Business Law 16

how agency relationships are formed

- consideration is not required - principal must have capacity to contract - anyone can be an agent 1. agency by agreement (written, implied or oral) 2. by ratification: person who makes a contract on behalf of a principal and principal then approves 3. by estoppel: when a principal causes a third party to believe someone is his agent and the third person deals with agent, principal is cannot deny relationship. Third party must reasonably believe that an agency relationship existed.

obedience

-When acting on behalf of the principal, an agent has a duty to follow all lawful and clearly stated instructions of the principal. -Whenever instructions are not stated, the agent can fulfill the duty of obedience by acting in good faith and in a manner reasonable under the circumstances.

employee or independent contractor

1. Control over details of the word 2. Engaged in occupation aside from act 3. Work under employers supervision or independent 4. Are tools supplied 5. How long is the person employed 6. Method of payment by time period or completion 7. Degree of skill required by worker

termination by operation of law

1. Death of principal or agent. 2. Insanity of principal or agent. 3. Bankruptcy of principal. 4. Changed circumstances. 5. War between principal's and agent's countries. 6. Impossibility a. Loss or destruction of subject matter of agency. b. Loss of required qualification by agent. c. Change in law making agency illegal.

e-agent

A computer program that by electronic or other automated means can independently initiate an action or respond to electronic messages or data without review by an individual.

cooperation (principal)

A principal must cooperate with and assist an agent in performing her or his duties

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).

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. Section 1 restatement agency

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. usually from patern of conduct over time

how agency relationships are terminated

By act of the parties which includes- lapse of time (if specified in the agreement), purpose achieved, occurrence of specific events (whatever was specified), mutual agreement, termination of one party (while both parties may have the power to terminate, they may not have the right), or notice of termination (principles duty to inform 3rd parties) or operation of law which includes- death or insanity of either principle or agent (automatic), impossibility, changed circumstances, bankruptcy and/or war.

authorized acts

If an agent acts within the scope of his authority, normally the principal is obligated to perform the conduct regardless of whether the principal was disclosed, partially disclosed, or undisclosed.

respondeat superior

In Latin, "Let the master respond." 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.

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.

works for hire

In some cases the person who creates a work is not considered the author, therefore is not the initial copyright owner. "In the case of a work made for hire, the employer is considered the author and owns all the rights of copyright, unless the parties have expressly agreed otherwise in written form."

vicarious liability

Legal responsibility placed on one person for the acts of another; indirect liability imposed on a supervisory party (such as an employer) for the actions of a subordinate (such as an employee) because of the relationship between the two parties.

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. section 2 restatment of agency

safe working conditions

Principal to provide safe working premises, equipment, and conditions for all agents and employees. Inspect working areas and to warn agents and employees about any unsafe situations.

agency by operation of law

The agency relationship is based on a social or legal duty (such as the need to support family members) or formed in emergency situations when the agent is unable to contact the principal and failure to act outside the scope of the agent's authority would cause the principal substantial loss.

actual authority

The authority of an agent specifically told or written to them by the principal., Includes expressed authority as well as implied authority, or that authority customarily given to an agent. Express Authority: The authority granted to an agent by means of the agent's written contract. Implied authority: Authority that is not expressed or written into the contract, but which the agent is assumed to have in order to transact the business of insurance for the principal.

performance

Use reasonable diligence and skill by a reasonable person agents must reasonably follow directions -reasonable it determined by: 1.custom industry or trade 2. prior dealings 3. nature of agreement -agent is required to perform the services specified for the time period and manner specified -agent not required to break law or ethics -agent can disobey in an emergency

reimbursement and indemnification (principal)

Whenever an agent disburses funds to fulfill the request of the principal or to pay for necessary expenses, principal has duty to reimburse. Principal also has to indemnify an agent for liabilities incurred because of authorized and lawful acts and transactions.

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 person, but the third person knows that the agent is or may be acting for a principal at the time the agent and the third person form a contract

agency by ratification

acting toward the contract as though one intends to be bound by it; principal's assent to unauthorized acts of an agent., Agency that exists when individual misrepresents himself/herself as agent for another party, and principal accepts/ratifies unauthorized act

principals duty to agent

compensation; reimbursement and indemnification, safe working conditions.

loyalty

fiduciary duty owned by an agent not to act adversely to the interests of the principle / did they put client/principle in best interest

agent negligence

liability Rationale underlying the doctrine of respondeat superior Determining the scope of employment The distinction between a "Detour" and a "Frolic" Employee travel time Notice of dangerous conditions

agents duties to the principal

o Generally the agent owes the principal 5 duties:!#@!@! 1) Performance=an implied condition in every agency contract is the agents agreement to use reasonable diligence and skill in performing the work. 2) Notification=an agent is required to notify the principal of all matters that come to her or his attention concerning the subject matter of the agency 3) Loyalty=agent has the duty to act solely for the benefit of his or her principal and not in the interest of the agent or a third party 4) Obedience=an agent has a duty to follow all lawful and clearly stated instructions of the principal 5) Accounting=unless an agent and a principal agree otherwise, the agent has the duty to keep and make available to the principal an account of all property and funds received and paid out on behalf of the principals *including gifts from third parties in connection with the agency

compensation (principal)

principal has a duty to compensate the agent unless the agent has agreed to act for free (pro bono) or gratuitously. Often, the compensation is based on what is established in the express agency agreement. If it isn't in the agreement, the court will determine the principal to pay the reasonable value rendered to that agent.

agents misrepresentation

principal is liable when a 3rd person sustains a loss due to the agents misrepresentation. Principals liability depends on whether the agent was actually or apparently authorized to make representation. EX. Justin is a demonstrator for Pedros Products. Pedro sends Justin to a demonstrations show. Pedros gives Justin the authority to answer questions to the consumers but if Justin makes false statements about the products Pedro will be liable.

agent accounting

the agent must give an honest accounting of the property or money of the principal

notification

the agent must notify the principal of all material facts while carrying out the duties the agent has been authorized to do. (what the agent knows, the principal knows)

agency by estoppel

when a principal causes a third person to believe that another person is the principal's agent, and the third person acts to his or her detriment in reasonable reliance on that belief, the principal is "estopped to deny"

principals conduct

• A principal may be liable for giving improper instructions, authorizing the use of improper materials or tools, or establishing improper rules that resulted in the agents committing a tort

agents conduct

• A principal that authorizes an agent to commit a tort may be liable to persons or property injured thereby, because the act is considered to be the principals • Note that the agent acting at the principals direction can be liable as a tortfeasor along with the principal for committing the tortuous act even if the agent was unaware of the wrongfulness of the act