ACCT324 ch.34

unidentified principal

partially disclosed principal also known as

disclosed principal

when the third party is aware that the agent is making an agreement on behalf of a principal and also knows who the principal is

disclosed

with a _________ principal, the agent is NOT liable bc she is NOT a party to the transaction -the principal is liable

iraq

______'s Civil Code is partially influenced by classical Islamic law, in which there is no separate concept of tort and which suggests that those who cause harm should repair it.

Chapter IV of the Agency Relationship Law

a U.S. manager conducting business in the European Union needs knowledge of ________ in order to terminate the agency relationship

revocation of authority

a principal can revoke an agent's authority at any time -however, such revocation might constitute a breach of contract with the agent, leaving the principal liable for damages -BUT if the agent has somehow breached the fiduciary duty to the principal, the principal can revoke the agent's authority w/out liability

ratifies

a principal who directs the agent to commit a tort is authorizing the agent's unlawful behavior and thus is liable for any damages caused by the tort -similarly, the principal who _______ an agent's tortious act knowing that the agent acted illegally is liable, even if they do NOT condone the agent's conduct

agency coupled with an interest

a special kind of agency relationship created for the agent's benefit, not the principal's -the principal may NOT terminate this relationship -rather, it is terminated when an event occurs that discharges the principal's obligation

power of attorney

a specific form of express agent authority -usually in writing, granting an agent specific powers

employer liability

a third party injured through negligence of an employee can sue either the employee or the employer -to establish __________, the third party must show that the wrongful act occurred within the scope of employment

implied

agents who go beyond their authority when the principal is disclosed or partially disclosed are liable for a breach of ________ warranty -they can NOT be held liable for breach of contract bc they were never an intended party to the contract, even when exceeding their authority -the agent can breach the _______ warranty intentionally, through a knowing misrepresentation or unintentionally through a good faith mistake (such as simply misjudging their authority)

general power of attorney

allows the agent to conduct all business for the principal

disloyalty of agent

an agency agreement is terminated whenever the agent, unknown to the principal acquires interest against the principal's interest

renunciation by (the) agent

an agent can terminate the agency relationship by renouncing the authority given to them -however, the agent can be liable for breach of contract if the agency agreement stated a specific amount of time that the relationship is to exist

NOT

an agent who acts within the scope of her authority on behalf of a disclosed or partially disclosed principal is ____ liable for the acts of the principal -the principal is liable only if the agent has authority to act on the principal's behalf

tort

an agent who commits a ______ that injures a third party is personally liable for their actions, regardless of both the classification and the liability of the principal

changed circumstances

if an unusual change in circumstances leads the agent to believe the principal's instructions do NOT apply, the agency relationship terminates

employees

if emergency room doctors are _________, the hospital can be responsible for the conduct of the doctors through respondeat superior --however if they are independent contractors, the hospital can NOT be held liable

actual notice

must be given to third parties who have had business interactions with the agent -it directly informs them, orally or in writing, that the agency agreement has terminated -when the agent's authority was granted in writing, this must also be given in writing

third

whether disclosed or partially disclosed, apart from any liability the agent might have, the principal is liable for the agreements made with the ______ party

durable power of attorney

while powers of attorney tend to terminate on the principal's death or incapacitation, a _________ specifies that the agent's authority is intended to continue beyond the principal's incapacitation

liability

classification of the principal is important bc it helps determines the principal's _______

power given as security

agency coupled with an interest is also called

tort liability

based on whether the agent/employee was acting in the scope of employment

independent contractor

-not an employee of the individual who hires them to do work -the individual doing the hiring does NOT control the details of their performance -an individual who hires one, can NOT be held liable for their tortious actions under the doctrine of respondeat superior

lapse of time

If an agency agreement specifies that the relationship will exist for a certain amount of time, it will end when that time expires

misrepresentation liability

depends on whether the principal authorized the agent's act -if the principal authorizes the agent to engage in an act and the agent misrepresents themselves intentionally or unintentionally, the principal is always liable in tort to someone who relied on the agent's misrepresentation (as a general rule, if a principal authorizes an agent to misrepresent themselves, the principal is always liable

criminal

employer may be liable for any tortious acts of the employee if the employer knew or should have known that the employee has a tendency to commit such acts -principal may be liable for negligent hiring if failed to do a background check -the principal of an employee with a __________ background may be held liable for tortious acts committed by their hired agent even though the employee may not recognize the wrongfulness of their act -therefore employers will most likely purchase liability insurance

substantial departure

if an agent makes a ___________ from the course of the employer's business, the employer is NOT liable -courts often refer to this as a "frolic of his own" -however, if the deviation from the employer's business is NOT substantial, the employer can be held liable

impossibility

ex. -if the painting agent was hired to sell is destroyed in fire, no longer possible to sell painting and the agency relationship can NOT continue -if the agent loses qualifications needed to perform duties for the principal, the agency relationship ends

special power of attorney

grants the agent express authority over specifically outlined acts

partially disclosed

if a principal is ________, the agent and the principal are both considered parties to the contract & each may be liable separately from the other

crime

if an agent commits a ______ in the scope of their employment w/OUT authorization from the principal, the principal is NOT liable for it

misrepresented

if an agent has ________ themselves, the third party has 2 options: 1) cancel the contract w/ the principal & be compensated for any money lost 2) affirm the contract & sue the principal to recover damages

hazardous

if the independent contractor engages in extremely _______ activities (ex. blasting operations), the principal will be responsible for any damages by the independent contractor -certain activities are held strictly liable bc of their inherently dangerous nature -an employer can NOT escape this liability simply by hiring an independent contractor to complete them -nor can the employer escape liability for an independent contractor's tort if the employer directs the contractor to commit the tort

instructions

if the principal fails to provide proper instruments or tools or gives inadequate _______ to the agent concerning the necessity to employ competent agents, the law holds the principal liable to a third party for negligent hiring of an agent -if an agent commits a tort against a customer, the customer often argues that the principal is liable bc they should have taken more care in hiring the agent

partially

if the principal is _______ disclosed, generally the agent is NOT held liable and the principle is -but the the agent may be held liable for contractual nonperformance (bc the courts generally treat the agent as a party to the contract)

insanity

if the principal or agent becomes insane, the agency relationship is finished -some states have modified this law so that the agency contract still exists unless the person has been adjudicated insane

bankruptcy

if the principal or agent files a bankruptcy petition, the agency relationship is generally no longer in existence -particularly if the agent is filing for bankruptcy and their credit is important to the agency relationship -however, the inability to pay debts or the condition in which liabilities outweigh assets, does NOT necessarily result in the termination of the agency relationship

death

if the principal or the agent dies, the agency relationship is automatically terminated -even if one party is unaware of the other party's death, the relationship no longer exists

undisclosed principal

if the third party does NOT know that an agent is acting on behalf of a principal

negligence

if the third party is able to establish employee negligence such that the employer is liable, the employer has the right to recover from the employee any damages they paid the third party as a result of the employee's negligence -however if the employee is innocent of ________, the employer is also free of liability

partially disclosed principal

if the third party is aware of the principal's existence but NOT their identity

intentional

in the same way the principal is responsible for the negligent acts of the employee under the doctrine of respondeat superior, the principal may also be liable for any ________ torts of the employee

unauthorized acts

the agent is held liable unless the principal ratifies the agreement -bc principal is not bound to the contract w/ the third party

apparent authority

the agent's __________ continues until the principal notifies the third parties that the relationship has ended -notice of the termination can be actual or constrictive -if the relationship has ended, the agent no longer has authority to make agreements on behalf of the principal

respondeat superior

the doctrine of ____________, applies in the context of the principal/employer-agent/employee relationship -a latin phrase meaning "let the superior speak"

vicarious liability

the principal/employer holds ____________, which is liability assigned w/out fault, for any harm the agent/employee causes while working for the principal -rationale is that if the employer is benefitting by the work of the employee, the employer should also be responsible for the harms the employee caused (basically the principal/employee is liable NOT bc they were personally at fault BUT bc they negligently hired an agent)

right of indemnification

the right to recover damages is referred to as

constructive notice

usually consists of publication in a generally circulating newspaper for the area where the agency agreement exists -parties NOT directly related to an agency agreement may receive ________, which is how the termination of an agency agreement is generally announced

termination by operation of law

ways that an agency relationship can be terminated: 1) death 2) insanity 3) bankruptcy 4) changed circumstances 5) change in law 6) impossibility 7) disloyalty of agent 8) war

termination by acts of parties

ways that an agency relationship can be terminated: 1) lapse of time 2) fulfillment of purpose 3) occurrence of specific event 4) mutual agreement by the parties 5) revocation of authority 6) renunciation by the agent 7) agency coupled w/ an interest

law of agency

we classify principals from the perspective of the third party's knowledge about them -the ________ places special weight on this viewpoint of the agency relationship

change in law

when a new law makes the commission of an existing agency agreement illegal, the agreement is terminated

undisclosed

when the agent acts within their authority on behalf of an ______ principal, the agent is liable but the principal is liable to the agent unless: - the contract excludes the principal - the contract is a negotiable instrument -the agent knows that if the principal's identity was revealed, the third party would not enter into a contract