Chapters 35 & 36: Agency Law

(Ch 35) Agent vs Principal

An agent is a person who agrees to represent or act for another, called the principal.

(Ch 36) Examples of Implied Authority

(1) Hired to manage a business (2) Given full control over a real property (3) Appointed to sell the principal's goods

(Ch 36) Apparent Authority is based on...

(1) Manifestations by the principal to the third party (2) (that cause the) 3rd party to believe reasonably that the agent has such authority

(Ch 35) Actual Authority

2 Forms: (1) Express Authority: actual authority that the principal has manifested to the agent in very specific or detailed language. (principal telling agent to remove the tree) (2) Implied Authority: to act in a way the agent reasonably believes is necessary to perform his duties (agent choosing the method to cut the tree)

(Ch 36) Scope of Employment

4 Tests: (1) It was of the kind that the employee was employed to perform (2) Occurred substantially within the authorized time period (3) Occurred substantially within the location authorized by the employer (4) It was motivated at least in part by the purpose of serving the employer

(Ch 36) Types of Principals

4 Types: (1) Disclosed: a 3rd party knows or has reason to know - 1. That the agent is acting for a principal 2.The principal's identity (Ex. Google agent sells ads space to Toyota. Google is disclosed principal) (2) Unidentified: the 3rd party - knows or has reason to know that the agent is acting for a principal but lacks knowledge or reason to know the principal's identity (Ex. Agent neglects to disclose principal's identity for better bargaining position) (3) Undisclosed: 3rd party lacks knowledge or reason to know both the principal's existence and the principal's identity. 3rd party reasonably believes that the agent is the other party to the contract. Thus, the 3rd party may hold an agent liable on contracts made for an undisclosed principal. (4) Nonexistent: agent who purports to act for a legally nonexistent principal is personally liable when the agent knows or has reason to know the principal does not exist Treadwell v. J.D. Construction Co. (pg. 1018)

(Ch 36) 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 employment.

(Ch 36) Estoppel

A person may be liable for an actor's transaction with a 3rd party who justifiably is induced to make a detrimental change in position because he believed the actor had authority to act for the person Guidelines: (1)Intentionally or carelessly cause the third party's belief, or (2) Having notice that such belief might cause a third party to change his position, fail to take reasonable steps to notify the third person of the facts. Different from apparent authority because it does not require that the purported principal has made any manifestation that the purported agent can act for her. Frontier Leasing Corp. v. Links Engineering, LLC (pg. 1015)

(Ch 35) Subagent

Agent appointed by another agent with the knowledge and consent of the principal.

(Ch 35) General Agent

Agent continuously employed to conduct a series of actions

(Ch 35) Duty of Loyalty

Agent must subordinate his personal concerns by: (1) Avoiding conflicts of interest with the principal (2) Not disclosing confidential information received from the principal. North Atlantic Instruments, Inc. v. Haber (pg. 998)

(Ch 35) Special Agent

Agent that is given the authority to perform specific tasks.

(Ch 35) Gratuitous Agent

Agent who receives no compensation for his services

(Ch 35) Agent Authority

Agent's ability to affect his principal's legal relations. 2 main forms: (1) Actual Authority (2) Apparent Authority

(Ch 35) Apparent Authority

Depends on what the principal communicates to the 3rd party—either directly or through the agent. The principal's communications to the agent are irrelevant unless they become known to the 3rd party or affect the agent's behavior Agents CANNOT give themselves apparent authority Apparent authority does not exist where an agent creates an appearance of authority without the principal's consent (direct or tacit). 3rd party must reasonably believe in the agent's authority

(Ch 36) Direct Liability

Principal is liable for his own tortious conduct involving the use of agents Examples of direct liability for negligence: (1) Giving the agent improper or unclear instructions (2) Failing to make and enforce appropriate regulations to govern the agent's conduct (3) hiring an unsuitable agent (4) Failing to discharge an unsuitable agent (5) Furnishing an agent with improper tools, instruments, or materials (6) Failing to properly supervise an agent. Green v. Cosby (pg. 1022)

(Ch 36) Ratification

Process whereby a principal binds himself to an unauthorized act done by an agent, or by a person purporting to act as an agent. 2 Types: (1) Express ratification: principal manifests assent that his legal relations be affected, such as stating orally that they wish to be bound by a contract that has already been made. (2) Implied ratification: principal's conduct justifies a reasonable assumption that he consents to the agent's act.

(Ch 35) Fiduciary Duty

That duty owed by an agent to act in the highest good faith toward the principal and not to obtain any advantage over the latter by the slightest misrepresentation, concealment, duress or pressure. Sanders v. Madison Square Garden L.P. (pg. 1001)

(Ch 35) Employees vs Nonemployees

The most important of these factors is the principal's right to control the manner and means of the agent's performance or work. Employees typically are subject to such control. Nonemployee agents generally contract with the principal to produce a result and determine for themselves how that result will be accomplished. CBS Corp. v. FCC (pg. 995)