South Carolina Bar Exam - Agency

Front 1

Start every Agency question with the following...

Back 1

Agency is the fiduciary relationship that results when two people agree that one will act on behalf and under the control of the other.

Front 2

*Three Essential Elements of Agency

Back 2

1. Consent of both parties,
2. A is subject to P's control, and
3. A acts on behalf of P

Front 3

*Formation of Agency Relationship

Back 3

Mutual manifestation of intent by both parties. Do NOT need an express agreement, contract, or consideration. Do NOT need intent to create agency, only intent to do the things that, by law, create an agency relationship.

Front 4

Who can enter into an agency relationship (Capacity)?

Back 4

1. Any person that can give legally binding consent can be a principal. Infants can be principals, but it can be voided by the infant. Persons adjudicated to lack capacity CANNOT be principals. Creditor can be a principal if he assumes control over conduct of debtor.

2. Anyone can be an agent. Their liability is limited to their capacity (ex. if they do not have the capacity to understand what fiduciary duty is, they cannot be liable for breach of fiduciary duty).

Front 5

Three Types of Agents and Liability in Tort or Contract

Back 5

1. Servant - principal has right to control moment-to-moment activities, even if right is not exercised. P liable in tort for acts of agent within scope of employment. A cannot bind P in contract.

2. Non-Servant Agent - principal has right to some control, but agent can decide how to complete principal's goals. P liable in contracts only.

3. True Independent Contractor - principal has no control. No liability in tort or contract.

**One person can be servant re: some activities and a non-servant agent re: other activities.**

Front 6

Three Types of Principals and Liability to Third Parties

Back 6

1. Disclosed Principal - 3rd party knows X is an agent and who the principal is. Principal and 3rd party are liable to each other in K, but agent is not liable to either unless all express clear intent that A be bound.

2. Partially Disclosed Principal - 3rd party knows X is an agent, but doesn't know and can't find out who principal is. Principal and 3rd party are liable to each other. Agent is treated as party to the K. 3rd party can decide to sue A or P.

3. Undisclosed Principal - 3rd party has no idea X is an agent. Same liability as partially disclosed P.

Front 7

Five Types of Non-Servant Agents and Binding Powers

Back 7

1. General Agent - does a series of similar transactions w/ continuity. Can bind P to agreements in general nature of agency even if outside scope of actual authority. Not a general agent if has authority to act for P in ALL matters.

2. Special Agent - can do a single transaction or set number of transactions. Usually cannot bind P and 3rd parties have duty to investigate their authority.

3. Co-Agents - two or more agents for P. No obligations to each other even if one is subordinate.

4. Subagents - In general, agent cannot delegate. Here, P tells agent to get an agent. P is bound if subagent acts within his own power and agent's power.

5. Agent's Agent - agent gets an agent without P's approval. P is not liable for any of agent's agent's acts. Agent is on the hook for agent's agent's acts.

Front 8

Actual Express Authority

Back 8

Created by principal's manifestation to agent ("Sell to Lisa!")

Front 9

Actual Implied Authority

Back 9

Though not expressed to agent, it is reasonably necessary to carry out express authority ("Sell to anyone!")

Front 10

Apparent Authority

Back 10

P tells 3rd party A can act. Must originate with P! Can be explicit or implied (holding out, course of dealing, etc). P must be disclosed or partially disclosed for belief to be reasonable. ("Smithers can handle it.")

Detrimental reliance is NOT required in South Carolina.

Front 11

*Estoppel

Back 11

When no agency exists, but a 3rd party is foreseeably and reasonably justified in relying on the appearance of agency, and does rely, P is estopped to deny existence of agency. Damages is the reliance interest.

Front 12

Inherent Agency Power

Back 12

No actual or apparent authority, but agent purports to bind P anyway. Doctrine protects innocent 3rd party who had no notice of limits of agent's power. Catch all category for when policy dictates P should be liable. Ex. Undisclosed P and agent acting within the normal course of business.

Front 13

Emergency Authority

Back 13

Unforeseen emergency threatens P's interest and it is not possible to get P's authority before some substantial loss occurs.

Front 14

Ratification

Back 14

Giving authority after the fact.

Elements:
1. P must be disclosed.
2. P had capacity to act at time of action (ex. Corp cannot ratify actions undertaken before corporation formed)
3. 3rd party believed agent was authorized to act on behalf of P
4. Ratifying person must know all material facts
5. Ratification must be complete (no partial ratifications)
6. Ratifying person must unequivocally affirm before 3rd party disaffirms
7. Agent avoids all liability once ratification is complete (even for fraud or breach of warranty)

Front 15

Restitution

Back 15

When a 3rd party has performed to the benefit of P, 3rd party can recover quantum meruit damages.

Front 16

When is a principal liable in contract?

Back 16

Liable if agent is acting within his AUTHORITY (see actual, implied, estoppel)

Front 17

Agent's Duties

Back 17

1. Fiduciary duty to P (loyalty, care, act in good faith)
2. Full disclosure of all pertinent facts to transactions
3. Exclusivity in subject matter (breached by self-dealing or stealing opportunities from P, though secret profits are considered held in constructive trust for P)
4. Exercise of reasonable care in conduct of P's business

Front 18

Principal's Duties

Back 18

1. Duties to disclose all risks to A
2. Liable for any injury to A caused by P's negligence (subject to contributory negligence)
3. Duty of reimbursement of expenses
4. Duty to indemnify A for liability incurred within performance of duties so long as performance was within scope of A's authority (South Carolina additional rule)
5. Duty to give opportunity to work, keep accounts, have good conduct, pay compensation, and not interfere with commission income

Front 19

Who can terminate an agency relationship?

Back 19

Consensual, so it can be terminated by either part

Front 20

Can you contract away the right to terminate? Can you contract away the power to terminate?

Back 20

Can assign right to terminate, but not power. If a party terminates without right, he is liable for breach of contract.

Front 21

*Methods for Terminating Agency Relationship

Back 21

1. Agreement of the parties
2. Unilateral renunciation by either party
3. Expiration of time (reasonable if not express)
4. Accomplishment of the objective of agency relationship
5. Loss or destruction of subject matter that forms basis of relationship
6. Death or incapacity of either party

**Must notify 3rd parties to terminate apparent authority**

Front 22

Irrevocable Agency

Back 22

Agency coupled with an interest is irrevocable until subject matter of the relationship has ended. Usually created to allow agent to protect some kind of right.

Front 23

When is 3rd party notification imputed to the principal?

Back 23

When agent has or appears to have authority to receive notifications for principal (ex. hand letter to P's personal secretary whose desk is right outside P's door). 3rd party giving notice must have no reason to believe agent is acting adversely to P's interest (ex. hand letter to P's personal secretary and she directs you to put it straight into her trash can and rolls her eyes).

Front 24

When is agent's knowledge imputed to the principal?

Back 24

When agent has a duty to disclose or has actual authority to act on P's behalf.

Front 25

Doctrine of Respondeat Superior

Back 25

Makes P liable for physical torts of A when A is acting within scope of employment

Front 26

Elements for determining if P controls A's moment-to-moment activities

Back 26

1. Direct evidence
2. Method of payment (salary v. pay per job)
3. Furnishing of equipment (if employee brings own tools, they look more like independent contractor)
4. Right to fire
5. Contract language is persuasive but not dispositive

Front 27

Elements for determining whether A's actions were within scope of employment

Back 27

1. Kind of actions he is employed to perform
2. Action occurred substantially within authorized time and space limits (ex. in the office during work hours)
3. Action done, at least in part, to serve master/employer
4. If action involves use of force, use of force not unexpected by master (ex. bouncer at a nightclub)

**In South Carolina, a servant is never acting within the scope of employment if they are acting for some independent purpose that is totally disconnected from furthering master's business. Make sure to mention this distinction!!**

Front 28

Servant's Use of Automobile (Detour v. Frolic)

Back 28

Detour is attributed to business of the master, but frolic is wholly disconnected with P's business and not attributable to P.

Front 29

Liability for Conduct During Smoking Breaks

Back 29

Smoking itself is outside course of employment, but things done while on smoke break are within scope of employment because breaks benefit employer by relaxing employees.

Front 30

Borrowed Servants

Back 30

Servant can have two different masters. Master can also direct servant to perform services for another. Test for liability is which master was in control at the time of the action.

Front 31

When is a master liable for servant's conduct that is outside the scope for employment?

Back 31

1. Master intended consequences or conduct
2. Negligent or reckless in hiring or supervision (ex. hiring bouncers you know will get extremely violent)
3. Inherently dangerous work
4. Reliance on apparent agency
5. Master ratified the tort

Front 32

When is an agent liable in contract?

Back 32

Based on DISCLOSURE (see disclosed P, partially disclosed P, etc)