CAL Agency

Creation of agency relationship? (Rule/Elements)

i) A principal manifests assent to an agent; ii) The agent acts on the principal's behalf; iii) The agent's actions are subject to the principal's control; and iv) The agent manifests assent or otherwise consents.

Duties of Agent to Principal?

i) Duty of care to perform with reasonable diligence and skill; ii) Duty to provide information to the principal regarding all matters relating to the agency relationship; iii) Duty of loyalty to the principal and to work only for his benefit; iv) Duty of obedience to the principal; and v) Duties not to usurp a business opportunity from the principal; not to take financial gain from the principal; to provide an accounting; and not to commingle the principal's property with that of a third party.

Frolic and detour?

i) Frolic When an employee's personal errand involves a significant deviation from the path that otherwise would be taken for the purposes of performing work, the errand is a frolic. Once a frolic begins, an employee is outside the scope of his employment until he resumes performance of his assigned work. ii) Detour Travel by an employee during the workday that involves a personal errand may be within the scope of employment when the errand is merely a detour (i.e., a de minimis departure from an assigned route).

The consensual nature of the agency relationship requires an agent to?

i) Have minimal capacity; ii) Manifest assent and consent to act on the principal's behalf; and iii) Manifest assent to be subject to the principal's control.

Factors when determining a third party's reasonable belief?

i) Past dealings between the principal and the agent of which the third party is aware; ii) Trade customs regarding how a similar transaction is normally accomplished; iii) Relevant industry standards; iv) The principal's written statements of authority; v) Transactions that do not benefit the principal; or vi) Extraordinary or novel transactions for the principal or similar types of principals.

An agent has the power to bind the principal to a contract when?

i) The agent has actual authority (express or implied); ii) The agent has apparent authority; or iii) The principal is estopped from denying the agent's authority. **ALWAYS GO THROUGH ALL THREE

A principal is directly liable to a third person harmed by an agent's conduct if:

i) The principal authorizes or ratifies the agent's conduct; ii) The principal is negligent in selecting, supervising, or otherwise controlling the agent; or iii) The principal delegates to an agent performance of a non-delegable duty to use care to protect other persons or their property, and the agent breaches the duty.

Implied authority by acquiescence?

Implied authority based upon acquiescence commonly results from: i) A principal's acceptance of the agent's acts as they occur; or ii) The principal's failure to object to the unauthorized actions of the agent that: a) Affirm the agent's belief that those actions further the principal's objectives; and b) Support the agent's perceived authority to act in the future. Thus, it is imperative that a principal stop, correct, and clarify any unacceptable act performed by an agent when the act takes place, so as not to grant implied authority as to the future actions of the agent.

Difference between implied actual authority and apparent authority?

Implied authority results when the principal's words or actions cause an agent to reasonably believe in the agent's authority to act. Apparent authority results when the principal causes a third party to reasonably believe that the agent has authority to act. To determine if a third party has a reasonable belief of apparent authority, look for a principal's manifestation that reaches the third party and could reasonably cause the third party to believe that the agent is authorized. The key is the principal's behavior, not the agent's, and the third party's perception that results from it.

Creation of an Agency Relationship? (Methods)

The most common method of creating an agency relationship is by appointment (oral or written). Generally, a principal's appointment of an agent need not comply with specific formalities (for example, a writing) to be effective. However, many states require an agent's appointment to be in writing when the agency relates to interests in property (e.g., a power of attorney).The most common method of creating an agency relationship is by appointment (oral or written). Generally, a principal's appointment of an agent need not comply with specific formalities (for example, a writing) to be effective. However, many states require an agent's appointment to be in writing when the agency relates to interests in property (e.g., a power of attorney).

Types of Implied actual authority?

1) Customary implied authority In the absence of instructions to the contrary, an agent has implied authority to act within accepted business customs or general trade usage within an industry. 2) Implied authority by position A principal may manifest assent to the actions of his agent by placing the agent in a position that customarily has certain authority, such as vice president or treasurer. 3) Implied by acquiescence 4) Implied authority due to emergency 5) Implied authority to delegate

Ratification?

A principal can ratify an act performed by another person, whether or not the person is an actual agent of the principal. Ratification occurs when a principal affirms a prior act that was done or purported to be done on the principal's behalf. The principal's affirmation may be either express or implied (such as through conduct), and consideration is not required. For ratification to occur, the following elements must exist: i) The principal must ratify the entire act, contract, or transaction (either by express manifestation of assent or conduct that justifies a reasonable assumption of consent); ii) The principal must have the legal capacity to ratify the transaction at the time it occurs; the third party must also have the legal capacity to engage in the transaction; iii) The principal's ratification must be timely (before the third party withdraws from the transaction); and iv) The principal must have knowledge of the material facts involved in the original act. If the principal ratifies the agent's action, then the principal is bound just as if the action had been authorized at the time it occurred.

Actual Authority?

Actual authority may be either express or implied. a. Express actual authority Express actual authority can be created via: i) Oral or written words; ii) Clear, direct, and definite language; or iii) Specific detailed terms and instructions. b. Implied actual authority Implied actual authority allows an agent to take whatever actions (designated or implied in the principal's manifestations) are properly necessary to achieve the principal's objectives, based on the agent's reasonable understanding of the manifestations and objectives of the principal.

Scope of employment?

An employee acts within the scope of employment when either: i) Performing work assigned by the employer; or ii) Engaging in a course of conduct subject to the employer's control.

Apparent Authority?

Apparent authority, also known as the doctrine of "ostensible agency," derives from the reasonable reliance of a third party on that party's perception of the level of authority granted to the agent by the principal. The perception is based on the principal's behavior over a period of time.

The principal's power to revoke/the agent's power to renounce?

Either party to the agency relationship may revoke or renounce consent that was previously given. A revocation or renunciation is effective as soon as the other party has notice of it. Either party has the power to terminate the agency relationship, even if they contracted not to do so. In that case, either party may be liable for breach of contract. The remedy for breach is limited to damages.

Implied authority to delegate?

In general, agents are prohibited from delegating either express or implied authority to a third person without the principal's express authorization. The rationale for the rule is that the agency relationship is consensual, and the principal has not agreed to a third party acting in the place of the known agent. Yet, in certain cases, a principal may be shown to have granted implied authority to the agent to delegate his duties to a third person or subagent. a) Mechanical or ministerial acts b) Specific to situation or circumstance c) Custom or usage d) Impossibility

Capacity in Agency?

To become a principal and be bound by an agent's actions, a person must have capacity both to consent to the agency relationship and to enter into the transaction to which the agent purports to bind the principal. In contrast, virtually any person can serve as an agent. A person can serve as an agent as long as he has the physical and mental capability to do whatever he has been appointed to do.

Types of Agents?

a. Individual Any individual with minimal capacity (some understanding that a contract is being initiated and the general nature of its subject matter) has the requisite capacity to be an agent. Status as an agent is established by the agreement to act on behalf of, and subject to the control of, the principal. b. Servant or employee A servant (often referred to as an employee) is an agent who is subject to the principal's control with respect to the physical conduct of the employee's performance. c. Independent contractor An agent who is not a servant/employee is referred to as an independent contractor. d. Gratuitous agent A gratuitous agent is an agent who does not receive compensation. e. General and special agents A general agent is an agent with broad authority over a wide variety of tasks, involving a continuity of service in a particular kind of business, without renewed authorization for each transaction or decision. General agents include store managers and purchasing agents. f. A trustee as an agent A trustee is an agent and is subject to the control of the settlor of the trust or one or more of its beneficiaries. g. Subagents A subagent is a person appointed by an agent to perform functions that the agent has agreed to perform on behalf of a principal.

Vicarious Liability?

a. Respondeat superior Under the doctrine of respondeat superior, a principal may be vicariously liable for a tort committed by an agent acting within the scope of his employment. A principal is vicariously liable to a third party harmed by the agent's conduct when: i) The agent is a servant (often referred to as an "employee"); and ii) The agent commits a tort while acting within the scope of employment. b. An agent's apparent authority A principal is vicariously liable for a tort committed by an agent with apparent authority when the agent's appearance of authority enables him to commit a tort or conceal its commission. c. Reliance upon care or skill of apparent agent One who represents that another is her agent and thereby causes a third person justifiably to rely upon the care or skill of such apparent agent is subject to liability to the third person for harm caused by the lack of care or skill of the one appearing to be an agent as if he were such.

Rights of Agent?

a. Right to receive compensation b. Right to have the principal not interfere with the agent's work c. Right to indemnification and reimbursement d. Right to work in a safe environment e. Remedies available to an agent