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34 Cards in this Set
- Front
- Back
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What are the three key parties in agency law? |
Principal Agent Third-Party |
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What does it take to establish an agency relationship? |
An agreement between the principal and agent
The agent will act on behalf of the principal
The agent will be subject to the principal's control |
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Does an agency agreement need to be in writing? |
Not normally. Only in a few circumstances. (most commonly, the buy or sale of property) |
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Equal Dignity Rule |
When a statute requires the principal's authorization to be in writing, it is commonly referred to as the "Equal Dignity Rule." |
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What consent is required to form an agency relationship? |
To become principal: to consent and for any underlying transaction
To become agent: to consent to what you have been appointed to do |
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What is the hallmark of a principal? |
The control of, or right to control, the agent's actions |
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What are two primary "brands" of the principal? |
Non-employer principals, in which there is looser control over the day-to-day activities of the agent
Employer principals, in which there is even greater control over the detailed activities of the agent |
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What are four indicators of an employer principal? |
Principal supplies tools at place of employment Principal pays the worker a regular paycheck Worker's skill level is specialized The principal directs the work to completion |
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What are two types of agents? |
Independent contractor agents (a.k.a. "non-employee" agents)
Employee agents |
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What are some indicators of an independent contractor agent? |
Agent maintains a high level of independence Agent is free to work for others Agrees to be paid a fixed fee Receives payment based on results Acceps responsibility to fix defects on her own expense |
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What is a subagent? |
An agent who has been appointed by another agent to help with a task for the principal |
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What type of authority is required for an agent to appoint a subagent? |
Actual or apparent authority |
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What duty does the subagent owe to the principal? |
Duty of loyalty |
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In what three situations will a principal be bound in contract law to a third party for the actions of the agent? |
If the agent had authority If the principal is estopped from denying the agent's authority If the principal ratifies the contract |
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In what four situations might a principal convey actual implied authority to the agent? |
Normal business customs Position of the agent Acquiescence/historical patterns between the principal and the agent By an emergency |
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Methods of terminating an agent's authority |
terminating the agency relationship invoking the authority as principal a dramatic change in circumstances passage of a reasonable period of time death of the principal (usually) loss of capacity by the principal (usually) death of the agent breach of fiduciary duties by the agent |
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When might a principal be bound to a third party in contract law under the theory of estoppel? |
When there is no actual or apparent authority but: -the third party reasonably believed a transaction was formed for the principal -the principal intentionally or carelessly caused that belief -the third party incurs a detrimental change of position |
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Describe ratification |
When a principal ratifies a contract with a third party, he can be bound to a contract brokered without his authority with a third party. |
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Four requirements for ratification? |
The principal must ratify the entire act
The principal must have legal capacity to ratify the transaction at the time it occurs
The ratification must be timely
The principal must have knowledge of material facts involved in the original act |
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What are the two main categories (and the underlying theories of each) for when a principal may be liable to a third party for the torts committed by his agent? |
1.) Vicarious Liability (respondeat superior & apparent authority)
2.) Direct Liability (authorized conduct, negligent agent supervision/selection & non-delegable duties) |
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Under respondeat superior, a principal is liable to third parties for the tort of an agent when: |
1.) the agent is an employee agent, and 2.) the tort is committed by the agent in the scope of employment |
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frolic v. detour |
frolic: when an employee's personal errand involves a significant detour from the job
detour: a tiny deviation from the route for a personal errand is considered a detour and may be in the scope of employment |
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key elements of apparent authority |
the third party reasonably believes that the agent acted with actual authority
this belief can be traced to some manifestation by the principal |
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elements of authorized activity |
A principal is directly liable if she authorizes or intends tortious conduct by an agent |
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Negligent hiring/control |
A principal is directly liable if she negligently hires or fails to provide reasonable supervision |
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Non-delegable duties |
Some duties cannot be delegated to an agent:
explosives, demolition, etc. |
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Fraudulent Concealment arises when...? |
When either the principal or agent has notice that the third party would not wish to deal with the principal but the agent nevertheless contracts with the third party for the principal and fails to make an affirmative representation about the principal's identity. The third contract may avoid the contract in this situation. |
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Rights of the principal: |
1.) the principal can control the agent's actions within the scope of their relationship
2.) the principal can expect the agent to perform all activities with reasonable care
3.) the principal can expect the agent to exercise a duty of loyalty
4.) the principal can expect to receive information from the agent related to any relevant issue
5.) the principal has the right to receive an accounting of the agent's activities on her behalf |
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Duties of the principal |
Principal owes:
1.) a duty to treat the agent fairly and to act in good faith
2.) a duty to honor the terms of any contract with the agent
3.) a duty not to interfere with the agent's work
4.) a duty to indemnify the agent for losses incurred in connection with the agency relationship |
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Rights of the agent |
1.) right to receive compensation (if so agreed) 2.) right to perform work without interference from the principal 3.) right to indemnification for losses from lawful business conducted on behalf of the principal 4.) right to a safe working environment |
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Duties of the Agent
*highly testable* |
1.) duty of loyalty 2.) duty of care/performance based duties |
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Definition of Duty of Loyalty |
an agent may not put her interests or the interests of some third party ahead of the interests of the principal |
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What situations are encompassed in the duty of loyalty? |
Agent may not deal with the principal as an adverse party in any transaction connected with the agency without the principal's knowledge
Agent may not acquire an unapproved material benefit in connection with actions undertaken in connection with the relationship
The agent may not usurp a business opportunity of the principal
Agent may not use the principal's confidential information for private gain
The agent may not compete with the principal
An agent working for multiple principals owes each a duty of full disclosure and fair dealing
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What are the performance-based duties owed to the principal? |
a duty of care: the agent must exercise reasonable diligence and care in the carrying out of her activities
agent must obey the principal's lawful and reasonable instructions
agent must provide relevant information to the principal if she knows or should know that the principal would with to have the information
the agent must keep and render accounts |
