MHR 461- Chapter 14

Agent's duties to the Principal (5)

1. Loyalty 2. Obedience and Performance 3. Reasonable care 4. Accounting 5. Notification

Partially Disclosed Principal

agent discloses that he is an agent but does not identify the principal. *Agent is liable to third party on contract or can sue third party for breach.*

Duty of Reasonable Care

agent must act in a reasonably careful and skillful manner; no malpractice *Example: An accountant hired to prepare an income tax return who fails to take advantage of a legitimate tax deduction would violate the duty of reasonable care.*

True or False: A principal must have legal capacity to contract. Agent need not have such capacity. The agent is merely a conduit

True

True or False: There is no Vicarious (Indirect )Tort Liability for intentional or negligence torts of an independent contractor unless job being done involves an ultra-hazardous activity (i.e. demolition)

True

Irrevocable agencies (agency coupled with an interest)

"Agency coupled with an interest" (in favor of the agent). The agency can't be terminated when agent (lender) is granted authority to deal on behalf of principal (borrower) to sell/convey principal's property given as collateral for the payment of the loan: 1. By recobation of authority by the principal/borrower 2. By bankruptcy of the principal/borrower 3. By the incapacity of the principal/borrower; or 4. By the death of the principal/borrower, unless the duty, for which the lien was given, ends with the principal's death.

Respondeat Superior

"Let the master answer" an employer is vicariously liable for the behavior of an employee working within his or her scope of employment *also means that employers may be liable for torts of employees that can be attributed to negligent hiring or supervision.*

Anderson v. Mandalay Corporation

*CASE BACKGROUND:* Anderson was in Las Vegas, staying at the Mandalay Bay Resort and Casino for an industry trade show. One evening she and coworkers went to dinner and had a lot to drink. She went to her room about 2:00 a.m. On the way to her room, she was in an elevator with Gonzalez, who worked for Mandalay cleaning common areas. Gonzalez, who had a passkey, entered her room and raped her. Anderson recognized him from the elevator and called security, which tracked him down. He pleaded guilty to sexual assault. - Anderson sued Mandalay for negligent hiring asserting that it was vicariously liable for its employee's intentional tort. While working at Mandalay, Gonzales had been suspended for a month for threatening a female supervisor saying things such as "I know where you live" and "I will be waiting for you in the parking garage." - At trial, it was shown that there were five previous sexual assaults at Mandalay by employees and that unauthorized entry into guest rooms by employees occurred about once a month. - *The district court held for the hotel, ruling that the assault was not foreseeable. Anderson appealed.* *CASE DECISION:* the "conduct of an employee is reasonably foreseeable if a person of ordinary intelligence and prudence could have reasonably anticipated the conduct and the probability of injury." ... After Gonzalez's suspension ended, Mandalay restored his keycard access to occupied rooms and assigned him to a shift with minimal supervision. [Nevada law] promulgates three distinct circumstances in which an employer is liable for an employee's intentional tort: (1) the employee's act was not "a truly independent venture," (2) the employee acted "in the course of the very task assigned," or (3) the employee's act was "reasonably foreseeable under the facts and circumstances of the case considering the nature and scope of his or her employment." *Considering the facts and circumstances here, a reasonable jury could conclude Gonzalez's act was reasonably foreseeable.... We reverse ... and remand....*

Bearden v. Wardley Corp.

*CASE BACKGROUND:* Bearden wanted to sell a rental house she owned. She listed the property with real estate agent Gritton, who worked for Wardley Corporation, a real estate brokerage firm. - Gritton told Bearden that he would buy the house. *Bearden would keep title to the property until the balloon payment was made.* - Unknown to Bearden, when Gritton gave her multiple documents to sign, one was a deed that transferred title to Gritton. He had the signature improperly notarized and recorded the deed. - He did not keep up on his payments to Bearden, so she hired a lawyer, - Lawyer discovered that Gritton fraudulently obtained the deed, borrowed money against the property and that the property was in foreclosure. Bearden paid $60,000 to keep the property from being lost. She sued Gritton and Wardley for breach of contract, fraud, and breach of fiduciary duty. Because the judgment was against both Gritton and Wardley, Wardley was stuck with paying the judgment. It appealed. *CASE DECISION:* Bearden also introduced evidence that it was Wardley's policy to have management or a supervisor review the documents in its transition files and that Wardley had an internal policy that prohibited agents from purchasing properties that an agent listed. - From this evidence, the jury could have found that Wardley owed Bearden the fiduciary duties of "loyalty, full disclosure, confidentiality, and reasonable care." *This evidence is sufficient for the jury to find that Wardley breached its duty of care to Bearden...Affirmed.*

Cove Management v. AFLAC, Inc.

*CASE BACKGROUND:* Galgano signed an "Associates Agreement" with AFLAC in 2004. It authorized him to solicit applications for insurance policies offered by AFLAC. - The agreement stated that Galgano was an independent contractor without authority to bind AFLAC for his "debts, faults, or actions." It also stated that Galgano may not incur debt on behalf of AFLAC and did not have authority to "rent any office space" or otherwise obligate AFLAC without "specific written authorization." - In 2009, Galgano leased office space from Cove Management. The lease listed the tenant as AFLAC and listed Galgano as the guarantor for the office to be used for "insurance services." When he defaulted on lease payments, Cove sued AFLAC to recover losses. - Cove asserted it had the right to presume that Galgano had authority as an agent to bind AFLAC to the lease. The district court dismissed the suit; Cove appealed. *CASE DECISION:* Plaintiff's primary argument is that AFLAC clothed Galgano with apparent authority as its agent and thus AFLAC was liable as a lessee under the lease. Apparent authority is defined as follows: - Where a principal has created the appearance of authority in an agent, and another party has reasonably and detrimentally relied upon the agent's authority, the principal cannot deny it. - If there is no showing of reasonable and detrimental reliance upon the agent's authority, there can be no apparent authority. - The majority of evidence that plaintiff shows is evidence that came into existence after the signing of the lease - we cannot consider the evidence (1) that when the office was set up, the parking sign had the AFLAC symbol and duck, (2) that AFLAC's stylized blue materials were in the office, inside and out, and (3) that AFLAC was listed on the directory of the building, because *they all occurred after the lease was signed and thus there was not any reliance by plaintiff on that information when entering into the lease....* The record in the instant case does not show that plaintiff made any effort to determine whether Galgano was an independent contractor or an agent of AFLAC acting within the scope of his authority. - *We cannot find that Galgano was acting under apparent authority. In addition, plaintiff failed to make a reasonable inquiry as they were under a duty to make.... Affirmed.*

Guz v. Bechtel National

*CASE BACKGROUND:* Guz worked for Bechtel (BNI) for 22 years. He had a good employment record. Bechtel's personnel policy stated that its employees were at-will. *It also stated that employees could be terminated for unsatisfactory performance or because of a reduction in workload or company reorganization.* Management decided to cut the budget for Guz's division. Guz and others were fired. This occurred when the company enjoyed profitability. - The duties Guz performed were shifted to other employees. He applied for other positions at BNI, but he was rejected without reason. - *Guz sued, alleging breach of an implied contract to be terminated only for good cause and for breach of the implied covenant of good faith and fair dealing.* - The trial court dismissed the suit, holding that Guz was an at-will employee. The appeals court reversed, holding that "Guz's longevity, promotions, raises, and favorable performance reviews, together with Bechtel's written progressive discipline policy and Bechtel officials' statements of company practices, raised a triable issue: that Guz had an implied-in-fact contract to be dismissed only for good cause." Bechtel appealed *CASE DECISION:* We see no triable evidence of an implied agreement between Guz and Bechtel on additional, different, or broader terms of employment security. *As Bechtel suggests, the personnel documents themselves did not restrict Bechtel's freedom to reorganize, reduce, and consolidate its workforce for whatever reasons it wished.* Guz insists his own undisputed long and successful service at Bechtel constitutes strong evidence of an implied contract for permanent employment except upon good cause. Guz argues that by retaining him for over twenty years, and by providing him with steady raises, promotions, commendations, and good performance reviews during his tenure, Bechtel engaged in "actions ... reflecting assurances of continued employment." ...* An employee's mere passage of time in the employer's service cannot alone form an implied-in-fact contract that the employee is no longer at-will. *Bechtel's written personnel documents imposed no restrictions upon the company's right to eliminate jobs or work units, for any or no reason, even if this would lead to the release of existing employees such as Guz.* *The Judgment of the Court of Appeals is reversed.*

Purpose of Agency

*Principal* gives power to *Agent* to make contract which binds principal to *Third party*

Ratification by the Principal

*can be express or implied* This arises when a person who is not an agent, or an agent acting beyond her authority, enters into a contract on behalf of another—the alleged principal - However, the alleged principal may become bound to a contract by ratifying the agreement. *Example: you advertised your car for sale for $9,000. A prospective buyer looked at it while you were away and offered $8,500, which your roommate accepted, thinking you would be happy to sell it for that. Because your roommate was not your agent, you would not be obligated to go through with the deal. However, you could ratify the deal by going ahead and selling for that price.*

France v. Southern Equipment Co.

- Hensley did business under trade name Royalty Builders. Hired 16-year-old Robert France to do roofing work. - Southern Equipment needed a new roof on a building and accepted a bid from Quality Metal Roof. - Quality hired Royalty to do the work and supplied materials. - While working on roof, France fell and suffered head injuries. He sued Southern (and others) for exposing him to an inherently dangerous job of roofing. - Court granted summary judgment for Southern. - France appealed. - Royalty Builders was an independent contractor. Southern had no control over the work done by Royalty. - Southern could not be held vicariously liable as Royalty Builder's (thereby France's) employer. *Affirmed*

Boss/worker example

- Truck driver - store clerk - laborer - factory worker

client/independent contractor-agent

- attorney - accountant - auctioneer

client/independent contractor

- homebuilder - landscaper - plumber

Boss/worker-agent example

- purchasing agent - supervisor - manager - corporate officer

principal/agent example

- real estate broker - sports agent - job recruiter

Termination - Acts of Parties (5):

1. Lapse of Time; 2. Fulfillment of Purpose; 3. Mutual Agreement; 4. Revocation of Authority by Principal; Principal has power to revoke authority but may not have the right; resulting in damages to agent. 5. Renunciation by Agent; Agent has power to end agency by notification to principal; but may not have the right; resulting in damages to principal.

Rules of contract liability

1. A disclosed principal or partially-disclosed principal and third party are bound if agent acts with actual or apparent authority 2. An undisclosed principal and third party are bound if the agent acts with actual authority. 3. No principal is bound to a third party if agent acts without any authority unless a disclosed Or partially-disclosed principal ratifies the contract.

Methods of Termination of Agency

1. Acts of parties 2. Operation of Law

An agency can be established by any of the following (4):

1. Agreement of the parties 2. Ratification of the agent's activities by the principal 3. Application of the doctrine of estoppel 4. Operation of law

Summary; Boss/worker

1. Boss is V/L to third party for Worker's negligence done in scope of employment 2. Boss is V/L to third party for Worker's intentional torts done in i) scope of employment; and ii) in furtherance of Boss' business. 3. Boss is D/L to third party for negligent hiring or supervision of Worker. 4. Worker is D/L for his/her own negligent and intentional torts.

Contracting to Limit At-Will Employment

1. By *express contract,* the employer and employee agreed on employment for a guaranteed time. An employee may be hired for a fixed period, until a project is completed, or until some other event occurs according to the contract. - Dismissing the employee without just cause (e.g., evidence of incompetence or proof of financial crisis) could be a breach of contract. 2. An *implied contract,* based on written or oral statements, may restrict grounds for termination or require specific procedures to be followed in a dismissal. Most states recognize this as a possible exception to the at-will presumption. Evidence includes the policies and past practices of the employer. Courts expect employers to behave consistently in such matters, not just follow procedure when it suits them to do so. *For example, the Supreme Court of Connecticut found an implied contract was breached in Coelho v. Post-Seal International (544 A2d 170). An employee was fired without good cause. The company president had told him that he had job security and that the president supported him in conflicts with other employees. The court stated "there was sufficient evidence to permit the jury to find that the parties had an implied agreement that, so long as he performed his job properly, the plaintiff would not be terminated...." Employers must be cautious about the statements they make to employees because what they say may be held to create an employment contract.* 3. Similarly, covenants of good faith and fair dealing that can be extended to employment contracts are recognized in a minority of the states. Some successful suits have been brought against employers who misrepresented employment conditions to attract an employee, only to soon fire them for no good reason. This is not a common basis for a successful suit, however.

Summary; Client/Independent Contractor

1. Client is not V/L to third party for contractor's negligent or intentional torts. 2. Client may be D/L to third party for negligent engagement of contractor. 3. Contractor is D/L for his/her own negligent and intentional torts.

Principal's duties to an agent (5)

1. Cooperate: 2. Compensate: 3. Reimburse 4. Indemnify 5. To warn of danger or risks

Termination - Operation of Law (8):

1. Death of principal or agent. 2. Incapacity of principal or agent after formation of agency -- exception: durable power of attorney. 3. Bankruptcy of principal or agent. 4. Change of Business Conditions affecting subject matter when reasonable inference that agency should end. 5. Loss or Destruction of Subject Matter 6. Disloyalty of Agent ends that agent's authority. 7. Change of Law after formation of agency. 8. Outbreak of War placing parties as alien enemies.

a Principal may ratify when the following elements occur:

1. Disclosure of the purported "agency" by agent to third party; 2. Knowledge by principal of all material facts of the transaction; 3. No notice of withdrawal by third party from the transaction; 4. No intervening event that alters the transaction making it unfair for third party if ratification is allowed; and 5. Existence of a real person who could have been principal at the time of the unauthorized act by agent/non-agent.

General rules for subagents

1. In General: An agent may not delegate his authority to another or appoint a subagent unless the principal has an expectation that others can perform the actions authorized and that agent posses no unique expertise. 2. Improper delegating means that agent exceeded his authority and will be liable for unauthorized contracts. If delegation is proper, then principal is liable to third party and agent and subagent are not. 3. Subagent owes the same fiduciary duties to both principal and agent.

Effect of Termination of Agency on Authority

1. In General: Upon the death or incapacity of principal or agent, agent's actual and apparent authority ends—no need to send termination notice to a third party. 2. In other termination situations, apparent authority for third parties who have had previous dealings with agent continues until actual notice of termination is received by third party. 3. As for other third parties (w/o prior dealings; but know of the agency) constructive notice (newspaper ad) is all that is needed to terminate apparent authority.

Summary: Rules of Contract Liability

1. Principal is liable to third party for Agent's contracts with third party done with: a. Actual authority b. Apparent authority c. By ratification d. By operation of law 2. Agent is not liable to third party on contracts so long as: a. Done with actual or apparent authority and b. Agent discloses agency and c. Agent identifies Principal; otherwise Agent is liable to a third party on the contract.

To determine the nature of the relationship when there is a dispute, the courts look at a number of factors, including the following:

1. The extent of control the employer exercised over details of work 2. Whether the hired party is engaged in a distinct occupation 3. Whether the kind of work done is usually done with or without supervision 4. Whether the work done involves significant skill 5. Whether the employer provided tools or supplies used for the work 6. How much time was involved (the longer the relationship, the more likely it is employment) 7. Whether compensation is by the job or by the hour 8. Whether the hired party is integrated into the employer's regular business or workforce

Classification of agents (6):

1. Universal agent 2. General agent 3. Special agent 4. Agency coupled with an interest 5. Gratuitous agent 6. Subagents

Common Problems with Employee Handbooks:

1. Using boilerplate forms that include material not relevant to the employer 2. Making promises about discipline procedures that are not followed consistently 3. Creating probationary periods that imply permanent status once probation has ended 4. Failing to change the handbook to comply with state and federal laws as they change 5. Listing specific offenses for which people may be fired can create the impression those are the only offenses that matter 6. Not giving a clear at-will employment statement and failing to specify that the employer has the right to change the terms at any time without notice

Vicarious liability

A principal is indirectly liable for torts of employee under respondeat superior: 1. (In the case of a negligence tort) when the tort was committed in scope of employment; or 2. (In the case of an intentional tort) when the tort was committed in scope of employment and in furtherance of the principal's business.

Direct Tort liability

A principal is liable for his own wrongful conduct using agents when: 1. Principal directs an agent to commit a tort; or 2. Principal negligently engages a incompetent agent or 3. Negligently supervises, trains or controls an employee.

Remedies for Breach of Duties:

A principal or agent aggrieved by a breach of a duty owed can recover for: 1. Breach of contract damages 2. Tort damages 3. Restitution for benefits conferred 4. Possible punitive damages and attorney fees (for wrongful acts that are intentional)

Agency by Agreement of the Parties

An agency is normally formed by agreement by the parties- must be consensual - Express written agreement - Express oral agreement - Implied-in-fact agreement

Apparent authority example:

Antebellum did not give Underwood authority to buy a car, but Antebellum's past actions led the seller to believe that Underwood had authority. If Underwood contracts for a car, Antebellum is bound by it. However, Underwood must indemnify Antebellum for losses incurred as a result.

Actual authority example:

Antebellum instructs Underwood, her agent, to buy her a car. Underwood contracts for a car with a seller who knows that Underwood is acting as an agent. Antebellum is bound by the contract and must honor it. The third-party seller may sue Antebellum if she fails to perform according to the agreement made with her by Underwood.

Yim v. J's Fashion Accessories, Inc.

Benjamin Yim did business under trade name Ho Tae. - Ordered goods from J's Fashion. Invoices were sent to Ho Tae. -Account not paid. Fashion sued Yim, as Fashion presumed Ho Tae was merely his trade name. - He denied liability, saying he acted as an agent for a principal, Hosung Enterprise, Inc. Hosung did business under name Ho Tae. - *Fashion said that at no time did Yim disclose existence of a corporation entity.*Fashion thought they were always dealing with Yim with trade name Ho Tae. - Trial court entered summary judgment against Yim. He appealed, saying he was only an agent for Hosung Enterprises. Agent who makes a contract without giving identity of the principal becomes personally liable when the agent believes the principal is willing to be responsible for the contract. There is a duty to disclose the principal's identity. Agent must be specific in disclosure. Use of a trade name is not necessarily a disclosure of principal's identity. At no point did Yim indicate he was acting other than an individual doing business as Ho Tae, so Fashion could presume he was personally liable. *Affirmed.*

Evaluations

Evaluations should be consistent with statements in a handbook, or in case of dismissal, there can be a claim of wrongful discharge. *This is most likely to happen if an employee consistently receives good evaluations and is suddenly terminated for non-performance.*

Proper disclosure of principal and agency in writing:

Hosung Enterprises, Inc., *(disclosure of principal)* a Georgia corporation doing business as Ho Tae By: _________________________ Benjamin Yim, its President and Authorized Agent *(disclosure of agency and capacity)*

Incompetent Principal

If agent acts as agent for a disclosed principal whose contract is voidable for lack of capacity, then agent is not liable to third party on the contract.

Nonexistent Principal

If agent acts as agent for a nonexistent principal, then agent is liable to third party on the contract.

Express written agreement

Must be in writing only if covered by statute of frauds. A Power of Attorney is the most formal written agreement.

Duty to warn of danger or risks

Principal should warn agent of danger or risks in the work that the agent does not know about. Also keep work environment safe and free from unreasonable risk

Contractors as agents

Some independent contractors are also agents- contractors authorized to enter into contracts for the principal are agents. *attorneys, auctioneers, and other such persons who conduct business on behalf of a principal.*

Master-Servant and Employer-Employee

The master-servant rules apply when an employee is under the direct control of an employer, such as a food service worker. *B/c employers are presumed to be in control of employees employers are often liable for torts committed by employees in the course of employment.*

Tort Liability for Employers and Principals

The principal or employer is liable for the tort of an agent or employee if the tort was authorized, or if the tort occurred within the scope of employment. *If the agent or employee commits an unauthorized tort outside the scope of employment, the agent or employee is liable to the third party for damages incurred, and the principal or employer is not liable.*

Negligent Hiring

a basis for tort that may arise from an employer's lack of care in selecting an employee who the employer knew or should have known was unfit for the position, thereby creating an unreasonable risk of harm to others. *Most cases involve torts committed by an employee who is not acting in the scope of employment.*

Agency

a consensual relationship in which one person (the agent) acts as a representative of, or acts on behalf of, another person (the principal) with the power to affect the legal rights and duties of the principal in relation to a third party

General agent

a person authorized to execute all transactions connected with a certain business, such as a manager who runs all aspects of a hotel. The principal may limit the extent of the general agent's authority to a portion of the business.

Express ratification

a principal's clear signal to be bound to an unauthorized agreement.

Agency by Estoppel

although no formal agency exists, the actions of the principal may lead one to reasonably believe that the presumed agent has authority to act for the principal. - When the agent enters into a contract with a third party for the principal, the principal is bound to the contract and is estopped (prevented) from denying the existence of the agent's authority- even though there was never a consensual relationship between the principal and agent *Occurs because the third party justifiably relies on the existence of the agency relationship*

Special agent

an agent with authority to represent the principal only for specific transactions, usually for a limited time.

Implied-in-fact agreement

arises by conduct or practice.

Apparent Authority

arises when the principal creates an appearance of authority in an agent that leads a third party to conclude reasonably that the agent has authority to act for the principal. - Commonly arises when a principal hires a business manager as an agent. - As a rule, the authority to manage a business gives the agent the implied authority—or the appearance of authority—to undertake usual business activities.

Employment-at-will

employers are free to discharge employees for any reason at any time, and employees are free to quit their jobs for any reason at any time. - Can be overruled if there is evidence to show a contract limiting dismissal or that there is a public policy against dismissal.

Duty to compensate

in an agency, the obligation of a principal to pay an agent a reasonable fee for services performed or to pay the amount agreed upon by the parties (unless gratuitous)

Express Authority

is based on oral or written instructions given by the principal to an agent. *Example: the owner of an apartment complex hires a leasing agent and tells him to rent apartments at certain prices.*

employee handbooks

manuals issued by employers to inform employees of their duties and rights as employees; often used as evidence of an employment contract that must be followed by both parties *Courts can hold that such handbooks create express or implied contracts that limit the presumption of employment-at-will.* *many employers put a bold disclaimer at the front of the handbook that says it is not a contract and require employees to sign a disclaimer.*

Employees as Servants and Agents

many of us work under the control of employers, but in some ways, we act as agents, in which case the employers are also principals. - Employees often make business decisions that affect their employer. *Example: Sales representatives at Don Reid Ford dealership who are authorized to sell cars within certain price ranges without permission of a supervisor are employees with certain agency powers to make contracts for their employer.*

Express oral agreement

most common method

Independent Contractor

one who provides service in the course of an occupation, who follows the employer's direction as to the result of the work but does the work according to her own methods, unlike a servant or employee, who is subject to detailed control in the performance of work. *hiring independent contractors may avoid what could otherwise be a costly liability.* *employers pay no Social Security tax for independent contractors, and they do not need to withhold income taxes for the Internal Revenue Service (IRS).

Disclosed Principal

one whose identity is known by the third party at the time a contract is entered into with an agent. *Agent is not a party to the contract with third party and has no liability*

Undisclosed Principal

one whose identity is unknown by the third party. - Thus, the third party is unaware of the identity of the principal and of the agency relationship, and the *agent is liable to the third party on contract and can sue*

Actual Authority

power of an agent to bind a principal; the power is from an express or implied agreement between principal and agent.

Statute of Frauds

requires a written contract in some instances, so an agency is usually in writing when it is to last longer than one year or is for the sale of land.

Duty of Loyalty (fiduciary duty)

requires utmost trust and loyalty by agent to principal 1. No Conflicts-of-Interest- Agent must act solely for principal. 2. No Self-Dealing-Agent can't buy or sell for himself. 3. No Competition-Agent can't compete or work for rivals. 4. No Disclosure of Confidential Info. 5. No Retention of Financial Benefits- No secret profits.

Universal agent

someone designated to do all acts that can be legally granted to an agent. The agent is usually given a general power of attorney to do all business transactions on behalf of the principal.

Example of agency

the Don Reid Ford dealership in the Orlando area employs managers and sales representatives to make decisions about ordering cars, selling them to customers, buying and selling used cars, and running a repair shop

Agency by Operation of Law

the agent, although acting beyond the authority granted by the principal, has authority to take reasonable action in emergencies and must be compensated. *Example: A hurricane is headed for Florida. Unable to talk to the boss who is traveling, an employee buys $500 worth of plywood to protect the windows and other business property. That purchase is beyond delegated authority, but the situation required an immediate decision.*

Duty to inform (notify)

the legal requirement an agent has to inform a principal of any matters related to the agency that can affect its success. Example: Minaj hires Eminem as her agent to sell some farmland at a given price. Eminem learns that the farmland will likely increase in value because of a new highway to be built nearby. Eminem is under a duty to inform Minaj of this information so that she can decide whether she still wants Eminem to sell according to her original instructions.

Duty to reimburse

the obligation a principal has, unless otherwise agreed upon, to pay the agent for reasonable expenses incurred in carrying out agency obligations.

Duty to Cooperate

the obligation of a principal in an agency relationship to act in a manner so as not to impede the ability of the agent to fulfill the purpose of the agency. example: the principal must provide a safe working environment and warn the agent of any unreasonable risks, furnish goods of adequate quality to the agent if agreement calls for the sale of certain goods.

Duty to indemnify

the obligation of a principal to pay for damages or losses suffered by an agent in the execution of transactions allowed under the relationship

Duty of Obedience and Performance

the obligation of an agent to execute the obligations of an agency in the manner instructed by the principal.

Duty to account

the obligation of an agent to report with accuracy about all financial matters related to the relationship, including expenditures and revenues.

Gratuitous agent

when a person volunteers with no expectation of being paid for her services. The fact that there is no pay does not change the legal consequences of the agency relationship.

Subagents

when a principal authorizes an agent to delegate authority to other agents, that is, to sub agents who assist the agent. The sub agents work for the agent but owe duties both to the agent and the principal.

Agency coupled with an interest

when an agent pays for the right to have authority for a business. An agency in which the agent has an interest in the property regarding which he or she is acting on the principal's behalf *Example: you lend someone money to buy a house to use as a rental. The borrower agrees that rent from the property will be sent to you to pay off the loan. The borrower has become the agent of the lender for the purpose of collecting rent.*

Implied ratification

when the principal behaves as if he has the intent of ratifying an unauthorized agreement (usually occurs when principal accepts benefits of agreement)

Implied Authority

when the right of an agent to act on behalf of a principal is inferred from past actions or from the current position of the agent. *Example: landowner authorizes a real estate agent to find a buyer for some acreage. The landowner does not describe to the agent every step that could be taken. Even though the parties may not discuss the matter, the agent would have implied authority to post a "For Sale" sign on the property, advertise the offer for sale, and take possible buyers to see the property.*