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82 Cards in this Set

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What is the Definition of Agency
Fiduciary relation that arises when one person (P) manifests assent to another (A) that the A shall act on the P's behalf and subject to the P's control; and the A manifests assent or otherwise consents to act.
What is a Sub-Agent
Person appointed by an A (empowered to do so), to perform.

A agrees to be primarily responsible for Sub-A's conduct.

P must know (assent) or have reason to know A's hiring someone else to help, for Sub-A to be part of the K, allowing right to indemnification from either party. If no assent, he's merely A's agent.
What is a Special Agent
Only an A for some purposes.

Unlike a General Agent.
What are the 3 major elements of the Agency relationship?
(1) Assent - Both parties must assent.
(a) express or
(b) implied (conduct: head nod, failure to object when action taken previously in agency capacity is again proposed; knowing acquiescence of P).

(2) Control - R3d: person subject to the dominance of influence of another consents to act on behalf of the other and the other has the right to control.
-Ambiguous, gets manipulated by court depending on the equities of the case (nature of the liability).

(3) On behalf of - primarily for the benefit of P.
-R3d: the fiduciary nature of the agency ship "signifies that A must act in the P's interest as well as on his behalf."
-The element ignored most by courts who have found Control.
What is the difference b/twn Assent in the "agency relationship" and Assent for "apparent authority" purposes?
Agency relationship - Assent must be manifested by P to the A that he has authority to act on his behalf.

Apparent Authority - Assent must be manifested from P to the Third Party that A has some authority to act on P's behalf.
How is an Escrow Agent different from an Agent?
An escrow agent is not controlled by either party; neither can direct him to do anything inconsistent w/ the agreement.

Note: there's no escrow relationship unless both "Ps" are party to the agreement w/ him.
How does the Third Party Beneficiary Doctrine operate?
It can be used by one who thought A was acting on their behalf but lacked the sufficient agency relationship to claim breach of K.

Separate breach of K claim for failure to perform a K that was directly intended to benefit Third Party.
How is a Seller different from an Agent? What Factors do you look for?
(1) How much control is the manufacturer retaining?

(2) On whose behalf is the seller primarily selling the goods for?

Factors: Amount of control exercised by manuf.; Did title pass? (not conclusive); Is the dealer setting prices for his own profit and pursuing self interest; Did dealer pay fixed price or does manuf. retain power to demand a share of profits; Retain power to control dealer's business expenses; Is dealer bearing expenses we wouldn't expect an A to bear (storage, cartage, transportation, handling, sale and distribution, no indemnification).
How is a Bailee different from an Agent?
Bailee is merely loaned property to possess w/o power to deal w/ the goods.

If he has power to sell or mortgage the goods or deal w/ them on P's behalf = Agent-Bailee
How is a Trustee different from an Agent?
Trustee is not subject to control of either the creator or beneficiary of the trust.

If he is subject to either's control = Agent-Trustee.
How is a Creditor different from an Principal?
Creditor may loan money to someone, exercise minimal control (a veto power, access to books, right to look at books, right to interest on the loan) without creating P-A relationship.

Affirmative Management & Sharing In Losses = P, who is now liable for the A's obligations incurred in normal course of business.

Cargill - grain elevator's creditor.

Lowenstein - these cases focus too much on "control" w/o establishing "on behalf of" too.
How is a Franchisee different from an Agent?
Franchisee is granted a license to sell a product or service under a name/ trade mark.

No Agency bc acting on own behalf (unless otherwise agreed).
How is the Lessor-Lessee relationship different from agency relationship?
Making improvements by lessee is insufficient to establish agency unless it was required under terms of lease.
Are the Board of Directors in a Corporation "agents" of the Corp.?
No bc they can't individually act on behalf of the corp.
Are the Officers and Employees of a Corp. "agents" of the Corp.?
Yes bc they act on behalf of the Corp. and are subject to the control of the board.
What is the Dual Agency rule?
If an A purports to act on behalf of 2 adverse P's w/o consent (express or implied) of both, either may void the K.
Describe the "ambiguous P" complexity.
When an A is acting w/ consent of 2 P's the A has an agency relationship w/ the one who satisfies "on behalf of" and "control" clearly from the facts.
What are the contractual and fiduciary duties a P owes to his A?
Contractual:
(1) Duty to pay
(2) Duty to reimburse for expenses
(3) Duty to indemnify for losses & liabilities.
(4) Duty to Exonerate.
(5) Duty to Deal Fairly & In Good Faith

Fiduciary Duties:
(1) Duty of care
(2) Duty of disclosure - to warn of risks

.
What is P's Duty to Pay?
R3d: P has a duty to pay A for his services.

Exception:
(1) P and A contract out of this.
(2) Minor nature of services destroy the inference that he'll paid.
What is P's Duty to Reimburse?
P has duty to reimburse A for expenses reasonably incurred in performance of relationship.
What is P's Duty to Indemnify?
P has a duty to indemnify A for any losses suffered in the performance of agency relationship (including lit. expenses).

Exception: P owes no duty to indemnify A if
(1) they contracted around it, or
(2) A acted negligently (misconduct; damage to P or others; departure from instructions).
-Some argue cost of A's ordinary negligence in discharge of duties should be bourn by the business.
What is Exoneration?
Even though A has a right to indemnity...in equity, he may call upon his P to discharge his duty to pay some debt before having to dip into his own resources.
-As long as the liability must fall on P in the end either way.
What is P's Duty of Care?
Non-delegable duty to provide a safe place to work.

Exception: ee injuries in the scope of employment are now mostly covered by worker's compensation (even where 1 ee causes injury to another ee).
What is P's duty to Deal Fairly & In Good Faith?
Implied duty to maintain a standard of conduct that won't harm A's business rep or reasonable self-respect.

Breach allows A to terminate the relationship and sue for breach of K.

Key: did employer exercise reasonable diligence? (Taylor v. Cordis).
What are A's 4 major duties he owes to P?
(1) Duty of Good Conduct & To Obey
(2) Duty to Indemnify for Loss Caused by Misconduct.
(3) Duty to Account to P.
(4) Fiduciary Duties
What is A's Duty of Good Conduct & To Obey?
Good Conduct: (1) not to act in a manner that makes continued friendly relations w/ the P impossible, or (2) bring disrepute to the P.

To Obey: obey all reasonable directions of P.

Exception: no duty to obey illegal or unethical orders.
What is A's Duty to Indemnify P?
A owes no duty to indemnify P for stuff that happens in the course of employment.
-Some argue this should include ordinary negligence bc that cost should be bourn and spread by the business.

Exception: (1) The parties agree to alter or abrogate this duty, and (2) A must indemnify P for any loss caused by A's misconduct (including negligence; damage to P or others; departure from P's instructions).
What is A's Duty to Account to P?
A has a duty to account to P for money/property received or paid out in the course of his agency relationship.
-Detailed statement of debts, credits, receipts, payments, etc.

Exception: Parties agree otherwise.
What are the 3 categories of fiduciary duties owed by A to P?
(1) Duty of Care
(2) Duty of Full Disclosure
(3) Duty of Loyalty
What is the Fiduciary Duty of Care owed by A?
R3d: a paid A has the duty of reasonable care and diligence, using level of care determined by the K and any special skills of A's.
-Failure to perform = breach of K
-Careless performance = breach of K and Negligence.

Exception: gratuitous A generally has a lower duty of care.
What is A's Duty of Full Disclosure to P?
Rule: Duty to inform P of all material facts relevant to a transaction that A reasonably believes P would want to know.

Material: info that bears upon the transaction in question; reasonable person would attach importance to it in determining choice of action.
-Even if acting adverse (w/ consent), stil have duty to disclose.

Consider Parties Expectations: What was in their K; Surrounding circumstances of relationship supporting a broad disclosure obligation.
How is a "Middleman" different from an A?
Middleman may work for both parties and receive compensation from each but has no fiduciary duties to either.

"Finder" - type of middleman that intros parties and brings them together w/o facilitating an agreement.
What are P's Remedies for A's breach of the Duty of Loyalty?
Breach of Fiduciary Duty Claim
(1) A forfeits any compensation he received for the transaction.
(2) If A made it possible for others to profit, he may be held accountable for those profits.
(3) Knowing 3rd party may be held liable for encouraging the breach of fiduciary duty (tort).
What is A's Duty of Loyalty during the agency relationship?
Duty not to compete or deal adversely with P.

Exception: Parties agree otherwise (other fiduciary duties remain).
What is A's Duty of Loyalty after termination of the agency relationship?
Duty to Not Misuse Info: can't use info acquired by him as an A or by means of his agency relationship.
Includes: trade secrets
Does Not Include: common knowledge, use of special skills (must enter a non-compete for that).

Competition/General Rule: A is free to compete IF the agency relationship terminated through no fault of the A.
-May plan for post termination competition as long as not "feathering your nest at the expense of employer while still on his payroll" by soliciting his customers.
-May not misuse info.

Exception: (1) A caused termination of the agency relationship wrongfully, or (2) Parties entered into a Non-Compete
-Non-Compete may not be unreasonable restraint on trade (a) protectable interest (trade secrets, good will, extraordinary investment on skills); (b) reasonable duration; (c) reasonable geographic scope.
Draw the Respondeat Superior Flow Chart.
(1) Is the Agent an EE or an IC?
-Depends on the extent of P's control over the "manner and method" of his performance at the time in question.

(2) EE
Was the act w/in the scope of employment?
-Depends on whether EE was where he was suppose to be, doing what suppose to be doing, with purpose of the employer in mind.

Yes? P is vicariously liable.
-Exception: If "borrowed EE" then liability shifts to borrowing employer.
No? P is not vicariously liable.

(3) IC
(a) Was the activity inherently dangerous?
(b) Was the duty non-delegable?
(c) Was the P negligent in selecting the IC? (direct liability)
(d) Did an IC (authorized by the P to make representations) make representations?

Yes? P is vicariously liable
No? P is not vicariously liable
What is the basic definition of Respondeat Superior Liability?
A type of vicarious liability where the master must answer strictly for the losses caused by his employee, in addition to that person's personal liability.

A P will have to answer vicariously for the A's conduct where he exercised enough control for the A to be considered an EE (for the purpose of holding P vicariously liable).
What is the main distinction b/ an Agent and an EE?
An EE's principal controls or has the right to control "the manner and means" of his performance; while an Agent is hired in a representative capacity and exercises discretion w/o same control.
What is the general rule regarding an EE's contributory negligence?
General Rule: if an ee's negligence is imputed vicariously to his employer then his contributory negligence is imputed to the employer (personally).
-Both Ways Test: barring recovery by employer against a third party if his EE was at all contrib. negligent.

Comparative Negligence: if comparative state then employer just has the % of EE's fault imputed to him, reducing (not barring) recovery.
What is the IC Exception and what are the 3 Tests to find sufficient lack of control over him?
Rule: No vicarious liability for IC's.

IC is not hired in a representative capacity, is hired merely for the results, and acts on own behalf.

Tests:
(1) R2d Right to Control Test
(2) Independent Calling Test
(3) Licensed Skills Test
Employee or IC: Right to Control Test (11 factors)
R2d factors helping draw inference of whether there was control or right of control:
(1) Extent of control they agree that P may exercise over the details of the work (RIGHT);
(2) Whether A's involved in a distinct occupation or business;
(3) Whether type of work is customarily done under a P's supervision;
(4) Skill required in A's occupation;
(5) Who supplied tools, instrumentalities, place for work.
(6) Length of time A is engaged by P;
(7) Method of payment (by the job or salary (benefits, taxes);
(8) Whether it's part of P's regular business;
(9) Whether they believe they're creating an employment relationship;
(10) Whether P is in business;
(11) Extent of control P has exercised in practice (ACTUAL).
Employee or IC: Independent Calling Test
One who in pursuit of an independent business, undertakes to do a specific job for someone, w/o submitting to control in respect of all its details.

Represents the employer only as to the result of the work, not the means by which it's accomplished.
Employee or IC: Licensed Skills Test
The skill requires such training (licensing) that no P can be said to "control" the A enough to make him an EE.

Rationale: such a relationship wasn't contemplated by respondeat superior doctrine.
Since P is not vicariously liable for IC, when can P be liable for an IC? (3 Situations)
(1) Inherently Dangerous Activity: May be held vicariously liable for IC's work on inherently dangerous activity.
-Work which in its nature, will create some peculiar risk of injury to others unless special precautions are taken (i.e. excavations near public highway).

(2) Non-delegable Duty: May be held liable if duty was (a) the responsibility is so important to community that employer shouldn't be permitted to transfer it; (b) non-delegable duty originates in a K, statute, or admin. reg.; or (c) where plaintiff's reasonable expectations and beliefs about who would be rendering particular service are significant (Kleeman-atty's duty of care rendering service of process on client's behalf was nondelegable, client didn't know custom).

Exception: You may K around the fact the duty is nondelegable unless (1) statute prohibits it, (2) against public policy, or (3) unconscionable.

(3) Negligent Hiring of IC (Direct Liability): direct liability for a lack of care.
Exception: R2d Torts, the fact he's a plumber or carpenter is sufficient, unless employer knows his rep is bad or knows facts which should lead him to realize ICs not competent.
What is the Borrowed Employee exception and 2 tests for it?
Rule: There is an exception to respondeat superior liability for an employer, shifting liability to borrowing employer.
-If 1st employer retains control, ee is just an "IC" for the 2nd employer.

(1) Transfer of Allegiance Test: can be reasonably inferred that EE's allegiance has been transferred.
-Merely obeying new employer's direction is not enough; If EE is a specialist or part of business that typically loans men/equipment, allegiance probably remains with 1st employer; Parties may enter into K declaring who has primary control.

(2) Control at Time of WRongful Act Test: who was exercising control at exact moment of act causing loss?
-Lowensteing dislikes test that focus on "control" w/o "on behalf of"
Scope of Employment Limitation - Intentional Torts - Punitive Damages, Criminal Liability, Fraud
Punitive Damages:
Minority - Punitive damages allowed whenever compensatory damages are.
Majority (R2d; "Complicity Rule") - only when a superior officer orders, participates in, or ratifies the conduct.
-Superior Officer = more than just an EE vested w/ some superivisory or decision-making responsibility.

Vicarious Criminal Liability:
Rule - P is NOT liable for criminal acts of A unless he authorized, consented to, advised, aided or encouraged the specific act.
-Exception: violation of a regulatory criminal statute (enacted for public morals, health, peace, safety to regulate not to punish).

Fraud:
R3d - basically, fraud as the result of A's apparent authority can lead to an employer's vicarious liability.
-Focus: expectations of the V.
Employer's Vicarious Liability by Estoppel
If there is NO agency relationship, vicarious liability may be imposed if there was apparent agency or authority and third party reasonably relied.

Holiday Inn - sufficient evidence that Holiday had permitted franchisee (no actual agency) to create appearance that the Inn was owned and operated by Holiday (apparent agency) and plaintiffs reasonably relied on Holiday's good reputation for guest safety.

Ramada Inn - plaintiff lost when Ramada proved she stayed there by order of her employer, not by choice.
Is there Vicarious Liability in Unincorporated Associations?
Uninc. Associations - typically formed for some nonprofit activity.
-Not recognized as legal entities, triggering agency law.

General Rule: Membership alone doesn't render one vicariously liable for torts committed by fellow members, officers, or EEs. UNLESS member participated in or ratified the act.

Uniform Nonprofit Assoc. Act - No member is vicariously liable personally in K or Tort for liabilities of the association unless personally guilty (gave personal guarantee or commited personal misconduct).

Co-Principle Doctrine: has been used to impute liability of it's members to the association to bar suits by other members.
What are the 4 sources of authority through which A may bind P?
(1) Actual authority: (a) express, or (b) implied;
(2) Apparent authority
(3) Estoppel (when third party relies on A's apparent authority but it cannot be sufficiently traced to P's manifestations).
(4) Inherent authority
How does an A obtain Actual Authority?
Actual Authority is created upon P's manifestation to A that he has authority to act on his behalf.

Express:
(1) Written or oral agreement (Equal Dignity Rule - statute requires that K's entered into in writing must be by A who's authority is also in writing; or
(2) Power of Atty.(construed cautiously and narrowly; broad gifts of authority often disregarded).

Implied: actual authority that arises from words or conduct b/ P and A.
(1) Incidental to express authority [R3d/R2d];
-i.e. express authority to sell goods = implied authority to make warranties, receive pmt, deliver, etc
(2) Implied from conduct [R3d];
-A's reasonable interpretation of P's manifestations.
(3) Implied from custom/usage [R2d]
Can A delegate authority?
A can delegate authority w/ the consent of P.

If P consents - he is a Sub-Agent (he owes duties to both but is solely A's responsibility).

If P does not consent - he is A's agent and has no contractual relationship w/ P.
What is the Apparent Authority rule?
A P will be bound into a K by an A's unauthorized acts if (1) the P objectively manifested to the third party that A had authority, and (2) third party reasonably relied on the manifestation.
What are the R3d's 6 Signs of "objective manifestation" for apparent authority?
(1) Explicit stmts P makes to third party.

(2) Stmts traceable to P that reach third party.

(3) Having A's name included in a list of representatives that is provided to third party.

(4) Directing A to make statements to, perform acts, or conduct negotiations w/ third party.
-W/o authorization, A's personal stmt of authority is not P's manifestation.

(5) Placing A in a position of powe in P's organization.
-Absent notice, placing A in position that customarily gives authority of a specific scope = manifestation.

(6) Placing A in charge of transaxn or situation.
What is Third Party's "Duty of Inquiry" when dealing with an A w/ actual and apparent authority?
Some courts say you must inquire into fact and scope of agency relationship.

If Third has reason to know A's authority is contained in a doc (power of atty) that's open for his inspection - may have duty to inquire.

If A is attempting to bind P to unusual/extraoardinary transaction - may have duty to inquire.
i.e. President of a Corp. doesn't ordinarily have authority to unilaterally sell a major Corp. division.

If other red flags show lack of support for Third's reliance - may be duty to inquire. (i.e. having check made out to him personally).
What is Third Party's "Duty of Inquiry" when dealing with an A w/ apparent authority?
Some courts say you must inquire into fact and scope of agency relationship.

If Third has reason to know A's authority is contained in a doc (power of atty) that's open for his inspection - may have duty to inquire.

If A is attempting to bind P to unusual/extraoardinary transaction - may have duty to inquire.
i.e. President of a Corp. doesn't ordinarily have authority to unilaterally sell a major Corp. division.

If other red flags show lack of support for Third's reliance - may be duty to inquire.
What is Third Party's "Duty of Inquiry" when dealing with an A w/ apparent authority?
Some courts say you must inquire into fact and scope of agency relationship.

If Third has reason to know A's authority is contained in a doc (power of atty) that's open for his inspection - may have duty to inquire.

If A is attempting to bind P to unusual/extraoardinary transaction - may have duty to inquire.
i.e. President of a Corp. doesn't ordinarily have authority to unilaterally sell a major Corp. division.

If other red flags show lack of support for Third's reliance - may be duty to inquire.
What is Lingering Apparent Authority?
P can terminate A's authority by providing notice to the third party who received P's original manifestation.

R2d: If P is unsuccessful in having all indicia of authority returned, he bears the risk of third parties who otherwise have no notice.

Tip: consider dating indicia, providing time period limits.
What is Lingering Apparent Authority?
P can terminate A's authority by providing notice to the third party who received P's original manifestation.

R2d: If P is unsuccessful in having all indicia of authority returned, he bears the risk of third parties who otherwise have no notice.

Tip: consider dating indicia, providing time period limits.
What is Lingering Apparent Authority?
P can terminate A's authority by providing notice to the third party who received P's original manifestation.

R2d: If P is unsuccessful in having all indicia of authority returned, he bears the risk of third parties who otherwise have no notice.

Tip: consider dating indicia, providing time period limits.
When can a P be estopped from claiming that he has no liability?
When the third party's belief cannot be traced to a manifestation by P [R3d], P can still be held liable if:

Third party changed his position bc of belief the transaction was on P's behalf; and

(1) P intentionally or carelessly caused such belief; and
(2) Knowing of such belief, P didn't take reasonable steps to notify them of the facts.

Hoddeson v. Koos - imposter salesman; estoppel claim upheld bc wouldn't have happened had store exercised reasonable surveillance over business.
What is R2d's definition of Inherent Authority? (Since R3d abandons the concept)
Rule: A general A can bind his P to K's when there was neither actual or apparent authority if the acts would "usually accompany or are incidental to" transactions that A is authorized to conduct.
-Must be some element of helping the P's business.

Rationale: If one appoints a general A, it's fair he should bear losses incurred even w/o authority if it's something usually done in connection w/ his authorized transaxns.

Watteau v. Fenwick-Mngr bought cigars against instructions (no actual) of undisclosed P (no apparent). Purchase deemed incidental to mngr's authorized purchase transaxns.
What are the rights of an Undisclosed P? And the exceptions?
P is a party (giving him all contractual rights) to the K b/ Third party and A, if:

(1) A intended to be acting on behalf of P when K was made; and
(2) K was made w/in A's power to bind P.

Exceptions:
(1) K's terms expressly exclude other parties
-Though P may introduce P-E to show the K was made on P's behalf, or

(2) P's existence was fraudulently concealed AND concealment was material.
-Material: objectively (reasonably relied) and subjectively (honestly relied); even if no express misrepresentation was made, just matters P knew of the controversy and A failed to disclose.
-Not Material: if only effect of P's i.d. would've been that seller would've charged more.
Is Undisclosed P liable for A's authorized transactions w/ third parties?
R3d: Yes, P is bound by the K. He has the same rights and liabilities that flow from agency relationship.
What are third party's remedies against A and against P for an authorized transaxn for undisclosed P?
Against A - breach of K.

Against undisclosed P - agency liability, P is liable.
Majority [R3d]: Satisfaction Rule - may sue for judgment against both A and P but can only get 1 satisfaction.
Minority [R2d]: Election Rule - If third party discovers P's i.d. prior to judgment, she must elect b/ A and P.
What are third party's remedies against A and P in an UNauthorized transaxn for an undisclosed P?
Against A - breach of K

Against P - R2d undisclosed P is NOT liable for A's unauthorized acts bc there's no "on behalf of"; not part of P's business.
(2) Third party's expectations aren't hurt bc only knew she was contracting w/ A; P's not a party to the K.
Exception: Inherent Authority
Watteau - acted against P's wishes (no actual) and had no apparent bc P was undisclosed, third party though he was the P. But as a manager his conduct was inherent in the duties he would have had if he'd been authorized or had apparent authority.
When does third party discharge any duty to pay on a K when there's an UndP?
Third party discharges duty and binds UndP if he pays A prior to learning about P.
When does UndP discharge any duty to pay on a K? (Majority & Minority)
Majority: P who settles in good faith w/ his A while still undisclosed has discharged his duty.

Minority: Not discharged by pmt to A unless done on reasonable reliance (on manifestation from third party himself) that A has already settled the account w/ third party.
What are a third party's rights to set off claims against an A when the P is undisclosed?
- R2d -
A was authorized to conceal:
Rule: Third party can set off if they didn't know or have reason to know of P.

A was not authorized to conceal:
Rule: Third party can set off if (1) A had been entrusted w/ possession of goods, or (2) P otherwise misled third party to extend credit to A.

Rationale - Protect third party who entered into K only bc she could set off a pre-existing claim she had against A.

- R3d -
Third party can set off if it had no notice it was dealing w/ an A.
What are the 3 ways A may be held liable by third party?
(1) Agent's personal guarantee (express or implied)

(2) Breach of K (depends on the status of P at the time the K was made)

(3) Breach of implied warranty of authority.
What is A's contractual liability to third parties?
Absent personal guarantee A will still be held as a party to the K and liable for breach unless:

He meets burden of proving (1) he disclosed existence of an agency relationship w/ his P, and (2) the i.d. of his P.

Disclosed P - party to K.
Partially Disclosed (R2d)/Unidentified P (R3d) - party to K unless meet burden.
Undisclosed P - party to K unless meet burden.
How can A meet the burden of proving he provided sufficient notice of his P's identity?
R2d - if third party knew, had reason to know, should've known, or was given notification A was acting on behalf of someone else.

What Causes Notice
-Corp. checks, meetings at the Corp., Other docs (billing invoices), Public Record (courts split).

P-E Rule: PE can't be intro'd to contradict an unambiguous K showing A's status as a "party."
How Does A's personal guarantee create liability to third party?
Express - expressly agree to be a party to the K or personally guaranty it ("undersigned agrees to personally guarantee pmt...")

Implied: industry custom, etc.
-R3d's Lawyer Rule: Unless lawyer expressly disclaims liability, he is liable to third party (expert W) when he knows or reasonably should know third party relies on his credit (not the client's).
Safe & Unsafe Ways for A to Sign a Document (avoiding contractual liability)
Safest:
"P by A, Agent"
"A, as Agent only"

Acceptable:
"A as Agent for P"
"A on behalf of P"
"P Corp. by A, President"

Unsafe:
"A, President, P Corp." (name of A simply followed by name of P).
What's the Agent's Implied Warranty of Authority rule?
Rule: an A who purports to K on behalf of another makes an implied warranty that he has authority to bind P.

Exceptions:
(1) third party knows A is unauthorized (reason to know insufficient here);
(2) A purported to warrant P's honesty or solvency;
(3) A added a disclaimer to his authority (said "IF I'm authorized then yes");
(4) third party is seeking recovery of a pecuniary harm.
What is the doctrine of Ratification?
Where an actor did not have any authority to bind P; P may ratify the act (from its inception) by an external, observable manifestation of assent.

Ratification deletes any claim for A's breach of implied warranty of authority.
The act of ratification, what does it take to ratify?
P can ratify by:
(1) Manifesting assent, or
(2) Conduct that justifies reasonable assumption he consents (including silence or silent retention of benefits after being informed of the situation).

Exception: ratification won't stand if P ratified w/o knowledge of material facts (unless he failed to reasonably investigate stuff that was known).
What are the 6 Limitations on Ratification?
(1) Writing formality;
(2) Ratifier must've been in existence at time K was formed;
(3) Can't ratify an illegal or non-delegable duty;
(4) No partial ratification (instead condition affirmance on K's modification);
(5) Can't ratify if changed circs make it inequitable to bind third party;
(6) Must take place before any specified time limits.
What are the tests for finding whether EE's Negligent act was in "scope of employment" for vicarious liability?
[1] R2d 228(1)
-Includes 4 factors (1 of which is "Motivation Test")

[2] R3d 7.07
-Took R2d 228(1)(c), The Motivation Test and made it the sole factor.

Both Analyzed Using:

(1) Frolic & Detour's Re-Entry Factor: EE returned to his duties prior to the accident, proven by (a) location in time and space; and (b) EE's dominant purpose was now performance of employer's business.

(2) Dual Purpose Doctrine: EE's acts/goals can't be more dominant than his employer's, but they can be equal while still being w/in scope.

(3) Going & Coming Rule: Generally outside scope, but if a special errand for employer may be w/in.

(4) Employer's Vehicle Presumption: can be rebutted by surrounding circs.
-Re-Entry Test
What is the R2d's Test for finding whether EE's Negligent act was in "scope of employment"?
R2d 228(1): Conduct is w/in scope if
(a) it's of the kind he's employed to perform;
(b) it occurs substantially w/in the authorized time and space limits;
*(c)* It's actuated at least in part by a purpose to serve the master.
(d) If foce is intentionally used by servant against another, the use is not expectable by master.

*Used frequently bc actually gives objective factors instead of 1 overarching principle; easier for courts to apply.
What is the R3d's Test for finding whether EE's Negligent act was in "scope of employment"?
The Motivation/Intent to Serve Test:

Takes R2d's 228(1)(c) and drops the other factors.

W/in scope of EE's conduct was actuated, at least in part by, a purpose to serve the master. Focus is on EE's intent/motivation.

*Known to be a more helpful test for analyzing Intentional Torts.
What is the Majority Test for finding whether EE's Intentional Tort was in "scope of employment"?
Courts are reluctant to find employer vicariously liable for EE's intentional misconduct unless there's EE's clear intent was to serve his employer.

R2d 228(1)(c)/R3d 7.07
The Motivation/Intent to Serve Test:

Was EE's conduct actuated, at least in part, by an intent to serve the master or his purposes?
What are the 3 Minority Tests for finding whether EE's Intentional Tort was in "scope of employment"?
(1) Characteristic Risk/Long Term Foreseeability Test:
The mishap can be said to be fairly characteristic of the employer's activities; EE's conduct was not so startling as to throw vicarious liabiiity out the window. Bushey - drunken sailor who sunk ship.

(2) Outgrowth of Employment Test: If (a) EE's conduct has a sufficient nexus to his employment and (b) EE's conduct is not so startling; and (c) holding employer liable wouldn't be so startling and unfair.
*Focus more on nexus and fairness to employer.

(3) R2d 219(2)(d) Aided by the Agency Relation Test: EE was aided in accomplishing the tort by the existence of the agency relation. Costos - bc he was Mngr of the Inn he knew where keys were and where V was staying, was aided in his tortuous conduct by the agency relation.
-Attacked and rejected by R3d bc it "swallowed the rule."