19.3 Liability in Agency Relationships and Termination of an Agency

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 contract is made.

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.

An undisclosed principal can require the third party to fulfill the contract unless the undisclosed principal was expressly excluded as a party in the written contract, the contract is a negotiable instrument signed by the agent with no indication of signing in a(n) representative capacity, or the performance of the agent is personal to the contract, thus allowing the third party to refuse the principal's performance.

An undisclosed principal can require the third party to fulfill the contract unless the undisclosed principal was expressly excluded as a party in the written contract, the contract is a negotiable instrument signed by the agent with no indication of signing in a(n) representative capacity, or the performance of the agent is personal to the contract, thus allowing the third party to refuse the principal's performance.

If an agent commits a crime, the principal, or employer, is not liable unless the principal participated in the crime by

Conspiracy

If an agent is on a (Blank) , the principal will be liable, but if the agent is on a (BLANK) , the principal will not be liable.

Detour, Frolic

If an agent has authority to sign a contract on behalf of a disclosed principal, the third party may hold either the principal or the agent responsible to perform.

False

Generally, death or insanity of either party will automatically and immediately terminate the agency relationship. If performance becomes impossible , the agency relationship will terminate. A significant change in circumstances may trigger termination of the agency if the agent can reasonably infer that the principal will not want to the relationship to continue. Bankruptcy of the principal most likely will terminate the agency, but bankruptcy of the agent may or may not terminate the relationship. Finally, if the nations of the two parties are different and those nations are at war , the relationship is terminated because there is no way to legally enforce the rights of either party.

Generally, death or insanity of either party will automatically and immediately terminate the agency relationship. If performance becomes impossible , the agency relationship will terminate. A significant change in circumstances may trigger termination of the agency if the agent can reasonably infer that the principal will not want to the relationship to continue. Bankruptcy of the principal most likely will terminate the agency, but bankruptcy of the agent may or may not terminate the relationship. Finally, if the nations of the two parties are different and those nations are at war , the relationship is terminated because there is no way to legally enforce the rights of either party.

If an agent contracts with a third party without authority from the principal, the principal is not liable on the contract. If the third party knows of the existence of a principal, either disclosed or partially disclosed, then the agent is liable to the third party who relied on the agency status. In this situation, there is a breach of the implied warranty of authority. If the third party knows that the agent does not have authority, then the agent is not liable to the third party.

If an agent contracts with a third party without authority from the principal, the principal is not liable on the contract. If the third party knows of the existence of a principal, either disclosed or partially disclosed, then the agent is liable to the third party who relied on the agency status. In this situation, there is a breach of the implied warranty of authority. If the third party knows that the agent does not have authority, then the agent is not liable to the third party.

In determining whether a particular act occurred within the scope of employment, courts will evaluate whether the employee's act was authorized by the employer, the time, place, and purpose of the act, whether the act was one commonly performed by the employees on behalf of their employers, the extent to which the employer's interest was advanced by the act, the extent to which the private interests of the employee were involved, whether the employer furnished the means by which an injury was inflicted, whether the employer had reason to know that the employee would perform the act in question and whether the employee had done it before, and whether the act involved the commission of a serious crime.

In determining whether a particular act occurred within the scope of employment, courts will evaluate whether the employee's act was authorized by the employer, the time, place, and purpose of the act, whether the act was one commonly performed by the employees on behalf of their employers, the extent to which the employer's interest was advanced by the act, the extent to which the private interests of the employee were involved, whether the employer furnished the means by which an injury was inflicted, whether the employer had reason to know that the employee would perform the act in question and whether the employee had done it before, and whether the act involved the commission of a serious crime.

Vicarious Liability

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

A principal is always responsible for an agent's (Blank) made within the scope of the agent's authority.

Misrepresentations

One or more parties may terminate an agency relationship by placing into the agreement a time period for termination. When that time expires , the agency ends. In addition, the parties can specify that the agency is for a particular purpose and once that is achieved, the agency terminates. Alternatively, the parties can include a specific event as a trigger for termination and once that event occurs , termination of the agency will occur. The parties can terminate an agency relationship prior to any of the preceding events by mutual agreement or by either individual party.

One or more parties may terminate an agency relationship by placing into the agreement a time period for termination. When that time expires , the agency ends. In addition, the parties can specify that the agency is for a particular purpose and once that is achieved, the agency terminates. Alternatively, the parties can include a specific event as a trigger for termination and once that event occurs , termination of the agency will occur. The parties can terminate an agency relationship prior to any of the preceding events by mutual agreement or by either individual party.

Either party has the (Blank) to terminate the agency agreement, but they may not have (Blank) the to do so without legal consequence.

Power, Right

(Blank) is required to inform any third parties who know of the existence of an agency that the agency has been terminated.

The principal

Renunciation

The unilateral termination of the agency agreement by the agent.

Revocation

The unilateral termination of the agency agreement by the principal.

A principal who authorizes an agent to commit a tort may be liable to persons or property injured because the act is considered to be the principal's.

True

Agency law is similar to contract law in that both an agency and a contract may be terminated by the parties or by operation of law.

True

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

True

Liability for contracts formed by an agent depends on how the principal is classified and on whether the actions of the agent were authorized or unauthorized.

True

A principal may be liable for the tortious conduct of an agent based on the principal's own actions, including all of the following EXCEPT:

c. providing explicit accurate written instructions to the agent.

Which of the following is NOT a valid reason for a termination of an agency by operation of law?

d. Prior engagement

A principal will be liable for the intentional torts of an employee/agent in all of the following situations except:

d. if the agent committed the intentional tort while on a frolic