Chapter 28/29 Agency Law

how is agency terminated by law?

(these are automatic terminations) 1. Death or Incapacity of either party 2. loss or destruction of subject matter 3. Change in circumstances: if the agent finds out knowledge that would change the value of the subject matter such that the principal would not want the agent to act without telling them. 4. bankruptcy 5. disloyalty of agent: automatically ends authority 6. change of law 7. War: if principal and agent were to be enemies

how can the agency/principal relationship be terminated? (two overall categories)

1. act of parties 2. operation of law

What are the two types of agent authority? (how can the agent get authority)

1. actual express authority 2. actual implied authority

what are the elements of agency?

1. assent (have to agree to represent principal) 2. principle has control 3. agent acts on behalf of principle (all of these can be at the corporate level where the principal is the organization)

what are the implied authorities that come with managing a business?

1. buy and sell property for principal 2. make contracts (reasonable) 3. get equipment and supplies 4. make repairs 5. employ,discharge employees 6. take payments, make payments 7. direct ordinary operations of business

how do you form agency relationships?

1. formal or informal 2. always is consensual between parties 3. consideration is not required (gratuitous) 4. can have agency by estoppel 5. can be an oral agreement unless it falls under the statute of frauds 6. principal must have capacity; however, agent can still bind principal to the contract even if they do not have capacity (it is their option to void the contract then)

how can the agency/principal relationship be terminated by the parties?

1. lapse of time: when the time for the contract, or reasonable time, has been fulfilled. 2. fulfillment of the purpose: agent did what principal engaged him to do (sold house) 3. Mutual agreement 4. Termination by one party

what are the three kinds of agency relationships?

1. principal and agent 2. employer and employee 3. principal and independent contractor

duties of agent to principal:

Agent is liable to Principal for these things because of the fiduciary relationship! 1. obefience 2. good conduct 3. performance/diligence 4. accounting: must account for ALL money and property received. have to have separate accounts for their funds and your funds. 5. notification: notice to agent is seen as notice to principal 6. loyalty (no conflicts of interest, self dealing, even after employement-keep info confidential)

which are employees and which are independent contractors?

All employees are agents. But, not all agents are employees. If you are an agent that is not an employee, you are an independent contractor. But, not all independent contractors are agents (taxi driver) If your everyday actions are controlled- employee if you have freedom to do your actions- independent contractor

what is required for termination?

NOTICE! Notice has to be both direct and constructive. (only for termination by parities, not termination by law)

what are the principals duties to the agent?

Principal is liable to Agent for these things! 1. compensation 2. reimbursement: travel, whatever expenses the agent gets into on principals behalf 3. indemnification: for losses/liability incurred on agent (that the principal fairly should bear) 4. cooperation: has to allow agent to be able to perform 5. tort duties: have to give safe working conditions, have to disclose and warn about dangers upon knowledge.

if the relationship is terminated by the agent, it is called

Renunciation principal could sue for breach of contract if you terminate them before the contract is over.

if the relationship is terminated by the principal, it is called

Revocation by authority. HOWEVER, agency coupled with interest in not revokable. agent could sue for breach of contract if you terminate them before contract is over.

Del Pilar v. DHL Global Customer Solutions

a particular significant factor in determining whether a person is an agent or a independent contractor is how much CONTROL is over the person. if the principal is exhibiting a lot of control over the "independent contractor", they can be seen as an agent and thus the principal can be vicariously liable. however, if it is clear that they are not exercising control over operations, then only the independent contractor will be liable.

what is actual express authority?

actual authority given to the agent by the words (written/spoken) of the principal

what would a sales clerk relationship be?

agent and employee

trigger word "agency by estoppel", think

apparent agency

what is actual implied authority?

authority inferred from words or conduct authority you have based on the position that you hold. (impossible to specify everything an agent can do in a contract) "manage the store while i step out to lunch"

Paul authorizes Aaron to sell her 80 acre of farmland for $800 per acre. Subsequently, oil is discovered on nearby land, and her land greatly increases in value. What happens?

because Aaron knows of this and Patricia does not, Aaron's authority to sell the land is terminated.

tell me about the relationship between the principal and the agent

both the principal and the agent have agreed that the agent can act on behalf of and instead of the principal and can enter into binding contracts with a third party. if a contract is entered into, it is the principal and the third party in the contract (not the agent) ******ex: real estate agent, sales clerk could also be an agent because she is performing contracts for the company's benefit. agents can be both employees or independent contractors.

if the agent acts outside of their authority or if they lack the authority to make a contract, the agents liability to the third party is based on what?

breach of implied warranty of authority

what is the relationship between an employer/employee:

employer controls the details of the employees work. Employers are liable for the actions of their employees. Employees can also be agents!! (not mutually exclusive)

liability between agents and principals

if agent acts with actual or apparent authority, principal is liable. if agent did not have actual authority- but he did have apparent authority- agent is liable to the principal.

what is required for termination of the relationship?

if by law: nothing if by action of parties: direct and constructive.

when is a principal liable for an agents criminal acts?

if he direct, approved, or participated in the acts (not just if the agent goes rogue)

liability between third parties and the principal/agent

if the third party did not know who the principal was (partially disclosed principal), he can sue the agent. But, if the agent had actual authority, he can sue the principal when he finds out who he is. 1. disclosed liability 2. partially disclosed liability 3. undisclosed liability

ex: auctioneers, brokers

independent contractor

ex: lawyer

independent contractor

if agent leaves the scope of their employment to do something personal, and then they commit a tort, who is liable?

just the agent because they were not within their scope of employment.

if a licensed professional co-mingles funds..... what will happen?

lose their license

what is the relationship between employer/employee also referred to as?

master/servant

undisclosed principle liability

neither the agents or principles identity is known. agent is liable under contract and if third party finds out about who the principal is, then principal is liable too.

can an agent delegate his duty to act?

not normally and only if the principal consents

if the agent is an independent contractor and there is a tort committed, who is liable?

only agent because the principal cannot closely control the actions of an independent contractor.

agent is _________ when she enters into a contract with a third party on behalf of an undisclosed principal

personally liable. The third party does not know who the principal is at all and is soley trusting the agent.

if a principle directs an agent to commit a tort:

principal is directly liable agent is liable if he commits it

what is disclosed liability?

principal is known by the third party. principal is liable AGENT IS NOT LIABLE

if an agent is an employee and is acting WITHIN HIS SCOPE OF EMPLOYMENT and a tort occurs:

principal is liable as well as agent. EVEN IF the agent goes directly against his wishes. respondent superior: principal is liable for torts of agent if the agent is acting within their scope of employment. however, principal can recover money damages from agent

respondent superior:

principal is liable for torts of agent if the agent is acting within their scope of employment. EVEN IF the agent directly goes against the principals wishes.

partially disclosed principle liability :

principals identity is not known by the third party but the party knows the agent is an agent. agent and principal are liable

even if the written agreement says that no agency exists and that the person is a third party contractor, if there is a lot of control exercised over the third party, what could the court rule?

that the third party is in fact an agent and that the principal has vicarious liability because of this.

what is agency?

the fiduciary(trust and confidence) relation which results from the manifestation of consent by one person to another that the other can act on their behalf, subject by the control and consent of the other to act.

when the authority is not actual but it is apparent, who is liable?

the principal is still liable and bound by the contract; however, the agent is liable to the principal because of a breach of duty.

what is apparent authority?

this is what the principal's conduct leads third parties to believe about the authority of the agent. Even if the agent does not have actual express or actual implied authority, if they have apparent authority, the principal is still bound by the contract.

ratification of a contract entered into while an agent was not under your authority but had "apparent authority"

two options: 1. express: tell the third party that the agent was not actually working for you, but that you want to go ahead and ratify the contract. 2. implied: go ahead and perform the contract but do not tell the third party they were not under your authority.

what is agency by estoppel

when the principal causes a third party to believe that a third person is acting as their agent when they actually are not. this is the restaurant that had cars being valeed out front. They were not actual agents/employees of the business, but the restaurant allowed customers to believe they were. So, the court ruled that the restaurant was liable for their agency because of agency by estoppel.

what is the relationship between a principal and an independent contractor?

with an independent contractor, employers do not control the work of the contractor. Contractor and Employer are not liable for actions of independent contractor. independent contractor can also be an agent!! (insurance agent could be a contractor and agent)

what is the power of attorney?

written and formal appointment of an agent

can a principal be liable for negligently hiring, instructing, supervising, and controlling an agent?

yes

if you only give direct notice but fail to give constructive notice, what happens?

you are still liable for the actions of your agent because their apparent authority still exists.

direct notice:

you have to notify all customers that the agent called on to tell them that you terminated your agent.

constructive notice:

you have to tell the world ("potential customers") that you terminated the agent. This could be in the newspaper or trade journal