Texas Agency And Partnership

Front 1

Agency

Back 1

1) Some manifestation by the principal that the agent act
(a) on his behalf and
(b) subject to his control and
2) manifestation of consent by the agent so to act

Front 2

Intention

Back 2

The creation of an agency relationship ultimately turns on the parties' intentions as manifested by their agreements or actions

Front 3

Primary determination is the parties's intent NOT three characteristics that are not exclusive

Back 3

1) Agent's power to alter legal relations of the principal (means more than just whether the principal is bound by contracts entered into by the agent on the principal's behalf)
2) Agent's duty to act primarily for the benefit of the principal
3) The principal's right to control the agent (less control than a master/servant relationship, control can be attenuated with respect to duties)

Front 4

Do you need an express agreement?

Back 4

An agency relationship can be created by express agreement or by inference from the acts of the agent and principal

Front 5

Two fundamental elements (basically mutual consent)

Back 5

1) Some manifestation or indication by the principal to the agent that he consents to the agent's acting for his benefit and
2) consent by the agent to act for the principal
Restatement says: principal control

Front 6

Signature of agent

Back 6

Signature of agent is not always required but signature of agent-in-fact is their consent to agent to act

Front 7

Equal Dignities

Back 7

If the deed, K, etc. has to be written, the agreement forming the agency always has to be written.

Corporations- deems that act of certain persons are in themselves the acts of the corporation

Front 8

Can you be an agent and not have power to bind the principal to a contract?

Back 8

Yes, the principal sets the scope of the authority, it can be limited (and trivial) but you can STILL be an AGENT

Front 9

Who does it bind when the agent acts outside of his scope of employment?

Back 9

If the principal is not a party because the agent acted outside the scope of the authority, the agent then becomes the party

Front 10

Ostensible Agency

Back 10

For a principal to be held liable- must be traceable to the principal and cannot be established solely by the acts, declarations, or conduct of an agent.

Front 11

Actual Authority

Back 11

1) Manifestation of intent by the principal to the agent that agent is authorized,
2) such that the AGENT actually believes
3) reasonably, that the agent is authorized

Front 12

Apparent Authority

Back 12

1) Manifestation of intent by the principal to the agent that agent is authorized
2) such that the THIRD PARTY actually believes
3) reasonably, that agent is authorized

Front 13

Equitable Estoppel

Back 13

1) A person makes a statement to another, and
2) The other relied on that statement
3) Reasonably
4) To the other's detriment

Front 14

Agency by Estoppel

Back 14

1) A person makes a statement to another (X is my agent or X has my authority) and
2) the other relied on that statement (signs K, etc.)
3) Reasonably
4) to the other's detriment

Front 15

Principal Capacity

Back 15

A principal must have the capacity to give a legal consent, as well as capacity to do the act that he or she is authorizing the agent to do. Ex: An infant can employ an agent with authority to make fully enforceable contracts for necessities, but the contracts of the agent for other types of subject matter would be voidable at the election of the infant (K not tort)

Front 16

Agent Capacity

Back 16

To be an agent, a person needs only the PHYSICAL or MENTAL capacity to do the thing he or she has been appointed to do. Almost anyone can serve as an agent. Even an intact or mental incompetent person might well have the capacity to bind a principal to a contract (to cause tortt liability for a master where they act as a servant)

Front 17

Disclosed

Back 17

Where the third person has notice BOTH that the agent is acting for a principal and of the principal's identity

Front 18

Partially disclosed/ Unidentified

Back 18

Even where third persons know they are dealing with an agent, they may not have notice of the identity of the principal

Front 19

Undisclosed

Back 19

Where the third person has no notice that the agent is acting for a principal

Front 20

Common Law Agency

Back 20

An agent has the power to make business contracts on behalf of the principal. Principal has standing to sue on a contract formed by their agent. Principal is also liable on the same contract (liability on BOTH sides)

Front 21

Big Amusement Hypo

Back 21

If change in identity changes WILLINGNESS to enter the contract, contract may result in rescission.
If change in identity changes PRICE, can't avoid contract unless misrepresentation
(could have gotten more $ if they'd known it was Disney)

Front 22

Power of Attorney

- can be Agent with NO power to do anything at all

Back 22

PA lacks power to make a gift of the principal's property, unless that power:
1) is expressly conferred
2) arises as a necessary implication from the conferred power
3) is clearly intended by the parties, as evidence by the surrounding facts/circumstances

Front 23

Powers in PA

Back 23

Powers must be clearly delineated but CAN use facts and surrounding circumstances (to find INTENTION of the parties)
- Informal request may show intent that would make it different
- Rejects bright line rule (may exclude evidence that the principal did NOT want property given away)
- Can't file for divorce or represent principal in Court

Front 24

Lawyer client settlements

Back 24

Presume that the attorney of record who enters into a settlement agreement had authority to do so
you can't affirmatively prove otherwise- produce a letter that says they didn't have authority (never going to happen)
- hard to predict what court will hold in settlement cases

Front 25

If entrusting to a MERCHANT

Back 25

Any entrusting of possession of goods to a merchant who deals in goods of that kind gives him the power to transfer all rights of the entrusted to a buyer in ordinary course of business.
- If they don't deal in goods of that kind= NOT agent!

Front 26

Consequence of Estoppel

Back 26

Legal consequence of invoking estoppel is that a person is bound by what they original said or did.
Person in case is estopped from denying the act or omission- not being able to deny someone is your agent established by agency

Front 27

Difference between apparent authority and estoppel

Apparent authority could rise out of omissions TOO

Back 27

- Distinction: While merely entering into a contract based on a reasonable belief of authority is sufficient to invoke apparently authority, it is not a change in position sufficient to invoke ESTOPPEL. In estoppel, the THIRD PARTY must showing something additional: A DETRIMENTAL CHANGE IN POSITION

Front 28

Ostensible Agency

Back 28

Basically apparent authority without detriment (not based on estoppel but they say it is)

Front 29

Nogales Case

Back 29

Apparent Authority: needs principal manifestation
Agency by Estoppel: needs a statement by Principal that authorizes agency
Inherent Agency Power: derived not from authority, apparent authority or estoppel, but solely from the agency relation and exists for the protection of persons harmed by or dealing with a servant or other agent

Front 30

Inherent Authority

Back 30

If the principal is disclosed, then LIABILITY EXISTS if:
1) the agent is a GENERAL agent
2) doing acts which usually accompany or are incidental to authorized transactions (even though forbidden, and
3) the other party reasonably believes that the agent is authorized

Front 31

Inherent Authority Notes

Back 31

- Only difference is you don't have to have the other party reasonably believing that the agent is authorized
- It would be unfair for an enterprise to have the benefit of the work of its agents without making it responsible to some extent for their excesses and failures to act carefully

Front 32

GENERAL agent

Back 32

Key: continuity of service
- No FRESH authority needed
- "An agent authorized to conduct a series of transactions involving a continuity of service"
- PP: can't verify everything with principal, that's the point of an agent
- "One who is an integral party of a business organization and does not require fresh authorization for each transaction is a general agent"

Front 33

General Principles of Notification to and Knowledge of the Agent

Back 33

1) Knowledge and notice of facts
2) notification
3) prior or casually obtained information

Front 34

Notice/Knowledge

Back 34

Generally, notice to, or knowledge of, an agent while acting within the scope of his authority and in reference to a matter over which his authority extends, is notice to, or knowledge of, the PRINCIPAL
(relevant knowledge is imputed to the corp/principal)

Front 35

Duty to Report

Back 35

If employee holds a position of management or control, in the exercise of which a duty to report known dishonesty of a fellow employee can be found to exist either explicitly or by fair inference from a course of conduct

Front 36

Notification

Back 36

A notification given to an agent is notice to the principal if it is given to "an agent authorized to receive it" or to "an agent apparently authorized to receive it"
- Doesn't matter if they read it (it was notification NOT notice)

Front 37

Difference between Knowledge/notice and Notification

Back 37

A notification is a manifestation that is made in the form required by agreement among parties or by applicable law, or in a reasonable manner in the absence of an agreement or an applicable law, with the intention of affecting the legal rights and duties of the notifier in relation to the rights and duties of a person of whom the notification is given

Front 38

Constructive knowledge cases

Back 38

Dvoracek and Udolf

Front 39

Prior or casually obtained information

Back 39

Principal cannot be held liable for the knowledge of their agent when he agent obtained the knowledge BEFORE he became an agent (Davenport)

Front 40

Davenport dissent rule

Back 40

The time when the knowledge is acquired should be relevant ONLY to draw the appropriate inference as to the EXISTENCE of knowledge. If the knowledge was acquired before/not while agent was acting for purposes of the principal AND the agent had FORGOTTEN knowledge- principal not held liable because agent had no duty to remember it. ** Knowledge would be imputed ONLY if it can reasonably be said to be present in the agent's mind while he was acting for the principal or if was acquired so recently as to raise the presumption that he still retained it in his mind.

Front 41

Adverse Interest Exception

Back 41

The agent must have totally abandoned his principal's interest and be acting entirely for his own or another's purposes. It cannot be invoked merely because he has a conflict of interest or because he is not acting primarily for his principal (If BOTH corporation and employee benefitted= no adverse interest exception)

Front 42

Ratification

Back 42

1) Affirmance
2) Knowledge of Agents

Front 43

Ratification

Back 43

- The affirmance by a person of a prior act which did not bind him by which was done or professedly done on his account
- Requires: acceptance of the results of the act with an INTENT to ratify and with FULL KNOWLEDGE of all the MATERIAL circumstances
- K or other single transaction must be affirmed in its ENTIRETY in order to effect ratification

Front 44

Principal AVOIDANCE of ratification

Back 44

If at the time of affirmance, the purported principal is ignorant of material facts involved in the original transaction, and is unaware of his ignorance, he can thereafter AVOID the effect of the affirmance

Front 45

Forgery is an example of ratification- always done on behalf of another

Back 45

Unclear whether the agent must purport to act on principal's behalf for ratification to work

Front 46

Knowledge required for ratification to work

Back 46

ACTUAL knowledge is NOT required, probably need SOME knowledge of the material facts

Front 47

Termination of Agency Relationships

Back 47

- The revocation of the agent's authority does NOT become effective as between the principal and third persons until they (3rd persons) receive NOTICE of the termination
- Lingering Authority is a problem otherwise

Front 48

Voluntary Terminations

Back 48

- The principal may at any time revoke his consent to action on his behalf by the agent
- The authority of an agent to act of rate principal terminates when the principal "manifests" to the agent that the principal no longer consents, or when the agent has notice the principal no longer consents
- The agent may renounce the agent and withdraw his consent to act on behalf of the principal

Front 49

Apparent Authority Termination

Back 49

- Apparent authority ends when it is no longer reasonable for the third party with whom the agent deals to believe that the agent continues to act with actual authority
- Notification by publication usually not enough to stop lingering authority

Front 50

Terminations by operation of LAW

Back 50

1) Death
2) Statutory Responses

Front 51

Death
- Principal is no longer a legal person but that's not a good argument (circular)- if it's coupled with an interest, they are a legal person again?

Back 51

Death of the principal puts an end to the agency and terminates the agent's authority to act for the principal unless the agency is coupled with an interest
- EVEN ENDS LINGERING AUTHORITY/apparent authority

Front 52

If the agreement is silent to both expiration and revocation

Back 52

It continued in effect among that parties until lawfully terminated by breach, by action of a party, by agreement of the parties, by operation of law, or by accomplishment of its purpose.

Front 53

An agent's authority to act for a principal, is always revocable at the will of the P and may at any time be put an end to by withdrawing the authority; unless the authority be coupled with an interest or has been conferred on the A for a valuable compensation moving from him to the P

Back 53

"coupled with an interest"= is an interest in the thing itself on which the power is to be exercised, and not an interest in that which is to be produced by the exercise of the power

Front 54

One kind of interest which may be coupled with an agency to make it irrevocable

Back 54

An interest, not amounting to a property or estate in the thing itself, but still an interest in the existence of the power or authority to act with reference to it, not for the purpose of earning a commission by the exercise of the power, but because the agent has parted with value, or incurred liability, or assumed obligations, at the P's request or with his consent, looking to the exercise of the power as the means of reimbursement, indemnity or protection

Front 55

Another kind of interest which may be coupled with an agency to make it irrevocable

Back 55

An interest or estate in the thing itself, concerning which the power to be exercised, arising from an assignment, pledge or lien created by the P, couple with which is the power to deal with the thing itself in order to make the assignment, pledge or lien effectual

Front 56

Difference

Back 56

The second, the agent has an estate or interest in the subject matter of the power, while in the first one his interest is rather in his right to exercise the power over the thing, in order to make it available for the security or protection contemplated.

Front 57

What if K says the agency is irrevocable?

Back 57

The principal might be liable in DAMAGES for revoking the agency in violation of the contract, but the principal nevertheless could revoke the agency.

Front 58

Only agency powers that were irrevocable by voluntary act

Back 58

1) powers coupled with an interest in the subject matter of the powers
2) powers given for consideration or as security

Front 59

1) Powers Coupled with an Interest

Back 59

An agent's power was coupled with an interest, and thus irrevocable only where the agent had a SEPARATE interest in the subject matter of the power that arose INDEPENDENTLY of the agency power.
(interest in proceeds/result of the power insufficient)

Front 60

2) Powers given for consideration or as security

Back 60

A power given for consideration or as security (created in the form of an agency authority but held for the benefit of the power holder or a 3rd person and given to secure the performance of a duty or to protect a title, either legal or equitable, such power being given when the duty or title is created or given for consideration) may not be revoked by the P's voluntary act

Front 61

Death (CL)

Back 61

Power ceases with the life of the person giving it, admits of one exception. If a power be coupled with an "interest", it survives the person giving it, and may be executed after his death.

Front 62

CL agency liability for agent

Back 62

A is liable on a contract entered on behalf of a P if the P is not fully disclosed. An A who negotiates a contract with a 3rd party can be sued for any breach of the K unless the A discloses both the fact that he is acting on behalf of a P and the identity of the P.

Front 63

3rd party liability in finding out

Back 63

It is not sufficient that the 3rd party has knowledge of facts and circumstances which would, if reasonably followed by inquiry, disclose the identity of the P. The duty of disclosure clearly lies with the Agent alone; the 3rd party with whom the A deals has no duty to discover the existence of an agency or identity of the P

Front 64

Partially disclosed

Back 64

Agent is liable on contracts negotiated on behalf of a partially disclosed principal (existence but not identity is known to the other party)
- P is at least partially disclosed where the third person has NOTICE the A is acting for a P

Front 65

Notice: when a third party deals with an agent for a P, the existence and identity of which has been disclosed, the third party is presumed to know it's a LLC not a partnership or other type of biz org

Back 65

However, where an agent fails to disclose either the fact that he is acting on behalf of P or the identity of the P, the notice provision cannot relieve the agent of the liability to a third party.
Can say Exxon instead of Exxon, Inc.

Front 66

General Rule of liability

Back 66

Agent who enters into a K on behalf of a P is a party to the contract and thus liable on it unless
1) the agency fully discloses the principal
2) the contract provides that the agent will not be liable.
An agent is not a party to the K, or liable on it, except to the extent that the K provides that the agent is also a party to the contract or liable on it.

Front 67

"Notice"

Back 67

Persons have "notice" of a fact when they know it, have reason to know it, have received a notification of it, or should know it

Front 68

Fully disclosed/ Partially disclosed

Back 68

Fully Disclosed: Where the 3rd person has NOTICE of the identity of the P
PD: where the 3rd person has NOTICE the A is acting for a P

Front 69

Election of Remedies

Back 69

Applicable only where they are available to the litigant at the time of the election, two or more coexistent remedies, which are repugnant and inconsistent. Theory that of several inconsistent remedies, the pursuit of one necessarily involved or implies the negation of the others.

Front 70

Election of Remedies Generally

Back 70

- Judgments may be simultaneously be entered against an agent and his undisclosed P although only one satisfaction may be obtained
- Joint and several liability, because it allowed a Creditor to collect from the agent, the P or both until the judgment has been fully satisfied

Front 71

Election of Remedies Case

Back 71

We hold that liability of an agent and his previously undisclosed P is no longer alternate, but is joint and several. A creditor may recover judgments against BOTH the P and the A, may attempt to collect its judgment against EITHER party, and to the extent the judgement remains unsatisfied, may subsequently pursue collection from the other party.

Front 72

Agent's implied warranty of authority

Back 72

A person who assumes to act as agent for another impliedly warrants that he has authority to do so and if he in fact lacks authority he renders himself personally liable on the warranty to one who deals with him in good faith in reliance thereon

Front 73

Damages
(tort)- discovery rule for two year SOL for tort actions

Back 73

Cause of action against an agent for breach of his implied warrant of authority accrues when the third person learns that the agent does not have authority or when he suffers damage or fails to gain the anticipated benefits, whichever occurs first

Front 74

Duties of Agent to the Principal

Back 74

- Because an agent is entrusted with the power to act on behalf of the principal, an agent is a fiduciary with respect to matters entrusted to the agent
- The nature/extent of the duties are determined by the agreement of the parties and interpreted in light of the circumstances
- An agent has a FIDUCIARY DUTY to act LOYALLY for the Principal's benefit in all matters connected with the agency relationship

Front 75

Seven different Duties of Performance

Back 75

1) Duty created by Contract
2) Duty of Care (characterizing the duty as duties of care, competence, and diligence)
3) Duty of Obedience (duties to act only within the scope of actual authority and to comply with principal's lawful instructions)
4) Duty of good conduct
5) Duty to Provide Information
6) General Duties as to the Principal's Property (segregation, record keeping, and accounting)

Front 76

If agent failed to accomplished what he agreed to acheive

Back 76

breach of contractual duty and the agent is liable to the P for actual damages caused by the breach
- DOES NOT REQUIRE CONSIDERATION TO CREATE AN AGENCY RELATIONSHIP

Front 77

Agency= consensual and fiduciary relationship. Creates a duty upon the agent to act in good faith and according to the terms of the agency agreement. The inherent nature of the agency relationship imposed a FD upon the agent to act according to the terms of the agency agreement.

Back 77

- Agency theory should include whether the agent acted REASONABLY in executing the duties spelled out in the agency agreement.
- The promise to act as an agent is interpreted as being a promise only to make REASONABLE efforts to accomplish the directed results.

Front 78

Duty of Care

Back 78

- An agent has a duty to the principal to act with the care, competence, and diligence normally exercised by agents in similar circumstances
- Special skills or knowledge possessed by an agent are circumstances to be taken into account in determining whether the agent acted with due care and diligence.
- If an agent claims to possess special skills or knowledge, the agent has a duty to the P to act with the care, competence and diligence normally exercised by A's with such skills or knowledge

Front 79

Duty of Care for Attorneys

- Dash 2 is better than dash one "Could" is better than "would"

Back 79

- Standard of care which would be exercised by a reasonably prudent attorney (objective).
- If an attorney makes a decision, which A reasonably prudent attorney COULD make in the same or similar circumstance, it not an act of negligence even if the result is undesirable

Front 80

Attorney standard

Back 80

- Standard is an objective exercise of professional judgment, not the subjective belief that his acts are in good faith.

Front 81

Business Judgment Rule

Back 81

Managers beach their duty of care only when they were GROSSLY NEGLIGENT in informing themselves

Front 82

Good faith

Back 82

NOT subjective good faith but conduct that breaches the duty of loyalty GENERALLY

Front 83

Duty of Obedience

Back 83

1) Duty requires the agent to act only within the scope of the agent's actual authority
2) Duty of obedience requires the agent to follow all lawful instructions received from the principal and persons designated by the P concerning the agent's actions on behalf of the P

Front 84

Duty of Obedience, other points

Back 84

- Where the agent binds the P by an unauthorized act, the agent is "subject to liability" to the principal for any resulting losses
- The agent's obligation to act only as actually authorized by the P continues after the termination of the relationship

Front 85

Duty of Good Conduct

- An agent is subject to a duty not to conduct himself with such impropriety that he brings disrepute upon the principal or upon the business in which he is engaged (Vegan/Bank examples)

Back 85

- An agency has a duty, within the scope of the agency relationship, to act reasonably and to refrain from conduct that is likely to damage the P's enterprise
- If the service involves personal relations, an agent has a duty not to act in such a away to make continued friendly relations with the P impossible

Front 86

Duty to Provide Information (already discussed in duty to inform)

Back 86

An agent has a duty to use reasonably effort to provide the principal with facts that the agent knows, has reason to know, or should know when:
1) subject to any manifestation by the P, the agent knows or has reason to know that the P would wish to have the facts or the facts are material to the agent's duties to the P and
2) the facts can be provided to the principal without violating a superior duty owed by the agent to another person

Front 87

General Duties to the P's Property

Back 87

- An agent receiving or holding things on behalf of the principal is subject to a duty to the principal not to receive or deal with them so that they will appear to be his OWN, and to NOT CO-MINGLE with them with his own things as to destroy their identity
- Duty not to attempt the impossible

Front 88

All are pretty much Duty of Loyalty
Four categories of PROHIBITED CONDUCT in regard to the DUTY OF LOYALTY

Back 88

1) realizing a material benefit from acting as an agent (not told to P)
2) self dealing, or dealing on behalf of 3rd party
3) competing with the P, or assisting others to do so
4) diverting the P's property or confidential information, for the benefit of the agent or of the 3rd party

Front 89

Duty of Loyalty

Back 89

- Agent has a duty to his P to act solely for the benefit of the principal in all matters connected with his agency
- Agent is under a strict duty to avoid any conflict between his self interest and that of the P

Front 90

Failure to disclose

Back 90

- Failure to disclose information material to the agency constitutes a breach of principal-agent relationship
- Agent must disclose any interest he has in the transaction and receive the consent of his principal to proceed.
- NO NEED TO PROVE HARM- no minimum value which A can take undisclosed profits from P

Front 91

Respondeat Superior
Scope of Employment Test

Back 91

Conduct of a servant is within the scope of employment if:
a) it is of the kind he is 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 used by the servant against another, the use of force is NOT unexpectable (reasonably foreseeable) by another
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 92

Scope of Employment

Back 92

- Employer/master: the acts of the servant, within the general scope of his employment, while engaged in his master's business, and done in furtherance of that business and the master's interest even though the acts be done wantonly and willfully.
- The act may be within the scope of employment even though forbidden or done in a forbidden manner. The master cannot escape responsibility no matter how specific, detailed and emphatic his order may have been to the contrary.

Front 93

Respondeat Superior

Back 93

Under the doctrine of Respondeat Superior, an employee is vicariously liable for the negligence of an agent or employee acting with the scope of his agency or employment, although the P/employer has not personally committed a wrong (PP: right to control the means and methods of the agent or employee's work)

Front 94

Independent Contractor

Back 94

Has sole control over the means and methods of the work to be accomplished. the individual or entity that hires the independent contractor is generally not liable for the torts or negligence of that person

Front 95

Exceptions to Independent Contractor

Back 95

Ostensible Agency: P's conduct should equitability prevent it from denying the existence of an agency
(Hospital example- they are independent contractors but they hold the doctors out as employees)

Front 96

Authority

Back 96

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 97

Creation of Authority

Back 97

...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 that the principal desires him so to act on the principal's account.

Front 98

Apparent Authority

Back 98

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.

Front 99

Creation of Apparent Authority

Back 99

...apparent authority to do an act is created as to a third person by written or spoken words or any 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 100

Inherent Authority

Back 100

The reasonable-foreseeability rationale leads to a definition: Inherent authority is authority to take an action that a reasonable person in the principal's position should have forseen the agent would be likely to take, even though the action would be in violation of the agent's instructions.

Front 101

Personal Acts

Back 101

As a general rule, the master is not liable for his servant's conduct unless the servant is in fact acting in the employment and for his master's purposes. Nevertheless, in appropriate situations such personal acts as getting ready to work or clearing away after work may be within the scope of employment. Furthermore, in some employment settings even such personal matters as eating and cleaning of the person may be so much a part of the work and under such control that it is part of the employment. If, however, such acts are for the personal convenience of the employees and are merely permitted by the master in order to make the employment more desirable, the acts are not within the scope of employment. As in other situations, the fact that the acts are done upon the master's premises or with his instrumentalities is important but not conclusive.

Front 102

Incidental Acts

Back 102

An act may be incidental to an authorized act, even if, when considered separately, it is an entirely different kind of an act. The Comment to Section 229 of the Restatement (2nd) of Agency provides the following guidance:
To be incidental, however, it must be one which is subordinate to or pertinent to an act which the servant is employed to perform. It must be within the ultimate objective of the principal and an act which it is not unlikely that such a servant might do. The fact that a particular employer has no reason to expect the particular servant to perform the act is not conclusive. Although an act is a means of accomplishing an authorized result, it may be done in so outrageous or whimsical a manner that it is not within the scope of employment. An assault by one employed to recapture a chattel, while entirely different from the act which he was employed to do, which was merely to take possession of the chattel, may be within the scope of employment, unless committed with such violence that it bears no relation to the simple aggression which was reasonably foreseeable.

Front 103

Ratification

Back 103

Ratification is the affirmance by a person of a prior act which did not bind him but which was done or professedly done on his account, whereby the act, as to some or all persons, is given effect as if originally authorized by him.

Front 104

Ratification
Material Facts

Back 104

(1) if at the time of affirmance the purported principal is ignorant of material facts involved in the original transaction and is unaware of his ignorance he can thereafter avoid the effect of the affirmance.
(2) Material facts are those which substantially affect the existence or extent of the obligations involved in the transaction as distinguished from those which affect the values or inducements involved in the transaction.

Front 105

Ratification
Mistake

Back 105

[O]rdinarily a unilateral mistake by a party to a contract not induced by a misrepresentation of the other party is not ground for rescission. . . . A contract which results from ratification, however, can be rescinded by the person affirming, if he affirms under a unilateral mistake as to a material fact unless he assumes the risk of mistake or unless the third person has changed his position in reliance upon the ratification.

Front 106

Receipt of Benefits as Affirmance

Back 106

The receipt by a purported principal, with knowledge of the facts, of something to which he would not be entitled unless an act purported to be done for him were affirmed, and to which he makes no claim except through such act, constitutes an affirmance unless at the time of such receipt he repudiates the act. If he repudiates the act, his receipt of benefits constitutes an affirmance at the election of the other party to the transaction.

Front 107

Retention of Benefits as Affirmance

Back 107

The retention by a purported principal, with knowledge of the facts and before he has changed his position, of something which he is not entitled to retain unless an act purported to be done on his account is affirmed, and to which he makes no claim except through such act, constitutes an affirmance unless at the time of such retention he repudiates the act. Even if he repudiates the act, his retention constitutes an affirmance at the election of the other party to the transaction.

Front 108

General Rules

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Ratification is the affirmance by a person of a prior act which did not bind him but which was done or professedly done on his account, whereby the act, as to some or all persons, is given effect as if originally authorized by him.
(1) Ratification does not result from the affirmance of a transaction with a third person unless the one acting purported to be acting for the ratifier.
To become effective as ratification, the affirmance must be by the person identified as the principal at the time of the original act or, if no person was then identified, by the one for whom the agent intended to act.

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Ratification Capacity

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Ratification will take place if the principal has the legal capacity to authorize the unauthorized act at the time it originally occurs and also has legal capacity at the time of affirmance of the act.

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Adoption

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Although there is no ratification, a person on whose account another acts or purports to act may become a party to a transaction similar to the original transaction by manifesting consent.. . .
An affirmance of a contract by one on whose account it was purported to be made but which did not result in ratification, as where the purported principal was incapable of contracting at the time of the original transaction, often results in a new contract between the parties at the time of, or subsequent to, the affirmance. . . .

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Difference between Ratification and Adoption

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1. the timing of the principal's liability and
2. the principal's capacity at the time the unauthorized act occurred.

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Ratification Elements

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1) know of the unauthorized act
2) Know of al material facts relating to the unauthorized act
3) indicate affirmation through manifestation of consent AND/OR
4) indicate affirmation by accepting benefits of unauthorized act

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Disclosed Principal

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1) If, at the time of a transaction conducted by an agent, the other party thereto has notice that the agent is acting for a principal and of the principal's identity, the principal is a disclosed principal....

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Disclosed Liability Rule

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Unless otherwise agreed, a person making or purporting to make a contract with another as agent for a disclosed principal does not become a party to the contract.

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Undisclosed Principal

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(1) If, at the time of a transaction conducted by an agent...
(3) ...the other party has no notice that the agent is acting for a principal, the one for whom he acts is an undisclosed principal.

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Undisclosed Liability Rule

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An agent purporting to act upon his own account, but in fact making a contract on account of an undisclosed principal, is a party to the contract.

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Partially Undisclosed Principal

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(1) If, at the time of a transaction conducted by an agent...
(2) ... the other party has notice that the agent is or may be acting for a principal but has no notice of the principal's identity, the principal for whom the agent is acting is a partially disclosed principal.

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Partially Undisclosed Rule

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§ 321. PRINCIPAL PARTIALLY DISCLOSED
Unless otherwise agreed, a person purporting to make a contract with another for a partially disclosed principal is a party to the contract.

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Agent who Warrants Authority

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A person who purports to make a contract, conveyance or representation on behalf of another who has full capacity but whom he has no power to bind, thereby becomes subject to liability to the other party thereto upon an implied warranty of authority, unless he has manifested that he does not make such warranty or the other party knows that the agent is not so authorized.

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Liability for Misrepresentation of Authority

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A person who tortiously misrepresents to another that he has authority to make a contract, conveyance, or representation on behalf of a principal whom he has no power to bind, is subject to liability to the other in an action of tort for loss caused by reliance upon such misrepresentation.