Business Law Chapter 19

Respondeat Superior

"let the master answer" Tort Liability and Agency Relationship the principal by which liability for harm caused by an agent/employee is help by the principal/employer

Expressed Agency

(Agency by Agreement) Most common* Forming an agency relationship by making a written or oral agreement. Expressly assign the agent and instruct on what to do. If principal agrees to hire no other agent for a period of time until a job is done, the principal and agent have entered into an exclusive agency contract.

Termination by Law

1. Death 2. Insanity 3. Bankruptcy 4. Changed circumstances 5. Change in law 6. Impossibility

Agent's Duties

1. Duty of loyalty: best interest of principal *avoid conflicts of interest - Principal comes first *confidentiality - P's trade secret (continues after termination as well) 2. Duty of notification: keep principal informed of any relevant information that may affect them. 3. Duty of performance: task - reasonable skill and care 4. Duty of obedience: follow lawful instruction 5. Duty of Accounting: accurate account

Termination of the Agency Relationship - Acts of Parties

1. Lapse of time 2. Fulfillment of purpose 3. Occurrence of specific event 4. Mutual agreement by the parties 5. Revocation of authority 6. Agent quits

General Rule: Expressed Agency

Does not have to be in writing. Exceptions: 1. need to be in writing whenever an agreement is reached for an agent to enter into a contract that under the statute of frauds must be in writing. (Equal dignities rule) 2. Whenever an agent is given PoA - must be in writing

Circumstances Under Which an Agency Relationship Can be Created

-**Only for lawful purposes -**Almost anyone can act as an agent. (No matter age or competency) -Contract made by an agent is viewed as a contract between the principal and a third party. -If an individual does not have contractual capacity, the individual cannot hire an agent to make contracts on his or her behalf. If two criteria are met, agency relationships can be created on the basis of any of the following four forms of authority:(agencies)

Undisclosed Principal

3rd party is unaware that there is a principal. -Both A + P are liable - Indemnify A

Disclosed Principal

3rd party knows there is a principal involved and knows the principal's identity. -Only principal is liable

Partially Disclosed Principal

3rd party knows there is a principal involved, but does not know the p's identity. -Both A + P are liable - Indemnify A

Employees? Independent Contractors?

All employees are agents but not all agents are employees. Employees v. Independent Contractors E: file taxes with company IC: pay own taxes E: OSHA workplace safety E: Employment discrimination law E: Unemployment E: Tort liability (company)

Apparent Authority - Agency by Estoppel

An agency relationship created by operation of law when one party, by his actions, causes a third party to believe someone is his agent when that person actually has no authority.

Creation of the Agency Relationship

Formed by informal oral agreements or informal written contracts. Only exists when the principal takes action to ask another individual to act on behalf of the principal.

Intentional Tort

Generally Principal is not liable. Exception: agent is furthering principal's interest. -Bouncer

Duties of Principal

Principal's duties to the agent: 1.Duty to compensate: (if not gratuitous agent) must pay agreed upon amount 2.Duty to reimburse: agent pays money on principal's behalf and can get money back 3.Indemnify: agent pays money for a court judgment - get paid back 4. Cooperate: assist agent in performing duties 5. Provide safe work conditions: employees and I.C.

Vicarious Liability

The liability or responsibility imposed on a person, party, or an organization for damages caused by another, most commonly used with employment, with the employer held vicariously liable for damages caused by its employees. -Within scope of his or her employment.

Agency by Ratification

The person being spoken for must agree to a contract. A nonagent can't speak for someone. Otherwise, the "principal" isn't required to uphold contract. But if the person does end up agreeing to the contract, they are accepting the person speaking for them as his or her agent and is now bound by contract and the agent cannot be help liable for misrepresenting himself as the agent. -not authorized as an agent for a specific task, but acts anyway to make the K. -Principal must have full knowledge of the K and specifics -Principal must ratify full K

Fiduciary

a person who has a duty to act primarily for another person's benefit.

Frolic of his own

a substantial departure from work activities. Principal is not liable.

Durable Power of Attorney

after principal becomes incompetent, cannot be revoked. enacted by principal - may only be in effect given the subsequent incapacitation.

Agent

authorized to act on behalf of the principal. Acts as representation. No requirement for age or competency.

Power of Attorney

decide/signing legal documents *General can decide all things *Specific - ex) Real estate decisions -After becoming incompetent, you cannot appoint a PoA.

Agency

generally defined as a relationship between a principal and an agent. -must be consensual -must be a lawful purpose for the agent (legality)

Principal

hires the agent to represent him or her.

Detour

slight departure from work activities. Principal is liable.

Agency by Implied Authority

some cases, agency relationship is not created by an expressed agreement but implied by conduct of the parties. Cannot come in conflict with express authority. Do what is reasonable and necessary to carry out the express authority from which it is derived.