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five duties the agent owes the principal

1. Performance 2. Notification 3. Loyalty 4. Obedience 5. Accounting

Respondeat Superior

A doctrine under which a principal or an employer is held liable for the wrongful acts committed by agents or employees while acting within the course and scope of their agency or employment.

Disclosed Principal

A principal whose identity is known to a third party at the time the agent makes a contract with the third party.

Partially Disclosed Principal

A principal whose identity is unknown by a third party, but the third party knows that the agent is or may be acting for a principal at the time the agent and the third party form a contract.

Undisclosed Principal

A principal whose identity is unknown by a third person, and the third person has no knowledge that the agent is acting for a principal at the time the agent and the third person form a contract.

notary public

A public official authorized to attest to the authenticity of signatures.

agency

A relationship between two parties in which one party (the agent) agrees to represent or act for the other (the principal).

power of attorney

A written document, which is usually notarized, authorizing another to act as one's agent; can be special (permitting the agent to do specified acts only) or general (permitting the agent to transact all business for the principal).

Which of the following is NOT one of the four ways in which an agency relationship can arise?

Agency by federal law

Fiduciary

As a noun, a person having a duty created by his or her undertaking to act primarily for another's benefit in matters connected with the undertaking. As an adjective, a relationship founded on trust and confidence.

Express Authority

Authority expressly given by one party to another. In agency law, an agent has express authority to act for a principal if both parties agree, orally or in writing, that an agency relationship exists in which the agent had the power (authority) to act in the place of, and on behalf of, the principal.

Implied Authority

Authority that is created not by an explicit oral or written agreement but by implication. In agency law, implied authority (of the agent) can be conferred by custom, inferred from the position the agent occupies, or implied by virtue of being reasonably necessary to carry out express authority.

Apparent Authority

Authority that is only apparent, not real. In agency law, a person may be deemed to have had the power to act as an agent for another party if the other party's manifestations to a third party led the third party to believe that an agency existed when, in fact, it did not.

Generally, agency agreements must be in writing and there must be consideration.

False

Purpose achieved

If an agent is employed to accomplish a particular objective, when that objective is satisfied, the agency automatically ends

equal dignity rule

In most states, a rule stating that express authority given to an agent must be in writing if the contract to be made on behalf of the principal is required to be in writing.

Vicarious Liability

Legal responsibility placed on one person for the acts of another.

Independent Contractor

One who works for, and receives payment from, an employer but whose working conditions and methods are not controlled by the employer. An independent contractor is not an employee but may be an agent.

Ratification

The act of accepting and giving legal force to an obligation that previously was not enforceable.

You walk into a restaurant and check your coat to a person behind a counter. You see a sign that says "I work for tips." What can you assume the relationship is between the owner of the restaurant and the person who took your coat?

There is an implied agreement that the coat check person is an agent of the restaurant.

Agency relationships are normally consensual, coming about through voluntary consent and agreement between the parties.

True

An agency by estoppel arises when the principal's actions have created the appearance of an agency that does not in fact exist.

True

An employer may be held liable when an employee commits the torts of assault and battery or false imprisonment while acting within the scope of employment.

True

In an agency relationship involving two parties, the agent agrees to represent or act for the principal.

True

The principal has a duty to indemnify an agent for liabilities incurred because of authorized and lawful acts and transactions.

True

Occurrence of a specific event

When an agency relationship is to terminate on the happening of a certain event, the agency automatically ends when the event occurs

Gina buys a piece of pottery from Woodward for her principal, Kelvin. If Woodward knows that Gina is buying the pottery on behalf of someone other than herself but does not know the identity of that person, Kelvin is

a partially disclosed principal

An ordinary power of attorney ends when:

a person giving the power dies or becomes incapacitated

Dara gives her agent, Marla, money to purchase a new commercial oven. Marla takes the money and deposits it into her personal checking account. Marla then accidentally spends some of Dara's money. Marla has violated his duty of

accounting

Delia gives her agent, Mike, money to purchase a commercial oven. Mike takes the cash and deposits it into his personal checking account and then accidentally spends some of it. Mike has violated his duty of

accounting

the principal must __________ the agent's act in its entirely

affirm

If the third party knows at the time that the contract is made that the agent does not have authority, then the __________ is not liable.

agent

With respect to their employers, employees who deal with third parties are generally deemed to be

agents

Napoleon owns Napoleon's Construction. He agrees to renovate Mrs. Cernan's bathroom. According to Internal Revenue Service (IRS) criteria, Napoleon is likely to be classified as

an independent contractor

Whitney works at home making unique children's clothes. Liam buys Whitney's clothes to sell in his store. With respect to Whitney's legal relationship to Liam, she is probably

an independent contractor.

When a third party reasonably believes a person has authority to act on another's behalf, even if that person does not have such authority, the situation is known as

apparent authority

impossibility-destruction of the specific subject matter

applies any time the agency cannot be performed because of an event beyond the parties' control No notice required Automatic on the happening of the event

termination by one party

as a general rule, either party can terminate the agency relationship

the principal must have the legal capacity to __________ the transaction at the time the agent engages in the act and at the same time the principal ratifies

authorize

death or insanity

automatic termination on the death or insanity of either the principal or the agent

War between principal's country and agent's country

automatically suspends or terminates agency-no way to enforce legal rights

Under the equal dignity rule: a. contracts creating agency relationships are voidable by agents. b. if a contract must be in writing to be executed, an agent's authority must also be in writing. c. if a contract between a principal and an agent lasts for longer than one year, it must be in writing.

b

The following actions may make a principal liable for acting through an agent EXCEPT a. establishing improper rules that result in the agent's committing a tort. b. providing explicit accurate written instructions to the agent. c. giving improper instructions. d. authorizing the use of improper materials or tools.

b. providing explicit accurate written instructions to the agent.

Bankruptcy

bankruptcy petition (not mere insolvency) usually terminates the agency

Jason instructs his agent Miguel to obtain a piece of artwork from Martina by threatening to beat her if she refuses to sell the artwork. Miguel follows Jason's instruction and beats Martina when she refuses to sell the item. In this situation,

both Jason and Miguel are liable for Martina's injuries.

Charlie tells Jamal that Marisol has agreed to allow him to sell her racing bicycle. Marisol is present at the time, hears the conversation, and says nothing. Jamal wants to buy a bicycle like Marisol's, so he agrees with Charlie to buy Marisol's bike. Marisol then refuses to sell the bicycle. Marisol claims that she is not bound by the agreement formed by Charlie and Jamal because Charlie is not her agent. Marisol is

bound by the contract, under a theory of agency by estoppel.

Using agents provide clear benefits to principals,

but agents also create liability for their principals

two general categories of how termination of an agency can occur

by act of the parties operation of law

In agency law, ratification occurs when: a. there is no agency relationship, but the words and actions of the principal lead a third party to assume that an agency exists. b. fiduciary obligations are owed by an agent to a principal. c. a principal, by words or by actions, affirms a contract made by a person who in fact is not an agent. d. the obligation of an agent who acted outside the scope of his or her authority is rejected.

c

Kris represents Josh in the sale of his house as his real estate agent. Kris is entitled to

compensation

typical duties that the principal has to the agent

compensation reimbursement and indemnification cooperation

By using agents, a principal can

conduct multiple business operations (entering contracts, at the same time in different locations)

the principal has the right to

control the agent's conduct in matters entrusted to the agent, and the agent must exercise his/her powers "for the benefit of the principal only"

A familiar example of an agent is a

corporate officer who serves in a representative capacity for the owners of the corporation.

An agent's implied authority can be inferred by

custom

Federal statutes governing employment _____________ apply only when an employer-employee relationship exists.

discrimination

Changed Circumstances

events so unusual that it would be inequitable to allow the agency to continue to exist

The undisclosed principal was expressly ____________ as a party in the written contract

excluded

the principal must know all of the materials __________ involved in the transaction

facts

The principal-agent relationship is fiduciary and therefore not based on trust, but specific laws.

false

Selma, an elderly widow, gives her young neighbor, Steven, written power of attorney. This means that Steven now

has express authority to act as Selma's agent.

the agent must have acted on behalf of an ____________ principal who subsequently ratifies the action

identified

An agent ___________ warrants that he or she has the authority to enter a contract on behalf of the principal.

impliedly

Kip owns Kip's Construction. He agrees to renovate Simha's bathroom. Kip is likely to be classified as a(n)

independent contractor

Elia and Sonia ask Fay to be the administrator of their will and the guardian of their children if they pass away. Fay agrees. Fiduciary relationships such as this one:

involve a high degree of trust and confidence

Whether a worker is an employee or an independent contractor can affect the employer's ___________ for worker's actions.

liability

If the principal is disclosed or partially disclosed, and the agent contracts with a third party without authorization, the agent is _________ to the third party who relied on the agency status.

liable

Clarence buys $221 worth of groceries using his wife's credit card. Under agency law, his wife will probably be deemed:

liable for the purchase, based on the creation of an agency by operation of law

Sam goes out shopping, and using his wife Juanita's credit card, he buys $221.00 worth of groceries. Under agency law, Juanita will probably be deemed

liable for the purchase, based on the creation of an agency by operation of law.

An agent's authority to act for a principal:

may be actual or apparent

The principal is always directly responsible for an agent's ________________ made within the scope of the agent's authority.

mispresentation

Maureen knows that her friend Kramer collects duck memorabilia. One day, she spots a carved wooden duck she is sure he will love. She tells the shop owner that Kramer will pay her for the duck as soon as he sees it, and she takes the duck with her to show it to Kramer. Kramer is

not liable.

the principal must ___________ the same formalities when ratifying the act as would have been required to authorize it initially

observe

When Armani, an employee of a marketing firm, is going from her home to work, she is normally considered to be acting

outside the scope of employment

Louisa is moving from New York to Los Angeles. Grover agrees to act as her agent to sell her New York apartment. As her agent, Grover owes Louisa all of the following duties EXCEPT:

payment

The performance of the agent is ___________ to the contract, thus allowing the third party to refuse the principal's performance

personal

If an agent has no authority but nevertheless contracts with a third party, the ___________ cannot be held liable on the contract.

principal

Sarah asks Sergio to mow her law. Sergio, who is overloaded with work, contracts with Dan to do the work for him as an independent contractor. As Dan is mowing, Sarah walks out of her house and the lawnmower throws a rock and hits Sarah, causing serious injuries. In this situation, Sergio is

probably not liable for Sarah's injuries.

The degree of skill or care required of an agent is usually that expected of a(n) __________ person under similar circumstances.

reasonable

The contract is a negotiable instrument signed by the agent with no indication of signing in a ________________ capacity

representative

If the Internal Revenue Service decides that an employee is misclassified as an independent contractor, the employer will be ______________ for paying Social Security, withholding, and unemployment taxes.

responsible

One of the parties in agency relationship is called

the agent

mutual agreement

the parties to an agency can cancel (rescind) their contract by mutually agreeing to terminate the agency relationship, even if it was for a specific (longer) duration

the agent, agrees to represent or act for the other, called

the principal

Selena signs a power of attorney appointing Kim only for the purpose of signing on her behalf relating to the sale of her house. The power of attorney will terminate based on

the purpose being achieved.

lapse of time

when an agency agreement specifies the time period during which the agency relationship will exist, the agency ends when that time period expires

the principal's affirmation (ratification) must occur before the third party _____________ from the transaction.

withdraws

Any copyrighted work created by an employee within the scope of her or his employment at the request of the employer is called a

work for hire