general information concerning the method of business and names of customers retained in memory if not acquired in violation of his duties.

Front 27

Duties of an Agent During the Agency Relation

Back 27

Duty of care
Duty of good conduct
Duty to keep and render accounts
Duty to act only as authorized
Duty not to attempt the impossible / impracticable
Duty to obey
Duty not to act as agent after termination of agency relationship
Duty to give information

Front 28

What is Agency?
Who is a Principal?
Who is an Agent?

Back 28

Agency is the fiduciary relation which results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act.

The principal is the one for whom action is to be taken.

The agent is the one who is to act.

Front 29

Test for Agency

Back 29

1. Manifestation by principal that agent will act for him
2. Agent will act for principal subject to his control
3. The agent consents to act for principal

Front 30

Authority

Back 30

Authority is the power of the agent to affect the legal relations of the principal by acts done in accordance with the principal's manifestations of consent to him.

Front 31

Creation of Authority; General Rule

Back 31

Authority to do an act can be created by written or spoken words or other conduct of the principal, which, reasonably interpreted, causes the agent to believe the principal desires him to act on the principal's account.

Can be express or implied.
The Principal must say or do something.

Front 32

Apparent Authority

Back 32

Apparent authority is the power to affect the legal relations of another person by transactions with third persons, professedly as agent for the other, arising from and in accordance with the other's manifestations to such third persons.