Ch 33 - Agency Relationship Pt 2

Front 1

Express authority

Back 1

declared in clear, direct and definite terms. Can be given orally or in writing

Front 2

Equal dignity rule

Back 2

if the contract is or must be in writing, agent’s authority must also be in writing. failure to comply with the equal dignity rule can make a contract voidable at the option of the principal. Once it’s ratified in writing either party can enforce rights under the contract.

Front 3

Exceptions to express authority

Back 3

(1) executive office can conduct ordinary business without written authority (2) when agent acts in the presence of the principal (3) when agent’s act of signing is merely a formality then agent does not need written authority to sign

Front 4

Power of attorney

Back 4

written document that is usually notarized. can be special (for specified acts only) or general (permitting agent to transact all business for the principal). Gives extensive authority.

Front 5

implied authority

Back 5

to do what is reasonably necessary to carry out express authority and accomplish the objectives of the agency. can be implied by custom or inferred from the position the agent occupies. implied authority cannot contradict express authority. if a principal has limited an agent’s express authority, the fact that the agent customarily would have such authority is irrelevant.

Front 6

apparent authority

Back 6

an agent has apparent authority when the principal by either word or action causes a third party reasonably to believe that the agent has authority to act event hough the agent has no express or implied authority.

Front 7

apparent authority and estoppel

Back 7

if third party honestly relies on principal’s representations to his or her detriment, the principal may be estopped (prevented) from denying that the agent had authority.

Front 8

Ratification

Back 8

occurs when principal affirms or accepts responsibility for agent’s unauthorized act. Principal is bound to agent’s act

Front 9

Requirements for ratification

Back 9

(1) agent must have acted on behalf of an identified principal who ratifies action (2) principal must know of all material facts in transaction (3) principal affirms agent’s act in its entirety (4) principal must have legal capacity to authorize the transaction at the time the agent engages in the act (5) ratification must occur before 3rd party withdraws form the transaction (6) principal must observe same formalities when ratifying the act as would have been required to authorize it initially.

Front 10

disclosed principal

Back 10

identity is known by the third party at the time of the contract

Front 11

partially disclosed principal

Back 11

principal whose identity is not known by the third party but third party knows that the agent is or may be acting for a principal at the time contract is made.

Front 12

undisclosed principal

Back 12

identity is totally unknown by third party and they don’t know that agent is acting in agency capacity.

Front 13

Authorized acts

Back 13

if agent acts within their authority, principal is obligated to perform contract regardless of whether principal was disclosed, partially disclosed or undisclosed. whether agent can be held liable depends on disclosure.

Front 14

authorized act with disclosed or partially disclosed principal

Back 14

if principal is disclosed, agent has no contractual liability for the nonperformance of the principal or third party.

Front 15

authorized act with undisclosed principal

Back 15

principal is bound. if agent is forced to pay by third party, agent is entitled to be indemnified by the principal. once undisclosed principal’s identity is revealed, third party can elect to hold either principal or agent liable on the contract.

Front 16

undisclosed principal can require 3rd party to fulfill contract unless one of the following is true

Back 16

(1) undisclosed principal was expressly excluded as a party in the written contract (2) contract is negotiable instrument signed by agent with no indication of signing in a representative capacity (3) performance of the agent is personal to the contract, thus allowing third party to refuse principal’s performance

Front 17

unauthorized acts

Back 17

if agent has no authority but contracts, principle cannot be held liable. agent is liable unless third party knows that the agent doesn’t have authority.

Front 18

e-agent

Back 18

semiautonomous computer program that is capable of executing specific tasks. can enter into binding agreements on behalf of their principals. if an e-agent does not provide opportunity to prevent errors at the time of the transaction, the other party to the transaction can avoid the transaction. must provide on-screen confirmation of a purchase or sale.

Front 19

principal’s tortious conduct

Back 19

principal who acts through an agent is still liable for harm resulting form their own negligence or recklessness

Front 20

principal’s authorization of agent’s tortious conduct

Back 20

principal is liable if they authorize agent to commit a tort. agent can also be held liable as a tortfeasor.

Front 21

liability for agent’s misrepresentation

Back 21

always liable for agents misrepresentation made within scope of authority (including innocent misrepresentations); may be liable for fraudulent acts when agent has apparent authority

Front 22

respondeat superior

Back 22

a principal is liable for any harm caused to a third party when acting under authority

Front 23

vicarious liability

Back 23

indirect liability on an employer. third party injured through negligence of an employee can sue either that employee or the employer if the employee’s negligent conduct occurred while the employee was acting within the scope of employement.

Front 24

determining scope of employment

Back 24

(1) whether employees act was authorized by employer (2) time, place and purpose of act (3) whether the act was one commonly performed by employees on behalf of their employers (4) extent to which the employer’s interest was advanced by the act (5) extent to which the private interests of the employee were involved (6) whether the employer furnished means by which injury was inflicted (7) whether employer had reason to know that employee would perform the act in question and whether the employee had done it before (8) whether the act involved the commission of a serious crime.

Front 25

employee travel time

Back 25

employee going to and from work or to and from meals is usually considered to be outside the scope of employment. all travel time of traveling salespersons is normally considered to be within scope of employement.

Front 26

detour vs frolic

Back 26

distinction used to determine whether it was within scope of employment (frolic is not within scope)

Front 27

notice of dangerous conditions

Back 27

employer is charged with knowledge of any dangerous conditions discovered by an employee and pertinent to the employment situation.

Front 28

liability for agent’s intentional torts

Back 28

usually not in the scope of employment but employer can be liable, e.g. when a bouncer assaults someone at a night club.

Front 29

liability for independent contractor’s torts

Back 29

employer is not liable for physical harm caused to a third person by negligent act of an independent contractor in performance of contracts. some exceptions for hazardous activities.

Front 30

liability for agent’s crimes

Back 30

principal not liable for agent’s crimes even within scope of authority except when principal participated in the crime. can be liable for violation of regulations.

Front 31

termination of apparent authority

Back 31

third persons may need to be notified that the agency has been terminated

Front 32

5 ways that agency may be terminated by act of the parties

Back 32

(1) lapse of time (2) purpose achieved (3) occurrence of a specific event (4) mutual agreement (5) termination by one party

Front 33

revocation

Back 33

termination by principal

Front 34

renunciation

Back 34

termination by agent

Front 35

termination by one party

Back 35

either party can terminate. although both parties have the power to terminate, they may not possess the right and therefore may be liable for breach of contract for wrongful termination.

Front 36

agency coupled with an interest

Back 36

the agent has some legal right to an interest in the property that is subject of the agency. because agent has additional interest in the property beyond the normal commission for selling it, agent’s position cannot be terminated until the agent’s interest ends.

Front 37

notice of termination

Back 37

when parties terminate an agency, it is principal’s duty to inform any third parties who know of the existence of the agency that it has been terminated. if this doesn’t happen, apparent authority will persist.

Front 38

termination by operation of law

Back 38

events that terminate agency automatically because their occurrence makes it impossible for the agent to perform or improbable that the principal would continue to want performance.

Front 39

Death or insanity

Back 39

of either party automatically terminates ordinary agency relationship. knowledge of death or insanity is not required.

Front 40

impossibility

Back 40

when subject matter of agency is destroyed or lost or there is a change in law that makes impossible

Front 41

changed circumstances

Back 41

event occurs that has such an unusual effect on the subject matter of the agency that the agent can reasonably infer that the principal will not want the agency to continue. e.g. learning there is oil on your land and deciding not to sell it.

Front 42

bankruptcy

Back 42

if either party petitions for bankruptcy, agency is usually terminated unless financial status is irrelevant. insolvency does not necessarily terminate relationship

Front 43

war

Back 43

when principals’ country and agent’s country are at war with each other agency is terminated.