Business Law - Cheeseman - Chapter 29

Termination of Agency by Law can be by:

-Death of either principal or agent -Insanity -Bankruptcy of Principal -War

Termination of Agency by Act of Parties can be by:

-Mutual Agreement -Lapse of Time -Purpose Achieved -Occurrence of a specified event

Termination of an agency by operation of law

-The death of either the principal or agent -The insanity of either the principal or the agent -The bankruptcy of the principal - The outbreak of a war between the principal's country and the agent's country (No Duty to notify Third Parties)

Smith vs Delta Tau Delta, Inc

A national fraternity, Delta Tau Delta, gave its charters to a local fraternity at Wabash College. During a hazing incident someone died. Smiths sued and Delta Tau Delta claimed that the local fraternity were not their agents. The Courts sided with Delta

Incidental

Authority is IMPLIED from the conduct of the parties, custom, and usage of trade, or act INCIDENTAL to carrying out the agent's duties

Bosse vs Brinker Restaurant Corporation (Chili's)

Bosse and friends left a Chili's without paying another patron chased them, causing a high-speed chase, and then Bosse crashes into a wall. Bosse sues Chili's saying that the other patron caused the crash. Chili's claimed that the patron was not its agent. Court sided with Chili's

Notice of Termination

If the principal fails to give a notice of termination to third parties, the agent still has the authority to bind the principal to contracts. Direct Notice-notice to third parties who has dealt with the agent Constructive Notice- notice to third parties who has knowledge of the agency

Wrongful Termination

If the termination of the principal or agent breaches the contract, the other party can sue to recover damages

Creating Agent Relationships

People who lack contractual capacity cannot appoint agents (Insane/Minors) but the court can appoint someone to handle their affairs to enter into contracts. Agency Contracts are unenforceable if illegal or go against public policy (Hire to Kill / Unlicensed agents cannot perform the duties of a licensed professional)

Duty to Indemnify (Principal's Duty)

Principal owes the agent for the agent's losses b/c of the principal's misconduct

Termination of an Agency by Impossibility of Performance

Situation that makes fulfillment impossible -Destruction of Subject Matter - Loss of a Required Qualification - Change in Law

Contingency Fee

The Principal owes a duty to pay the agent an agreed-on contingency fee only if the agency is completed Example) If a lawyer agrees to a contingency fee, they will only get payment if they win

Apparent Agency

The agency that arises when a principal creates the appearance of an agency that in actuality does not exist (Misunderstanding of an agency) Principal is still bound by contract Example) Albert is a job candidate. And is taken on a ride-along. The manager makes a comment that causes a customer to believe that the candidate is an agent when they are not. If Albert enters into the contract, the principal is bound

Agency By Ratification

The agency that occurs when: 1. a person misrepresents himself as another's agent when in the fact he is not and 2. the purported principal ratifies the unauthorized act Example) A guy falsely claims to be his friend's agent and enters into a contract to buy a house. That friend can then ratify the contract and buy the house.

Exclusive Agency Contract

The principal cannot employee other agents if not the agent can recover damages

Power of Attorney

The principal gives an agent power to sign documents for them on their behalf. The agent is called an attorney-in-fact (Does not have to be a lawyer). General Power of Attorney - board powers Special Power of Attorney (Limited) - Restricted to powers on the agreement Durable Power of Attorney - remains effective even though the principal is incapacitated

Duty to Compensate (Principal's Duty)

a duty that a principal owes to pay an agreed-upon amount to the agent either upon the completion of the agency or at some other mutually agreeable time. If not, the fee paid is what is common in the industry and if not the principal owes a duty to the agent equal to what was received.

Duty to Account (Agent's Duty)

a duty that an agent owes to maintain an accurate accounting of all transactions undertaken on the principal's behalf. Also Requires 1) maintain a separate account for the principal and 2) use the principal's property in an authorized manner. Any property gained during the agency belongs to the principal. If the agent breaches the principal can sue

Agent

a party who agrees to act on behalf of an agency

Principal

a party who employs another person to act on his or her behalf

Principal-Agent Relationships

a relationship formed when an employer hires an employee and gives that employee authority to act and enter into contracts on his or her behalf

Employer-Employee Relationship

a relationship that results when an employer hires an employee to perform some task or service but the employee has not been authorized to enter into contracts on behalf of the employer

Principal-Independent Contractor Relationship

a relationship where an employer hires a person or business who is not an employee to perform a task on their behalf (Independent Contractors). The principal can authorize them to enter into contracts

Duty to Notify (Agent's Duty)

an agent owes a duty to notify the principal of important information, which often comes from third parties, concerning the agency. Imputed Knowledge = rule that says that the principal knows what the agent knows

Duty to Perform (Agent's Duty)

an agent's duty to a principal that includes (1) performing the lawful duties expressed in the contract and (2) meeting the standards of reasonable care, skill, and diligence implicit in all contracts. If not, the agent is liable to the principal for damages

Termination by an Unusual Change in Circumstances:

an unusual change that leads the agent to believe the principal's original instructions should no longer be valid

Implied Agency

occurs when a principal and an agent do not express create an agency, but it is inferred from the conduct of the parties. Example) A real estate gains implied agency if a water pipe breaks when the homeowner can not be contacted.

Express Agency

occurs when a principal and an agent expressly agree to enter into an agency agreement with each other. It can be oral written unless the Statute of Frauds states that it must be written.

Agency Law

the large body of common law that governs agency; a mixture of contract law and tort law

Agency

the principal-agent relationship; consent by one person to another that the other shall act on his half

Duty to Cooperate (Principal's Duty)

unless otherwise agreed, the principal owes a duty to cooperate with and assist the agent in the performance of the agent's duties and the accomplishment of the agency.

Duty to Reimburse (Principal's Duty)

unless otherwise agreed, the principal owes a duty to reimburse the agent for expenses incurred by the agent if the expenses were (1) authorized by the principal, (2) within the scope of the agency, and (3) necessary to discharge the agent's duties in carrying out the agency