LAW 231 CH. 20

Exceptions to the Equal Dignity Rule:

1. An executive officer of a corporation NORMALLY can conduct ordinary business TRANSACTIONS without obtaining written authority from the corporation. 2. When the agent acts in the PRESENCE of the principal, the rule does not apply. 3. When the agent's act of signing is merely a FORMALITY, then the agent does not need written authority to sign.

the four typical duties that the principal has to the agent:

1. Compensation 2. Reimbursement and indemnification 3. Cooperation 4. Safe working conditions

Termination of an Agency by Operation of Law:

1. Death or Insanity. Automatic on the death or insanity of EITHER the principal or the agent (expect when the agency is coupled with an interest). 2. Impossibility-DESTRUCTION of the specific subject matter. Applies any time the agency cannot be performed because of an event BEYOND the parties' control. ***No notice required, automatic on the HAPPENING of the event. 3. Changed CIRCUMSTANCES. Events so unusual that is would be INEQUITABLE to allow the agency to continue to exist. 4. Bankruptcy. Bankruptcy PETITION (not mere insolvency) usually terminates the agency. 5. War between principal's country and agent's country. Automatically suspends or terminates agency -no way to ENFORCE legal rights.

How the courts determine employee or independent contractor status:

1. How much CONTROL does the employer exercise over the details of the work? 2. Is the worker engaged in an OCCUPATION of business distinct from that of the employer? 3. Is the work usually done under the employer's direction or by a SPECIALIST without supervision? 4. Does the employer SUPPLY the tools at the place of work? 5. For how long is the person EMPLOYED? 6. What is the method of PAYMENT- by time period or at the completion of the job? 7. What degree of SKILL is required of the worker?

An agency relationship may be terminated by:

1. Lapse of time. When an agency agreement specifies the TIME PERIOD during which the agency relationship will exist, the agency ends when that time period expires. 2. Purpose achieved. If an agent is employed to ACCOMPLISH a particular objective, when that objective is satisfied, the agency automatically ends. 3. Occurrence of a specific event. When an agency relationship is to terminate on the HAPPENING of a certain event, the agency automatically ends when the event occurs. 4. Mutual agreement. The parties to an agency can cancel (rescind) their contract by mutually agreeing to TERMINATE the agency relationship, even if it was for a specific (longer) duration. 5. Termination by one party. As a general rule, EITHER party can terminate the agency relationship.

the five duties the agent owes the principal:

1. Performance 2. Notification 3. Loyalty 4. Obedience 5. Accounting

Requirements for Ratification:

1. The agent must have acted on behalf of an IDENTIFIED principal who subsequently ratifies the action. 2. The principal must know all of the material FACTS involved in the transaction. 3. The principal must AFFIRM the agent's act in its entirety. 4. The principal must have the legal capacity to AUTHORIZE the transaction at the time the agent engages in the act and at the time the principal ratifies. 5. The principal's affirmation (ratification) must occur before the third party WITHDRAWS from the transaction. 6. The principal must OBSERVE the same formalities when ratifying the act as would have been required to authorize it initially.

Factors determining whether a particular act occurred within the course or scope of employment:

1. Whether the employee's act was AUTHORIZED by the employer. 2. The time, place, and PURPOSE of the act. 3. Whether the act was one COMMONLY performed by the employees on behalf of their employers. 4. The extent to to which the employer's INTEREST was advanced by the act. 5. The extent to which the PRIVATE interest of the employee were involved. 6. Whether the employer FURNISHED the means by which and injury was inflicted. 7. Whether the employer had reason to know that the employee would PERFORM the act in question and whether the employee had done it before. 8. Whether the act involved the commission of a SERIOUS crime.

the two general categories of how termination of an agency can occur:

1. by act of the parties 2. operation of law

two situations in which the courts may find an agency relationship in the absence of a formal agreement:

1. in family relationships 2. in emergency situations

the two situations in which an agency relationship is unenforceable:

1. ones created for a purpose that is illegal 2. ones contrary to public policy

Respondeat Superior

A doctrine under which a principal or an employer is held liable for the wrongful acts committed by agents or employees while acting within the course and scope of their agency or employment.

Disclosed principal

A principal whose identity is known to a third party at the time the agent makes a contract with the third party.

Undisclosed principal

A principal whose identity is unknown by a third person, and the third person, and the third person has no knowledge that the agent is acting for a principal at the time the agent and the third person form a contract.

Partially disclosed principal

A principal whose identity is unknown by a third person, but the third person knowns that the agent is or may be acting for a principal at the time the agent and the third person form a contract.

Notary public

A public official authorized to attest to the authenticity of signatures.

agency

A relationship between two parties in which one party (the agent) agrees to represent or act for the other (the principal).

Power of attorney

A written document, which is usually notarized, authorizing another to act as one's agent; can be special (permitting the agent to do specified acts only) or general (permitting the agent to transact all business for the principal).

Which of the following is NOT one of the four ways in which an agency relationship can arise?

Agency by federal law

fiduciary

As a noun, a person having a duty created by his or her undertaking to act primarily for another's benefit in matters connected with the undertaking. As an adjective, a relationship founded on trust and confidence.

Express authority

Authority expressly given one party to another. In agency law, an agent has express authority to act for a principal if both parties agree, orally or in writing, that an agency relationship exists in which the agent had the power (authority) at act in the place of, and on behalf of, the principal.

Implied authority

Authority that is created not by an explicit oral or written agreement but by implication. In agency law, implied authority (of the agent) can be conferred by custom, inferred from the position the agent occupies, or implied by virtue of being reasonably necessary to carry out express authority.

Apparent authority

Authority that is only apparent, not real. In agency law, a person may be deemed to have had the power to act as an agent for another party if the other party's manifestations to a third party let the third party to believe that an agency existed when, in fact, it did not.

True/False: An agency coupled with an interest is created solely for the principal's benefit.

False

True/False: When a person who is not an agent makes a contract on behalf of a principal, the principal cannot benefit from the contract.

False

Equal dignity rule

In most states, a rule stating that express authority given to an agent must be in writing if the contract to be made on behalf of the principal is also required to be in writing.

Vicarious Liability

Legal responsibility placed on one person for the acts of another.

independent contractor

One who works for, and receives payment from, an employer but whose working conditions and methods are not controlled by the employer. An independent contractor is not an employee but may be an agent.

Randy instructs his agent, Antonio, to threaten to beat up Martina if she refuses to sell Randy a piece of artwork. Antonio follows his instructions but ends up beating Martina when she refuses to sell the item. In this situation,

Randy and Antonio are liable.

When the principal does not ratify an unauthorized contract resulting in an unaccepted offer, the third party can then do what?

Revoke the offer at any time without liability

Ratification

The act of accepting and giving legal force to an obligation that previously was no enforceable.

What is the one condition listed below that is NOT necessary for ratification?

The third party must withdraw from the transaction before the principal ratifies it.

Under what situation does an agent have emergency powers?

To protect the principal's property and rights when the agent is unable to communicate with the principal.

True/False: A court can apply the doctrine of agency by estoppel when a principal has given a third party reason to believe that an agent has authority to act.

True

True/False: A principal who authorizes an agent to commit a tort may be liable to persons or property injured because the act is considered to be the principal's.

True

True/False: Agency relationships can exist outside an employer-employee relationship, and thus agency law has a broader reach than employment law does.

True

True/False: Apparent authority usually comes into existence through a principal's pattern of conduct over time.

True

True/False: Generally, the liability of the principal will depend on whether the agent was authorized to form a contract.

True

True/False: Today standard agency principles also apply to e-agents.

True

An ordinary power of attorney ends when:

a person giving the power dies or becomes incapacitated

An employer is liable when an employee commits the tort of assault and battery or false imprisonment while __________ within the scope of employment.

acting

Alicia buys a piece of pottery from Woodward for her principal, Quan. Woodward knows that Alicia is buying on behalf of someone other than herself, but does not know the identity of that person. Quan is

an unidentified principal

When a third party reasonably believes a person has authority to act on another's behalf, even if that person does not have such authority, the situation is known as

apparent authority

If an agent commits a crime, the principal (employer) is not liable unless the principal participated in the crime by ________________ .

conspiracy

An agent's implied authority can be inferred by

custom

Federal statutes governing employment _____________________ apply only when an employer-employee relationship exists.

discrimination

Maureen, an elderly widow, gives her young neighbor, Leslie, a written power of attorney, which means that Leslie now:

has expressed authority to act as Maureen's agent

Under the equal dignity rule:

if a contract must be in writing to be executed, an agent's authority must also be in writing

Protection under employment-discrimination statutes provides a significant __________________ for workers to claim that they are employee rather than independent contractors.

incentive

Facts and circumstances must show that an ordinary, prudent person familiar with business practice and custom would have been _______________ in concluding that the agent had authority.

justified

Whether a worker is an employee or an independent contractor can affect the employer's _____________ for worker's actions.

liability

An employer is __________ for permitting an employee to engage in reckless actions that can injure others.

liable

In a partnership, if one of the partners commits a tort or a crime, the partnership itself can be held liable for the _______.

loss

An agent's authority to act for a principal:

may be actual or apparent

The principal is always directly responsible for an agent's _____________________ made within the scope of the agent's authority.

misrepresentation

The agent has the right to be compensated, to be reimbursed and indemnified, and to have a safe working environment. What other right does the agent also have in performing his agency duties?

no interference by the principal

Louisa is moving from New York to Los Angeles. Grover agrees to act as her agent to sell her New York apartment. As her agent, Grover owes Louisa all of the following duties EXCEPT:

payment

It is the deeds or statements of the _______________ that create an agency by estoppel.

principal

Regina asks Warren, a housepainter, to paint her house but he is too busy, so he contracts with Maggie as an independent contractor to do the job. While Maggie is painting, she accidentally drops a one-gallon can of paint on Regina's head causing serious injuries. In this situation, Warren is:

probably not liable for Regina's injuries.

With an agency at will the principal who wishes to terminate must give the agent

reasonable notice

For an agency by estoppel, the third person must prove that he or she ____________________ believed that an agency relationship existed.

reasonably

If the Internal Revenue Service decides that an employee is misclassified as an independent contractor, the employer will be ___________________ for paying Social Security, withholding, and unemployment taxes.

responsible

When a principal knows that an agent is not accurately advised of facts but does not correct either the agent's or the third party's impressions, the principal is ___________________ .

responsible

An agency CANNOT be terminated by

the principal's calling for an accounting

A principal could be liable for an agent's ______________ of sanitation rules.

violation