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5 Cards in this Set
- Front
- Back
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What two basic relationships arise under the law of agency?
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(i) Master/servant relationships - arise between a principal and an agent. The principal has the right to control an agent's physical conduct. Principal acts through agent, thus liable for agent's acts.
(ii) Independent contractor relationships - where a principal contracts with a party for the performance of some task, but no supervisory authority exists and no employment relationship exists. No liability for the principal, except where principal authorizes non-delegable duties, torts, fraud or other illegal activity. |
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What are the different degrees of notice a third party may be recognized to possess in relation to a principal?
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(i) Disclosed principal - where the third party has knowledge that agent is acting for a principal, with some notice of his identity. Will be construed to have knowledge of identity if it can be reasonably inferred from information at hand.
(ii) Partially disclosed principal - where the third party has knowledge that the agent is acting or may be acting for a principal, but has no knowledge of his identity. (iii) Undisclosed principal - third party has no knowledge that the agent is acting for a principal. |
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What are the different degrees of authority an agent may be recognized to possess?
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(i) Actual authority - principal has expressly or impliedly authorized the agent to act on the principal's behalf.
(ii) Inherent authority/estoppel - principal expressly or impliedly has led a third party to believe the agent has authority to act on his behalf. Estoppel applies to prevent a principal from denying an agency relationship where he has led the third party to believe that one exists between him and the agent. (iii) Inherent authority - authority to bind principal to third parties that arises out of the agency relationship, not out of actual authorization. Binds principal to third parties even if agent acting beyond his authority. |
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How does liability operate under the law of agency?
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(i) Liability of principal to third parties - always liable where some form of authority exists. May seek indemnification from agent if no actual authority exists.
(ii) Liability of the agent to third parties - not liable if disclosed principal. Liable alongside principal if partially disclosed/undisclosed principal. Agent not liable if third party aware of agent's lack of authority. (ii) Liability of third parties to principal - third parties liable to disclosed principal where agent acted with authority and principal has not been explicitly excluded from the contract. If partially disclosed/undisclosed, liable to principal if no exclusion of principal from contract, no fraudulent concealment of principal and no set off/similar defense applicable. |
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What duties does an agent owe a principal? What does the duty of loyalty entail?
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(i) Fiduciary duties of loyalty, obedience, care and disclosure.
(ii) Accountability for all profits, acting solely for the benefit of the principal, refraining from dealing with principal as an adverse party, non-competition in relation to subject matter of relationship and prohibition on use of principal's property for own purposes. |
