Agency Rule Statements

Principal's Remedies

1) Kual action, 2) Tort actions, 3) actions for secret profits, 4) equitable actions for accounting, 5) constructive trust, 6) disgorge profits, 7) withholding of compensation for intentional torts or intentional breaches of fiduciary duty, 8) may recover actual profits or properties held by agent whether or not the agent's profit caused the P any loss.

Defeating an Estoppel Claim

A 3P may fight an estoppel claim by showing justifiable inducement under the circumstances b/c: 1) P intentionally or carelessly caused such belief; or 2) having notice of such belief and that it may induce others to change their positions, the P did not take reasonable steps to notify them of the facts; and 3) 3P reasonably relied to his detriment upon the authority of the purported agent.

Estoppel to Deny Existence of Agency Relationship

A P may properly deny the existence of an agency relationship, including apparent authority, if there is a lack of a manifestation by the P that the purported agent holds authority to complete the transaction in question.

Inherent Auhority

A principal may be bound by the acts of an agent without actual authority if the agent had some authority to act and the act performed slightly exceeds the authority given.

Agency by Estoppel

Agency may be created by estoppel or by apparent authority. This means that a principal who holds another person out as her agent t a 3rd party will be legally precluded from claiming that there is no agency relationship.

Ratification

Allows a P to grant retroactive authority for his agent's earlier unauthorized actions. Ratified act must be one that the P could have authorized at the time of the act. Ratification requires: 1) manifesting an assent that the act shall affect the person's legal relations; or 2) conduct that is justifiable only on the assumption that the person so consents. Once ratified, an act has the effect as if ti were originally done by the agent w/ actual authority.

Agency

An agency is a legal relationship where an agent is authorized to represent the principal in business dealings with a third party. It may be formed by an express or implied agreement (no writing required) if both the principal and agent consent to the agency relationship. An agent acts with express authority when the principal has given the agent the power to bind him.

Actual Implied Authority

An agent acts with implied authority when the agent reasonably believes that she has the power to bind the principal based on the principal's acts. The agent may rely on custom or actions by the principal that reasonably leads the agent to think that she has the authority to act.

Apparent Authority

An agent has apparent authority to act when the principal leads others to believe the agent is acting with the principal's authority. A party who reasonably relies on the agent's apparent authority can hold the principal liable for contracts entered into by the agent. Cannot be limited by secret limiting instructions to terminate apparent authority.

Ratification

Authority can be granted after a K is entered if (1) the principal has knowledge of the material facts and (2) accepts the benefits of the K. Ratification can't alter the terms of the K: Ratification must be done as-is. The principal can't alter the terms of the K

Agent's Duty of Loyalty

Breach of the duty of loyalty (A) self dealing (benefit to detriment) (B) usurping P's opportunity (C) making a secret profit at the principal's expense without disclosure.

Principal Duties

Duty to Honor Terms of K Duty to Cooperate and not interfere with agent's performance. Duty to Compensate Principals must compensate agents reasonably for their services unless the agent has agreed to act gratuitously. However, when an agent has intentionally breached his fiduciary duties then the principal may, in addition to other remedies, refuse to pay compensation. Duty to reimburse The principal (1) owes the agent a duty to indemnify for all expenses and losses reasonably incurred in discharging authorized duties unless (2)the losses were solely the agent's fault.

Actual Express Authority

Express authority is authority contained within the four corners of the agency agreement and those expressly granted by the principal.

Servant v. Independent Contractor

Factors: 1) amount of control P exerts 2) whether agent is engaged in distinct business 3) whether work is customarily under P's supervision 4) skill required in agent's occupation 5) who supplies tools and place of work 6) length of time engaged by P 7) whether paid by job or hour 8) whether P intended to create employment relationship 9) whether P is in business

Delegation

In general, if the authority given involves the agent using his own judgment, he cannot delegate his responsibilities absent an emergency or explicit agreement of the P. Delegation of such a duty would be a material change in understanding when a P has hired a particular person to perform a particular purpose.

Agency Authority Template

In order to determine if the principal is bound ...myst have authority to enter into K... Actual Express Authority Actual Implied Authority Termination of Actual Authority Apparent Authority Lingering Authority Ratification

Agent Duties

In return for reasonable compensation and expenses, agents owes principal several duties: (1) duty to perform responsibilities under the K, (2) duty of reasonable care (2) duty of loyalty and (3) duty to obey instructions, (4) duty to notify the principal of any important matters concerning the agency. If breached, the principal can recover (1) losses caused by the breach and (2) disgorge the agents profits

Agent's Remedies

K remedies, tempered by duty to mitigate - Possessory lien for any $$ due to P, including compensation

Types of Principals

Looking at time of transaction: Disclosed - notice of agency and principal Undisclosed* - no knowledge Partially Disclosed* - knowledge of agency; no knowledge of principal *Agent is personally liable on al Ks entered into for principal. Otherwise, normally no personal liability.

Formation

Method: intention manifested by action (express/implied/conduct) or operation of law Capacity Consent.

Third Party Liability

Principal Liability to 3P: A principal is liable for a K entered into with 3rd Party, if the agent acts with principal's authority. Agent Liability to 3P: An agent is liable to the 3P if: (1) the agent makes an implied warranty that she has the authority to enter the K and does not (limited to actual damages), (2) All of the parties intend that the agent be treated as a party as a party to the K, (3) the principal's identity is undisclosed or is unknown. 3P Liability: A principal may sue the 3P to enforce the K unless the agent fraudulently concealed the principal's identity. Both principal and agent may be sued by 3P but 3P must elect which party to hold liable before judgment is issued.

Subagents

Principal is not liable for actions of subagents unless there is assent, benefit and control. The agent is liable to Principal for actions of his subagents and the subagent is always liable to the agent.

Termination of Actual Authority

Termination of actual authority occurs by either party's unilateral termination.

Lingering Authority

Where an agent's actual authority has terminated he will have apparent authority to act on the principal's behalf as to all third parties with whom the principal knows he dealt with unless and until the third parties receive either actual or constructive notice of the termination. However, death or incompetency of the principal terminates all authority of the agency w/out notice to either the agent or third party. Where an agent's actual authority has been terminated but third parties rely on written authorization of agency, the agent's apparent authority is not considered terminated. The principal must take back all written certificates of agency and authority in order to terminate authority.

Equal Dignity Rule

if a K must be in writing, the grant of authority to an agent to enter into such K on behalf of the P must also be in writing.

Respondeat Superior

must have 1) employer/employee relationship; and 2) conduct w/in the scope of employment