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66 Cards in this Set

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CREATION OF AGENCY RELATIONSHIP

How is an agency relationship created?
CREATION OF AGENCY RELATIONSHIP

The principal and agent manifest assent, in either words or actions, to the relationship.
CREATION OF AGENCY RELATIONSHIP

Articulate the difference between an employee/servant and an independent contractor.
CREATION OF AGENCY RELATIONSHIP

An employee servant is under the control of the principal, while an independent contractor is subject to no such control.
CREATION OF AGENCY RELATIONSHIP

What factors does a court consider in deciding whether someone is an indepednent contractor or an employee/servant?
CREATION OF AGENCY RELATIONSHIP

-Degree of supervision
-Length of employment
-Hourly compensation
-Use of own equipment
-Parties' description of the rxn
-Degree of skill required (higher = contractor)
-Person has own separate + distinct business
CREATION OF AGENCY RELATIONSHIP

(1) If a question involves a contract, what are the parties called?

(2) If a question involves a tort, what are the parties called?
CREATION OF AGENCY RELATIONSHIP

(1) Principal + agent.

(2) Employer + employee; master + servant.
CREATION OF AGENCY RELATIONSHIP

Is it necessary to have a writing to prove the existence of an agency relationship?
CREATION OF AGENCY RELATIONSHIP

No.
CREATION OF AGENCY RELATIONSHIP

(1) Is a master liable for the acts of an independent contractor?

(2) What are the exceptions?
CREATION OF AGENCY RELATIONSHIP

(1) No.

(2)
-Ultra-hazardous activity involved
-Seletion of an incompetent contractor
- Non-delegable duties involved (e.g. duty to keep care in working condition)
CREATION OF AGENCY RELATIONSHIP

What is the Agent's Equal Dignities Rule?
CREATION OF AGENCY RELATIONSHIP

If an agent is binding her principal to an agreement which must be in writing under the Statute of Frauds, then the agency relationship must also be in writing.
CREATION OF AGENCY RELATIONSHIP

If there is a dispute regarding the existence of an agency relationship, who bears the burden of providing that it does or does not exist?
CREATION OF AGENCY RELATIONSHIP

The person trying to prove the existence of agency.
CREATION OF AGENCY RELATIONSHIP

(1) What are the qualifications for serving as an agent?

(2) Can a minor serve as an agent?

(3) Why (re #2)?
CREATION OF AGENCY RELATIONSHIP

(1) Minimal capacity.

(2) Yes.

(3) If a principal has contractual capacity, so will the agent.
CREATION OF AGENCY RELATIONSHIP

(1) Who is liable if an agent enters into a contract on behalf of someone who turns out to lack contractual capacity?

(2) Why?
CREATION OF AGENCY RELATIONSHIP

(1) The agent is personally liable.

(2) Since the agent warranted to the third party that the principal had capacity, the agent will be liable if the representation turns out not to be true.
POWER OF THE AGENT TO BIND THE PRINCIPAL

(1) Is the principal bound to a contract if he mistakenly grants authority to the wrong person and that person enters into a contract on the principal's behalf?

(2) Does this include situations where the principal was induced to give authority to the agent because of misrepresentation by the agent?

(3) What recourse will the principal have?
POWER OF THE AGENT TO BIND THE PRINCIPAL

(1) Yes.

(2) Yes.

(3) The principal will have recourse against the agent if it was due to the agent's misrepresentation. The principal will not have recourse if it was an error by the principal.
POWER OF THE AGENT TO BIND THE PRINCIPAL

(1) Define actual implied authority.

(2) What happens if there is a dispute between the agent and principal?

(3) How is reasonable defined?

(4) What happens to third party if no implied authority?
POWER OF THE AGENT TO BIND THE PRINCIPAL

(1) Authority that the agent believes she has based on the representations of the principal.

(2) The court will decide what was reasonable under the circumstances of a particular agency?

(3) Agent's belief will be deemed reasonable if it was:
-based on custom
- Act purely ministerial in nature
- Principal not objected in the past
-Emergency

(4) Sole recourse is against the "agent."
POWER OF THE AGENT TO BIND THE PRINCIPAL

Define apparent authority.
POWER OF THE AGENT TO BIND THE PRINCIPAL

Exists when principal holds out he agent as being someone authorized to act on his behalf + a third party reasonably beleives that the agent has been authorized by the principal to enter into a particular transaction on the principal's behalf.
POWER OF THE AGENT TO BIND THE PRINCIPAL

What happens if a third party believes in the agent's authority because of misrepresentation by the agent, but through no fault of the principal?
POWER OF THE AGENT TO BIND THE PRINCIPAL

The third party will have no recourse against the principal.
POWER OF THE AGENT TO BIND THE PRINCIPAL

Define lingering apparent authority.
POWER OF THE AGENT TO BIND THE PRINCIPAL

Principal terminates the actual authority of an agent but does not notify third parties with whom the agent transacted business.
POWER OF THE AGENT TO BIND THE PRINCIPAL

What must a principal know in order to ratify the unauthorized acts of an agent?
POWER OF THE AGENT TO BIND THE PRINCIPAL

All material facts relating to the transaction in order to ratify the unauthorized acts of an agent.
POWER OF THE AGENT TO BIND THE PRINCIPAL

Hypo: Lets say an agent breaches his duty of loyalty to the principal. But therafter the agent does something else for the principal and the principal accepts the benefits of the second transaction. Is the principal bound by this second transaction? Why?
POWER OF THE AGENT TO BIND THE PRINCIPAL

Yes. When the agent violated his duty of loyalty, this automatically terminated his agency. Thus, the second act was unauthorized. But if the principal accepts the benefits of the second transaction after being informed of all of its material terms, then the principal will be said to have ratified the agent's act.
POWER OF THE AGENT TO BIND THE PRINCIPAL

When is the principal liable for the acts of someone who poses as his agent, e.g. an imposter?
POWER OF THE AGENT TO BIND THE PRINCIPAL

If the third party can show that the principal was negligent in allowing the imposter to represent herself as an agent of the principal.
POWER OF THE AGENT TO BIND THE PRINCIPAL

When will a third party be able to rescind a contract made by an agent on behalf of a partially disclosed or undisclosed principal?
POWER OF THE AGENT TO BIND THE PRINCIPAL

The agent misrepresents something about the principal or misrepresents that there is a principal + misrepresentation is material to the third party's decision to enter the contract.
POWER OF THE AGENT TO BIND THE PRINCIPAL

Hypo: Lets say Dion takes out an ad that says my cat has just had kittens and I am sellling them for a reasonable prince. Dion will not, however, sell any of them to a medical reserach lab. If someone buys a kitten on behalf of a medical reserach lab, but conceals the fact from Dion, what recourse does Dion have? Identify the parties.
POWER OF THE AGENT TO BIND THE PRINCIPAL

Dion may rescind the contract and get the kitten back from the lab. The buyer is the agent, the lab is the principal, and Dion is the third party.
POWER OF THE AGENT TO BIND THE PRINCIPAL


Is a third party always bound on a contract formed with an agent that is acting on behalf of an undisclosed principal?
POWER OF THE AGENT TO BIND THE PRINCIPAL

No, not always. Generally, the third party is bound on contracts with an agent acting on behalf of an undisclosed principal. However, if performance of the contract would expose the third party to risks greater than the risks of dealing with the agent, then the third party may rescind the contract once he learns the principal's identity.
POWERS OF AN AGENT TO BIND THE PRINCIPAL

Hypo: A books 25 hotel rooms at the Deluxe Hotel. When it turns out that A is the road manager for Guns N'Rosses, whose propensity to trash hotel rooms is well known, may the manager of the Deluxe Hotel rescind the contract with A? Why?
POWERS OF AN AGENT TO BIND THE PRINCIPAL

Yes, because this exposes the hotel to risks greater than the risk of just dealing with A. The hotel could not rescind, however, if A was the agent of the Boston Pops.
VICARIOUS LIABILITY OF PRINICIPAL FOR ACTS OF AGENT

Define respondeat superior.
VICARIOUS LIABILITY OF PRINICIPAL FOR ACTS OF AGENT

A master will be liable for the INTENTIONAL or NEGLIGENT torts of a servant, if the servant was under the master's control and was acting within the scope of his employment at the time of the accident.
VICARIOUS LIABILITY OF PRINICIPAL FOR ACTS OF AGENT

(1) Articulate the difference between a frolic and a detour.

(2) Articulate the difference re master /prinicipal liability?
VICARIOUS LIABILITY OF PRINICIPAL FOR ACTS OF AGENT

A detour is a minor deviation from a servant's designated duties. A frolic is a MAJOR deviation from the servant's designated duties.

(2) A master/principal retains tort liability for detours, but not for frolics.
VICARIOUS LIABILITY OF PRINICIPAL FOR ACTS OF AGENT

Articulate the difference between a partially disclosed principal and a completely undisclosed principal.
VICARIOUS LIABILITY OF PRINICIPAL FOR ACTS OF AGENT

A partially disclosed principal is one who the agent makes known to the third party that she (the agent) is ating in a representative capacity only, and not on her own behalf. The identity of the principal is not revealed.

A completely disclosed principal is a principal whose EXISTENCE is deliberately concealed from the third party.
VICARIOUS LIABILITY OF PRINICIPAL FOR ACTS OF AGENT

Is an agent liable when she acts on behalf of a principal who is partially disclosed or completely undisclosed?
VICARIOUS LIABILITY OF PRINICIPAL FOR ACTS OF AGENT

Yes (to both).

If this seems unfair, remember that the agent appreciates this risk and purchases insurance or has an indemnification clause in their contract with the principal.
VICARIOUS LIABILITY OF PRINICIPAL FOR ACTS OF AGENT

Who may a third party sue if she enters into a contract with an undisclosed principal? How many satisfactions can she receive?
VICARIOUS LIABILITY OF PRINICIPAL FOR ACTS OF AGENT

The principal + the agent, but can only receive one satisfaction.
VICARIOUS LIABILITY OF PRINICIPAL FOR ACTS OF AGENT

Will an agent ever be held directly liable on a contract where the identity of the principal is disclosed to the third party?
VICARIOUS LIABILITY OF PRINICIPAL FOR ACTS OF AGENT

Yes, but rarely. Only if he exeeds the bounds of his authoirty.
VICARIOUS LIABILITY OF PRINICIPAL FOR ACTS OF AGENT

Hypo: If an agent is authorized to buy lumber for the principal, what happens if the agent buys jewerly or airline tickets and informs the third party of the principal's identity?
VICARIOUS LIABILITY OF PRINICIPAL FOR ACTS OF AGENT

The agent will be personally liable because she exceeded the bounds of authority.
VICARIOUS LIABILITY OF PRINICIPAL FOR ACTS OF AGENT

Hypo: The agent enters into a contract for the purchase of lumber, but the principal dies (without the agent's knowledge) before the agent enters into the contract. Is the agent liable?
VICARIOUS LIABILITY OF PRINICIPAL FOR ACTS OF AGENT

Yes.
VICARIOUS LIABILITY OF PRINICIPAL FOR ACTS OF AGENT

When will the master be liable for the intentional torts committed by an employee?
VICARIOUS LIABILITY OF PRINICIPAL FOR ACTS OF AGENT


Under the theory of respondeat superior, if the tort was committed as apart of the employee's duties or to further the master's interests.
VICARIOUS LIABILITY OF PRINCIPAL FOR ACTS OF AGENT

When will a master be liable for an assault committed by her employee?
VICARIOUS LIABILITY OF PRINCIPAL FOR ACTS OF AGENT

Under a theory of respondeat superior if the employee's behavior was foreseeable, given the employee's particular job function.
VICARIOUS LIABILITY OF PRINCIPAL FOR ACTS OF AGENT

(1) Define a sub-agent.

(2) State when a principal will be liable for acts of sub-agent.
VICARIOUS LIABILITY OF PRINCIPAL FOR ACTS OF AGENT

(1) Person hired by the agent to assist the agent in fulfilling the task he undertook for the principal.


(2) The principal will be liable for the actions of the sub-agent IF the principal authorized, implicitly or explicitly, the sub-agent.
VICARIOUS LIABILITY OF PRINCIPAL FOR ACTS OF AGENT

Who is liable for the acts of a borrowed servant -- the servant's employer or the borrowing employer?
VICARIOUS LIABILITY OF PRINCIPAL FOR ACTS OF AGENT

Generally, it is the servant's original master who is liable sine he did not relinquish complete control of the servant and may reassert complete control at any time.
VICARIOUS LIABILITY OF PRINCIPAL FOR ACTS OF AGENT

True or False: A court can have personal jurisdiction over a principal due to the acts of an agent?
VICARIOUS LIABILITY OF PRINCIPAL FOR ACTS OF AGENT

True. If the agent enegages in any behavior within the scope of her authority that triggers a jurisdiction's long arm statuet and the principal can also be reached.
VICARIOUS LIABILITY OF PRINCIPAL FOR ACTS OF AGENT

When a franchisor be liable for the torts of a franchisee?
VICARIOUS LIABILITY OF PRINCIPAL FOR ACTS OF AGENT

It depends. If the franchisor had a substantial degree of control over the franchisee, the franchisor may be liable.
VICARIOUS LIABILITY OF PRINCIPAL FOR ACTS OF AGENT

Hypo: Several years ago, a woman sued McDonalds for burns recieved when she spilled hot coffee on herself. If McDonald's dictated the temperate at which its franchisees could serve coffee, would it be proper to hold McDonald's liable?
VICARIOUS LIABILITY OF PRINCIPAL FOR ACTS OF AGENT

It depends. If the franchisee kept the temperate permitted by the franchisor, the the franchisor would be liable. If the franchisee kept the temperature about the temperature permitted by the franchisor, the franchisor would not be liable.
FIDUCIARY DUTIES BETWEEN PRINCIPAL AND AGENT

(1) Do fiduciary duties owed by agent to principal depend on compensation?

(2) What fiduciary duties does an agent owe a principal?
FIDUCIARY DUTIES BETWEEN PRINCIPAL AND AGENT

(1) No.

(2)
-Duty of loyalty
-Duty of care in execution
-Duty of obedience
-Duty to notify
FIDUCIARY DUTIES BETWEEN PRINCIPAL AND AGENT

(1) How can an agent breach his duty of loyalty to the principal?

(2) What is the result?
FIDUCIARY DUTIES BETWEEN PRINCIPAL AND AGENT

(i) Acts on behalf of another principal in the same transaction without both principal's permission.

(ii) Engages in self-dealing.

(iii) Makes a secret profit from the transaction.

(2) Ageny automatically terminated.
FIDUCIARY DUTIES BETWEEN PRINCIPAL AND AGENT

(1) How can an agent breach his duty of care to a principal?

(2) Provide specific examples.

(3) State remedy.
FIDUCIARY DUTIES BETWEEN PRINCIPAL AND AGENT

(1) Agent fails to use reasonable care.


(2)
(i) gross negligence or recklesnness
(ii) intentional misconduct
(iii) knowing violation of the law

(3) Hold agent liable for whatever loss principal suffers.
FIDUCIARY DUTIES BETWEEN PRINCIPAL AND AGENT

What is the agent's remedy if the agent breaches his duty of loyalty?
FIDUCIARY DUTIES BETWEEN PRINCIPAL AND AGENT

Principal is relieved of the obligation to pay the agent's commission. If the principal has already paid, then the principal may recover the commission.
FIDUCIARY DUTIES BETWEEN PRINCIPAL AND AGENT

What fiduciary duties does the principal owe the agent?
FIDUCIARY DUTIES BETWEEN PRINCIPAL AND AGENT

Compensation for labor + reimbursement for expenses the agent incurs.
FIDUCIARY DUTIES BETWEEN PRINCIPAL AND AGENT

(1) What is the effect of the agent's breach of duty of notice to his principal?

(2) Why?
FIDUCIARY DUTIES BETWEEN PRINCIPAL AND AGENT

(1) Agent is liable for whatever damage occurs because the principal did not receive notice.

(2) Once an agent receives notice, it is tantamount to the principal having knowledge of it --even though the principal, in fact, has no such knowledge.
TERMINATION OF AGENCY RELATIONSHIP

How can a principal terminate the agency relationship?
TERMINATION OF AGENCY RELATIONSHIP

-Inform the agent
-Die or become incapacitated (unless durable power of attorney)
-Time specified for rxn elapses
TERMINATION OF AGENCY RELATIONSHIP

What right does the beneficiary have when the relationship is terminated unustly.
TERMINATION OF AGENCY RELATIONSHIP

Sue for damages arising out of breach of contract.
TERMINATION OF AGENCY RELATIONSHIP

What is a durable power of attorney?
TERMINATION OF AGENCY RELATIONSHIP

Written agreement that allows the agent to continue to act on behalf of the principal when the principal has died or become disabled.
TERMINATION OF AGENCY RELATIONSHIP

What does it mean to be an agency coupled with interest?
TERMINATION OF AGENCY RELATIONSHIP


Agency relationship that is meant to act as a security for the debt. The agency may not be unilaterally revoked by the principal.
TERMINATION OF AGENCY RELATIONSHIP

Hypo: Dion buys a house and takes out a mortage to pay for it. Describe the agency relationship.
TERMINATION OF AGENCY RELATIONSHIP

The bank is the agent. DIon is the principal. Since the bank has an interest in the house, there is an agency coupled with interest.
TERMINATION OF AGENCY RELATIONSHIP

When will an agency relationship terminate automatically?
TERMINATION OF AGENCY RELATIONSHIP


-Agent violates duty of loyalty

-Death of agent or principal (unless agency coupled with an interest)

-Specific or "reasonable" time for termination of rxn is reached

-Subject matter is illegal

-Principal adjudicated insane or incompetent

- Task is completed + principal's
knowledge of completion

-Subject matter is destroyed + agent learns of destruction

-Agent loses capacity

-Principal or agent becomes bankrupt + if agent, affects ability to carry out agency or if principal, terminates agency re business transactions only
TERMINATION OF AGENCY RELATIONSHIP

What does it mean to be an agency coupled with interest?
TERMINATION OF AGENCY RELATIONSHIP


Agency relationship that is meant to act as a security for the debt. The agency may not be unilaterally revoked by the principal.
TERMINATION OF AGENCY RELATIONSHIP

Hypo: Dion buys a house and takes out a mortage to pay for it. Describe the agency relationship.
TERMINATION OF AGENCY RELATIONSHIP

The bank is the agent. DIon is the principal. Since the bank has an interest in the house, there is an agency coupled with interest.
TERMINATION OF AGENCY RELATIONSHIP

Hypo: If someone is appointed agent because he is a licensed attorney, what would happen if disbarred?
TERMINATION OF AGENCY RELATIONSHIP

Agency would terminate because agent loses capacity.
TERMINATION OF AGENCY RELATIONSHIP

When will an agency relationship terminate automatically?
TERMINATION OF AGENCY RELATIONSHIP


-Agent violates duty of loyalty

-Death of agent or principal (unless agency coupled with an interest)

-Specific or "reasonable" time for termination of rxn is reached

-Subject matter is illegal

-Principal adjudicated insane or incompetent

- Task is completed + principal's
knowledge of completion

-Subject matter is destroyed + agent learns of destruction

-Agent loses capacity

-Principal or agent becomes bankrupt + if agent, affects ability to carry out agency or if principal, terminates agency re business transactions only
TERMINATION OF AGENCY RELATIONSHIP

Hypo: Two people are appointed as joint agents, what happens if there is loss of capacity by one?
TERMINATION OF AGENCY RELATIONSHIP

Results in loss of power by the other agent as well.
TERMINATION OF AGENCY RELATIONSHIP

Hypo: If someone is appointed agent because he is a licensed attorney, what would happen if disbarred?
TERMINATION OF AGENCY RELATIONSHIP

Agency would terminate because agent loses capacity.
TERMINATION OF AGENCY RELATIONSHIP

What does it mean to be an agency coupled with interest?
TERMINATION OF AGENCY RELATIONSHIP


Agency relationship that is meant to act as a security for the debt. The agency may not be unilaterally revoked by the principal.
TERMINATION OF AGENCY RELATIONSHIP

Hypo: Dion buys a house and takes out a mortage to pay for it. Describe the agency relationship.
TERMINATION OF AGENCY RELATIONSHIP

The bank is the agent. DIon is the principal. Since the bank has an interest in the house, there is an agency coupled with interest.
TERMINATION OF AGENCY RELATIONSHIP

Hypo: Two people are appointed as joint agents, what happens if there is loss of capacity by one?
TERMINATION OF AGENCY RELATIONSHIP

Results in loss of power by the other agent as well.
TERMINATION OF AGENCY RELATIONSHIP

What does it mean to be an agency coupled with interest?
TERMINATION OF AGENCY RELATIONSHIP


Agency relationship that is meant to act as a security for the debt. The agency may not be unilaterally revoked by the principal.
TERMINATION OF AGENCY RELATIONSHIP

Hypo: Dion buys a house and takes out a mortage to pay for it. Describe the agency relationship.
TERMINATION OF AGENCY RELATIONSHIP

The bank is the agent. DIon is the principal. Since the bank has an interest in the house, there is an agency coupled with interest.
TERMINATION OF AGENCY RELATIONSHIP

When will an agency relationship terminate automatically?
TERMINATION OF AGENCY RELATIONSHIP


-Agent violates duty of loyalty

-Death of agent or principal (unless agency coupled with an interest)

-Specific or "reasonable" time for termination of rxn is reached

-Subject matter is illegal

-Principal adjudicated insane or incompetent

- Task is completed + principal's
knowledge of completion

-Subject matter is destroyed + agent learns of destruction

-Agent loses capacity

-Principal or agent becomes bankrupt + if agent, affects ability to carry out agency or if principal, terminates agency re business transactions only
TERMINATION OF AGENCY RELATIONSHIP

When will an agency relationship terminate automatically?
TERMINATION OF AGENCY RELATIONSHIP


-Agent violates duty of loyalty

-Death of agent or principal (unless agency coupled with an interest)

-Specific or "reasonable" time for termination of rxn is reached

-Subject matter is illegal

-Principal adjudicated insane or incompetent

- Task is completed + principal's
knowledge of completion

-Subject matter is destroyed + agent learns of destruction

-Agent loses capacity

-Principal or agent becomes bankrupt + if agent, affects ability to carry out agency or if principal, terminates agency re business transactions only
TERMINATION OF AGENCY RELATIONSHIP

Hypo: If someone is appointed agent because he is a licensed attorney, what would happen if disbarred?
TERMINATION OF AGENCY RELATIONSHIP

Agency would terminate because agent loses capacity.
TERMINATION OF AGENCY RELATIONSHIP

Hypo: If someone is appointed agent because he is a licensed attorney, what would happen if disbarred?
TERMINATION OF AGENCY RELATIONSHIP

Agency would terminate because agent loses capacity.
TERMINATION OF AGENCY RELATIONSHIP

Hypo: Two people are appointed as joint agents, what happens if there is loss of capacity by one?
TERMINATION OF AGENCY RELATIONSHIP

Results in loss of power by the other agent as well.
TERMINATION OF AGENCY RELATIONSHIP

Hypo: Two people are appointed as joint agents, what happens if there is loss of capacity by one?
TERMINATION OF AGENCY RELATIONSHIP

Results in loss of power by the other agent as well.