Chapter 34 Acct 324

respondeat superior

"let the superior speaK"

Termination of agency relationship by operation of law

1. Death 2. Insanity 3. Bankruptcy 4. Changed circumstances 5. Change in law 6. Impossibility 7. Disloyalty of agent 8. war

conditions when a principal is responsible for tortious conduct

1. a principal who directs the agent to commit a tort is authorizing the agent's unlawful behavior and thus is liable for any damages caused by the tort, and the principal who ratifies an agent's tortious act knowing the agent acted illegally is liable, even if she does not condone the agent's conduct 2. If the principal fails to provide proper instruments or tools or gives inadequate instructions to the agent concerning the necessity to employ competent agents, the law holds the principal liable to a third party for negligent hiring of an agent

Termination of an agency relationship by 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. Renunciation by the agent 7. Agency coupled with an interest

situations where agent is liable for contract

1. the contract expressly excludes the principal from the contract 2. the agent enters into a contract that is a negotiable instrument 3. The third party enters into a contract with the agent such that the agent's performance is required and the third party may reject the performance of the principal 4. The principal or agent knows a third party would not enter into a contract with the principal if the principal's identity were disclosed but the agent does so anyway

principal

A _____________________ may be liable for negligent hiring who fails to do a background check to learn about the tendencies of potential employees

Revocation of Authority

A principal can revoke an agent's authority at any time. However, such revocation might constitute a breach of contract with the agent, leaving the principal liable for damages

Agency coupled with an interest

A special kind of agency relationship created for the agent's benefit, not the principal's. the principal may not terminate this relationship, which is also called power given as security. The relationship is terminated when an event occurs that discharges the principal's obligation

breach of implied warranty

Agents who go beyond their authority when the principal is disclosed or partially disclosed are liable for a _______________________

breach of contract

Agents who go beyond their authority when the principal is disclosed or partially disclosed cannot be liable for ______________________ because they were never an intended party to the contract, even when exceeding their authority

breaches

An agency agreement is also terminated if the agent _______________ the duty of loyalty he or she has to the principal

interest

An agency agreement is terminated whenever the agent, unknown to the principal, acquires _______________ against the principal's _____________________

express authority

An agency agreement might state that the relationship will begin on Sept. 1 and end on Sept. 30. While the agent and principal can agree to continue their relationship through Oct. They will have to make a new agreement to cover it. The agent's ______________________ ends when the relationship ends, thus the principal must notify third parties that the former agent can no longer act on the principal's behalf

Renunciation by the agent

An agent can terminate the agency relationship by renouncing the authority given to him or her. The agent can be liable for breach of contract if the agency agreement stated a specific amount of time that the relationship is to exist

not liable

An agent who acts within the scope of her authority on behalf of a disclosed or partially disclosed principal is ________________________ for the acts of the principal

tort

An employer cannot escape liability for an independent contractor's ________________ if the employer directs the contractor to commit it

strictly liable

Certain activities are held _________________________ because of their inherently dangerous nature; an employer cannot escape this liability by hiring an independent contractor to complete them

Occurrence of a Specific event

Depending on its purpose an agency relationship can be terminated on the ______________________. John employs Claire as an agent to sell his house. Once the sale is final, the agency relationship will terminate

liability insurance

Employers will most likely purchase ______________________ in case particular employees engage in tortious activities

both the employee and employer

If a delivery driver negligently injures a third party while making deliveries on behalf of the employer, ______________________________________ will be held liable

tort action

If an agent enters into a contract knowingly misrepresenting his alleged authority the agent is liable to the third party in a _____________________

ratifies

If an agent has no authority to act on behalf of a principal but still enters into a contract with a third party, the principal, regardless of the classification, is not bound to the contract unless the principal ________________ the agreement

terminates

If an unusual change in circumstances leads the agent to believe that the principal's instructions do not apply, the agency relationship ____________________

reject

If the agent is a photographer and he enters into a contract for his principal without disclosing this fact, the third party may _____________ the principal's attempt to fulfill the contract by taking the third party's picture

any damages paid

If the third party is able to establish employee negligence such that the employer is liable, the employer has the right to recover from the employee ____________________ to the third party as a result of the employee's negligence

agent

If the third party rescinds a contract the __________________ is the only party liable

terminate

Powers of attorney tend to ______________ on the principal's death or incapacitation

Fulfilled the purpose

Suppose John a homeowner, enters into an agreement with Claire, a real estate agent, to sell his house. Once Claire succeeds in selling the house she no longer has the authority to act on John's behalf. She __________________________ of the agency relationship

not binding

Suppose an agent has authority to buy antiques on behalf of a principal and continues to purchase items without knowing the principal has died. Those transactions are ______________________ on the principal's estate, because as soon as the principal died, the agent's authority to act was gone

Impossible

Suppose that while Gregory is trying to sell Danielle's painting, there is a fire in her house and the painting is destroyed. Because it is ____________________ for Gregory to sell the painting, the agency relationship is terminated.

independent contractor

Suppose that while working on the outside of the building he is renovating, an independent contractor accidentally injures an innocent bystander when he drops a pile of bricks. The owner of the building is not liable for the innocent bystander's injuries, the ______________________ is liable

unintentionally

The agent can breach the implied warranty ___________________ through a good-faith mistake such as simply misjudging his or her authority

change in law

When a new law makes the commission of an existing agency agreement illegal, the agreement is terminated

liability

When making decisions about an agency relationship's __________ to third parties, courts must first identify the type of authority an agent has, then determine the classification of the principal, and the court must decide whether the principal authorized the actions of the agent

does not

When the third party is aware that the agent does not represent the principal the law ________________ hold the agent liable for the agreement

Uniform Commercial Code (UCC)

_____________ governs negotiable instruments and states that other parties, that is, principals, cannot be liable for them if their name is not on the instrument or if the agent's signature does not indicate that it was made in a representative capacity

tortious liability

___________________ of the principal can be established directly or indirectly

negligence

a third party injured through the ______________________ of an employee can sue either the employee or employer

Mutual agreement by the parties

agency is a consensual agreement between 2 parties. If John and Claire both decide they do not wish to continue in the agency relationship, they can cancel the agreement and terminate the relationship

general power of attorney

allows the agent to conduct all business for the principal

tort

an agent who commits a ______________ that injures a third party is personally liable for his or her actions, regardless of both the classification and the liability of the principal

tortious acts

an employer may be responsible for ______________________ of the employee if the employer knew or should have known that the employee had a tendency to commit such acts

respondeat superior

applies in the context of principal/employer-agent/employee relationship -the principal/employer holds vicarious liability, meaning they are liable not because they were personally at fault but because they negligently hired an agent

misrepresentation liability

depends on whether the principal authorized the agent's act

Special power of attorney

grants the agent express authority over specifically outlined acts

"frolic of his own"

how do courts refer to substantial departure?

partially disclosed

if a principal is _______________________ the agent and the principal are both considered parties to the contract and each may be liable separately from the other

terminated

if a principal or agent becomes insane, the agency relationship is _______________________. Some states have modified this law so that the agency contract still exists unless the person has been adjudicated insane

lapse of time

if an agency agreement specifies that the relationship will exist for a certain amount of time, it will end when that time expires

crime

if an agent commits a _________________ the agent is liable for it

principal

if an agent commits a tort against a customer, the customer often argues that the __________________ is liable because she should have taken more care in hiring the agent

Third party

if an agent has misrepresented herself the _________________ has 2 options: 1. cancel the contract with the principal and be compensated for any money lost 2. affirm the contract and sue the principal to recover damages

principal

if an agent is an employee and the principal/employer controls the employee's behavior, the _____________________- can be found liable

substantial departure

if an agent makes a __________________________ from the course of the employer's business, the employer is not liable

principal

if the ________________ was not a party to the contract, he or she has no liability to the agent

scope of employment

if the agent commits the crime in the _______________________ for a principal without the principal's authorization, the principal is not liable for the agent's crime

fiduciary duty

if the agent has somehow breached the _____________________ to the principal, however, the principal can revoke the agent's authority without liability

undisclosed principal

if the agent is liable to the third party, then the ______________________ is liable to the agent

not substantial

if the deviation from the employer's business is ______________________ the employer can be held liable

free of liability

if the employee is innocent of negligence, the employer is also _____________________

extremely hazardous

if the independent contractor engages in ___________________ activities such as blasting operations, for the principal, the principal will be responsible for any damages by the independent contractor

intentionally or unintentionally

if the principal authorizes the agent to engage in an act and the agent misrepresents herself ___________________________ the principal is always liable in tort to someone who relied on the agent's misrepresentation

partially disclosed

if the principal is __________________ the agent herself can be held liable for contractual nonperformance because the courts generally treat the agent as a party to the contract

terminated

if the principal or agent files a bankruptcy petition, the agency relationship is generally _____________________, particularly if the agent is filing for bankruptcy and his or her credit is important to the agency relationship

terminated

if the principal or the agent dies the agency relationship is automatically _____________________, even if one party is unaware of the other party's death

undisclosed principal

if the third party does not know that an agent is acting on behalf of a principal

partially disclosed principal (unidentified)

if the third party is aware of the principal's existence but not his or her identity

vicarious liability

liability assigned without fault for any harm the agent/employee causes while working fro the principal

Actual notice of termination

must be given to third parties who have had business interactions with the agent; it directly informs them, orally or in writing, that the agency agreement has terminated

intent

one of the elements establishing that a crime has been committed

Constructive notice of termination

parties not directly related to an agency agreement may receive ________________________, which is how the termination of an agency agreement is generally announced -consists of publication in a generally circulating newspaper for the area where the agency agreement existed

Durable power of attorney

specifies that the agent's authority is intended to continue beyond the principle's incapacitation

principal

the ____________________ is liable only if the agent has authority to act on the principal's behalf

principal

the _______________________ may also be held liable for the agent's authorized or unauthorized acts

intentionally

the agent can breach the implied warranty ___________________ through a knowing misrepresentation

third parties

the agent's apparent authority continues until the principal notifies _____________________ that the relationship has ended

Insolvency

the inability to pay debts or the condition in which liabilities outweigh assets, does not necessarily result in the termination of the agency relationship

criminal background

the principal of an employee with a ________________________ may be held liable for tortious acts committed by her hired agent even though the employee may not recognize the wrongfulness of his act

right of indemnification

the right to recover damages

employer liability

to establish ________________________ the third party must show that the wrongful act occurred within the scope of the employment

doctrine of respondent superior

under the ____________________________ an individual who hires an independent contractor cannot be held liable for the independent contractor's tortious actions

principals

we classify __________________ from the perspective of the third party's knowledge about them

agent

when the __________________ acts within her authority on behalf of an undisclosed principal, the law will likely hold her liable for the agreement

personally liable

when the agent exceeds his authority to act on behalf of the principal, the agent will likely be _____________________ to the third party

writing

when the agent's authority was granted in ____________________, actual notice also must be given in __________________

disclosed principal

when the third party is aware that the agent is making an agreement on behalf of a principal and also knows who the principal is

third party

whether disclosed or partially disclosed, apart from any liability the agent might have, the principal is liable for the agreements made with the _____________________

disclosed

with a ________________________ principal the agent is not liable because she is not a party to the transaction