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40 Cards in this Set
- Front
- Back
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Creating an agency relationship
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A principal and an agent mutually consent that the agent will act on behalf of the principal and be subject to the principal’s control, thereby creating a fiduciary relationship. (p. 667)
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Elements not required
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An agency relationship can exist without either a written agreement, a formal agreement, or consideration. (pp. 668-669)
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An agent’s duties to the principal
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An agent owes these duties to the principal: duty of loyalty, duty to obey instructions, duty of care, and duty to provide information. (pp. 669-673)
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Can an agent receive outside benefits?
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An agent may not receive profits unless the principal knows and approves.
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Can an agent disclose information obtained during an agency relationship?
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Agents can neither disclose nor use for their own benefit any confidential information they acquire during their agency.
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In what way can an agent compete with the principal?
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Agents are not allowed to compete with their principal in any matter within the scope of the agency business.
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Conflict of interest between two principals
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Unless otherwise agreed, an agent may not act for two principals whose interests conflict.
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Can the agent deal with the principal without the principal’s knowledge?
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If a principal hires an agent to arrange a transaction, the agent may not become a party to the transaction without the principal's permission.
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True or false: The agent must behave appropriately at all times, even off duty
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True.
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The agent must obey her principal’s instructions unless …
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The principal directs her to behave unethically or illegally.
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What is the duty of care an agent must follow?
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An agent has the duty to act with reasonable care, and act as a reasonable person would under any circumstances.
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What is the duty to provide information an agent has with the principal?
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An agent has a duty to provide die principal with all information in her possession that she has reason to believe the principal wants to know.
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What are the ways which a principal / agent relationship can be terminated?
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A principal / agent relationship can be terminated through a terms agreement, achieving a purpose, mutual agreement, agency at will, or wrongful termination.
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The principal’s remedies in the event of a breach
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The principal has three potential remedies when the agent breaches her duty: recovery of damages the breach has caused, recovery of any profits earned by the agent from the breach, and rescission of any transaction with the agent. (pp. 673-674)
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The principal’s duties to the agent
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The principal has two duties to the agent: to reimburse legitimate expenses, and to cooperate with the agent. (pp. 674-675)
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Power and right to terminate
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Both the agent and the principal have the power to terminate an agency relationship, but they may not have the right. If the termination violates the agency agreement and causes harm to the other party, the wrongful party must pay damages. (p. 676)
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Automatic Termination
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An agency relationship automatically terminates if the principal or agent can no longer perform the required duties or if a change in circumstances renders the agency relationship pointless. (p. 676)
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A principal’s liability for contracts
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A principal is bound by the contracts of the agent if the agent has express, implied, or apparent authority. (p. 678)
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Express authority
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The principal grants express authority by words or conduct that, reasonably interpreted, cause the agent to believe that the principal desires her to act on the principal’s account. (pp. 678-679)
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Implied authority
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Implied authority includes authority to do acts that are incidental to a transaction, usually accompany it, or are reasonably necessary to accomplish it. (p. 679)
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Apparent authority
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Apparent authority means that a principal is liable for the acts of an agent who is not, in fact, acting with authority if the principal’s conduct causes a third party reasonably to believe that the agent is authorized. (p. 679)
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An agent’s liability for a contract
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An agent is not liable for any contract she makes on behalf of a fully disclosed principal. The principal is liable. In the case of an unidentified or undisclosed principal, both the agent and the principal are liable on the contract. (p. 681)
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Is the principal liable for the intentional torts committed by the agent?
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No, unless the agent intended to serve some purpose for the employer while committing the intentional tort, or there was negligent in hiring the employee.
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How are nonphysical torts committed by the agent treated as?
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Nonphysical torts are treated like a contract claim, which the principal is liable only if the agent acted with actual, implied, or apparent authority.
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Under what circumstances are the agents liable for the torts they commit while performing a duty for the principal?
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The agent is ALWAYS liable for the torts they commit.
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A principal’s liability for torts
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An employer is liable for a tort committed by its employee acting within the scope of employment or acting with apparent authority. (p. 683)
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Independent contractor
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The principal is liable for the physical torts of an independent contractor only if the principal has been negligent in hiring or supervising him. (p. 684).
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Agent’s liability for torts
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Agents are always liable for their own torts. (p. 687)
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True or False: A principal is always liable on a contract, whether he is fully disclosed, unidentified, or undisclosed. |
True |
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True or False: When a contract goes wrong, a third party can always recover damages from the agent, whether the principal is fully disclosed, unidentified, or undisclosed. |
False |
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True or False: An agent may receive profits from an agency relationship even if the principal does not know about the profits, so long as the principal is not harmed. |
False |
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True or False: An agent may never act for two principals whose interests conflict. |
False |
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True or False: An agent has a duty to provide the principal with all information in her possession that she has reason to believe the principal wants to know, even if he does not specifically ask for it. |
True |
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Someone painting the outside of a building you own crashed through a window, injuring a visiting executive. Which of the following questions would your lawyer not need to ask to determine if the painter was your employee? (a) Did the painter work full time for you? (b) Had you checked the painter's references? (c) Was the painter paid by the hour or by the job? (d) Were you in the painting business? (e) Did the painter consider herself your employee? |
(d) Were you in the painting business? |
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Which of the following duties does an agent not owe to her principal? (a) Duty of loyalty (b) Duty to obey instructions (c) Duty to reimburse (d) Duty of care (e) Duty to provide information |
(c) Duty to reimburse |
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Finn learns that, despite his stellar record, he is being paid less than other salespeople at Barry Co. So he decides to start his own company. During his last month on the Barry payroll, he tells all of his clients about his new business. He also tells them that Barry is a great company, but his fees will be lower. After he opens the doors of his new business, most of his former clients come with him. Is Finn liable to Barry? (a) No, because he has not been disloyal to Barry - he praised the compmany. (b) No, because Barry was underpaying him. (c) No, because his clients have the right to hire whichever company they choose. (d) Yes, Finn has violated his duty of loyalty to Barry. |
(d) Yes, Finn has violated his duty of loyalty to Barry. |
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Kurt asked his car mechanic, Quinn, for help in buying a used car. Quinn recommends a Ford Focus that she has been taking care of its whole life. Quinn was working for the seller. Which of the following statements is true? (a) Quinn must pay Kurt the amount of money she received from the Ford's prior owner. (b) After buying the car, Kurt finds out that it needs $1,000 in repairs. He can recover that amount from Quinn, but only if Quinn knew about the needed repairs before Kurt bought the car. (c) Kurt cannot recover anything because Quinn had no obligation to reveal her relationship with the car's seller. (d) Kurt cannot recover anything because he had not paid Quinn for her help. |
(a) Quinn must pay Kurt the amount of money she received from the Ford's prior owner. |
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Figgins is the dean of a college. He appointed Sueacting dean while he was out of the country and posted an announcement on thecollege web site announcing that she was authorized to act in his place. Healso told Sue privately that she did not have the right to make admissionsdecisions. While Figgins was gone, Sue overruled the admissions committee toadmit the child of a wealthy alumnus. Does the child have the right to attendthis college? (a) No, because Sue was not authorized to admit him. (b) No, because Figgins did not ratify Sue’s decision. (c) Yes, because Figgins was a fully disclosed principal. (d) Yes, because Sue had apparent authority. |
(d) Yes, because Sue had apparent authority. |
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A principal will not be liable to a third party for atort committed by an agent: (a) Unless the principal instructed the agent to commit thetort (b) Unless the tort was committed within the scope of theagency relationship (c) If the agency agreement limits the principal’sliability for the agent’s tort (d) If the tort is also regarded as a criminal act. |
(b) Unless the tort was committed within the scope of the agency relationship |
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Cox engaged Datz as her agent. It was mutually agreed that Datz would notdisclose that he was acting as Cox’s agent. Instead he was to deal with prospective customers as if he were aprincipal acting on his own behalf. Thishe did and made several contracts for Cox. Assuming Cox, Datz, or the customer seeks to avoid liability on one ofthe contracts involved, which of the following statements is correct? (a) Cox must ratify the Datz contracts in order to be held liable. (b) Datz has no liability once he discloses that Cox was the realprincipal. (c) The third party can avoid liability because he believed he wasdealing with Datz as a principal. (d) The third party may choose to hold either Datz or Cox liable. |
(d) The third party may choose to hold either Datz or Cox liable. |
