Agency-Principal

What are the 5 Theories of Agent's Authority (ways that principals can be bound by an "agent")

1) Actual Express Authority 2) Actual Implied Authority 3) Apparent Authority 4) Ratification 5) Inherent Agency Power BONUS: Estoppel

What are the ELEMENTS OF AN AGENCY RELATIONSHIP?

1) Consent by principal (for agent to act on his behalf) 2) Consent by agent (to act on principal's behalf) 3) Agent is subject to control FOR A SPECIFIC END. (Extra Note: - Must be an agreement, but not necessarily a contract. - Doesn't matter what the parties call their relationship.

Under what circumstance can an agent avoid liability, even if he is contracting on behalf of a partially disclosed agent?

An agent can escape liability in the event of a breach by a partially disclosed agent if: 1) The third party agrees to waive liability. 2) the third party has ACTUAL knowledge of the principal. (Example: an agent doesn't disclose the identify of the person he represents, but the third party had additional information that revealing the principals identity).

What are the elements of Estoppel (for purposes of holding a principal liablle?)

Elements: 1) No manifestation from P to A, but A asserts authority on P's behalf. 2) Third party relies to their detriment. 3) P was careless in allowing reliance.(P knew or should have known and should have corrected the misunderstanding).

How is a principle liable under a ratification theory?

Even where the agent had no authority to begin with, a principal can agree to be bound by obligations assumed by its agent. This is ratification.

What are some of the key indicators of the existence of a Master-Servant Relationship?

Factors include: 1) Allocation of risk (risk is often used as a proxy for control) 2) Control over day to day operations 3) Who is paying the bills 4) Rights to terminate the contract 5) What the relationship is called in the contract (though this is not dispositive)

What are some factors that court might look at to determine whether or not an employee was acting within the scope of his employment?

Factors: (Arguello v. Conoco) - Time, place, and purpose of the act - Similarity of acts which the servant IS authorized to perform. - Act is commonly performed by servants - Departure from normal methods - Master would expect such an act

What duties to agents have to a principal?

Fiduciary Duties: - Honesty/GOod faith (Reading - solider in uniform -security contracting) -Loyalty (Restatement: duty to act solely for the benefit of principal; duty to disclose information affecting company business (Rash- scaffolding case)

When might there be tort liability (master-servant relationship) in an "independent contractor" relationship?

If there is evidence of: 1) Right to control manner AND means. 2) Incompetence (skill, experience, financial responsibility/insurance) 3) Hazaradous Activity (nuisance per se)

Can there be apparent authority to an undisclosed principal?

No. While the agent can communicate the necessary manifestation of the principal-agency relationship to a third party, the third party must be aware that the alleged principal exists.

Can a principal avoid liability as an agent in an allegedly "master-servant" relationship, by refusing to exercise control provided that is allowed in a contract?

No. While the courts will look at the level of control exercised by a principal over his agent, the existence of a contractual right to control is usually enough- regardless of whether or not that control is actually exercised. (see,

What is Actual Implied Authority?

Principal has given express authority for something, and the actions of the agent are customary/ordinary given their position. Principal is liable.

What is Inherent Agency Power?

Principal is liable when an agent's acts are reasonably within the normal responsibilities (ie undisclosed principal, no manifestation by P to A).

What duties to agents have upon termination?

Still to act in good faith. This especially means no taking trade secrets (see Town & Country House and Home Service, Inc. v. Neweberry). The best approach is to approach clients together, and give clients the selection choice.

To hold an employer liable for the acts of his employee under respondeat superior, what must you show:

That the tort was committed while the employee was acting in the scope of his employment: - Possible Tests: - Motivated by service to the employer (Utah skiier) - Foreseeability (drunken sailor)

What is apparent authority

There are 3 Elements: 1) Manifestation by principal to a 3rd party. - Manifestation can be direct or indirect (ie job title) - The AGENT can communicate the manifestation. 2) Actual belief by the third party (objective standard) 3) Reasonable belief by third party (subjective standard) ** Principal must be disclosed!

What is respondeat superior

They theory whereby an employer can be held liable for the torts of his employee. (Master-Servant relationship)

What is a master-servant relationship

Traditional employer-employee relationship. Look for: Control over ENDS AND MEANS. Why is this important? In a master-servant relationship, the the master can be held liable for the torts of his agent.

Is Independent Contractor an agent?

Typically not, but sometimes there is overlap. Don't look at the label, look at the level of control.

Can a principal be held liable for the torts of his agent?

Usually not. (The primary exception is in the case of a Master-Servant Relationship)

What is Actual Express Authority

When the principal tells his agent to do something on his behalf, and the agent does it. Principal is bound by the actions of the agent.

Under what circumstances can an agent be held liable for the breach by a principal?

While typically an agent is not held responsible for the breach of a principal, he may be held liable if the principal was only partially disclosed. For example, if the third party knew he was contracting with an agent, but he never knew the true identify of the principal, he can sue the agent in the event of a breach. (Atlantic Salmon v Curran)

Can a creditor be a principal?

Yes, sometimes. Look for the level of control Contrasting Examples: - Cargill: Lender took control and made guarantees -

Can there be a master-servant relationship under only an apparent agency theory?

Yes. Example: Miller v. McDonalds: - McDonalds' agent was a franchisor

Can a franchisee/franchisor relationship be a master servant relationship for purposes of tort liability?

Yes. Look for the level of control exerted- especially on the specific part of the business where the tort took place. Example: McDonald liable for jewelry found in the food. Holiday Inn not liable for slip and fall (when Holiday Inn didn't exert any control over maintenance).

If a person is assumed to be a principal under an apparent-authority principal, and the third party who believed he was doing business with a bona fide agent breaches his contract, can the alleged principal sue for the breach? (Even if he never actually intended to enter into the contract?)

Yes. Once the court has determined that the is agent acted with apparent authority, both the principal and the third party are bound by the contract.