Law Test 3

Main Purpose doctrine

"Leading object rule". An exception to the suretyship provisionWhere the object or purpose of the promisor is to obtain an economic benefit for himself, the promise is NOT within the statute.

Employment relationship

"Master-servant relationship". An employee is an agent whose principal controls or has the righ tot control agent whose principal controls or has the right to control the manner and means of the agents performance of work

those the principal has apparently authroized

.The principal and the third party are bound to those contracts the principal actually authorizes plus...

Agency

A consensual relationship in which one person (the agent) acts as a representative of or otherwise acts on behalf of another person (the principal) with power to affect the legal rights and duties of the principal)

Satisfaction of a third party

A contract may provide that performance be approved by a third party.

satisfied

A contracting party is not obligated to pay unless

While still a minor

A minor has no power to ratify a contract, when?

Liability for Necessaries

A minor is liable for the reasonable value of necessaries actually delivered to the minor (items that reasonably supply a person's needs).

Liability on Contracts

A minor's contracts are voidable at the minor's optioin

Unauthorized acts of agent

A principal who negligently conducts activities through an employee or other agent is liable for harm resulting from such conduct. Principal is liable if he negligently 1. selects agents 2. retains gents 3. trains agents 4. supervises agents or 5. otherwise controls agents.

Land contract provision

A promise to transfer "any interest in land" is within the Statute. Must be in writing

The rule (Parol evidence rule)

A written contract that contains the complete agreement of the parties may not be MODIFIED in any way with the use of parol (oral or written) evidence

Duty to account fo financial benefits (fiduciary duty)

Account for any financial benefit, bribes, kickbacks, gifts, secret profits, received as direct result of transactions conducted on behalf of principal.

Duty of obedience

Act only as authorized, obey all reasonable, legal, ethical instructions and directions

Duty of diligence

Act with reasonbale care/skill in performing work

Two types of authority

Actual (given by actualy consent) and Apparent (given by acts or conduct of principal)

A minor may disaffirm a contract when?

After becoming an adult

Contract liability

Agent change slegal status of principal by binding principal through actual or apparent authority; depending on disclosed, partially disclosed, or undisclosed

Misappropriation (fiduciary duty)

Agents possessing principal's property cannot use it for their own benefit

Independent contractors

Agents who are not employees. The principal has the right of control over the agent, the principal does not control the manner and menas of the agent's performance. Contract with another to do a particular job.

One year provision

All contracts that CANNOT POSSIBLY be fully performed within one year are within the Statute.

not all agents are employees.

All employees are agents but...

the formation of the agency relationship: with its termination

An agents fudciary duty to a principal generally begins with _________ and ends with

Uniform Electronic Transactions Act (UETA)

Applies only to transactions between parties each of which has agreed to conduct transactions by electronic means.

Suretyship provision

Applies to a contractual promise by a surety (promisor) to a creditor (promisee) to perform the duties or obligations of a third person (principal debtor) if the principal debtor does not perform.

Direct liability or principal

Arise one of two ways...1. For harm resulting from h is directing an gent to commit a tort 2. Fails to exercise reasonable care in employeing competent agents (negligence)

Apparent authority

Arising out of the principal's behavior that creates in another's mind that reasonable, justified belief that the agent has actual authorityBased upon acts or conduct of the principal that lead a third person to believe that the agent, or supposed agent, has actual authority, upon which blief the third person justifiably relies. May consist of words or actions of the principal as well as other facts and circumstances that induce the third person reasonably to rely upon the existence of an agency relationship

Dissaffirmance

Avoidance of the contract the right of a minor to avoid a contract through words or conduct. may be done during minority and for a reasonable time after reaching majority.

Principal's Remedies (Fiduciary duty)

Breach of duty triggers agent discharge, avoiding transaction; tort/contract recovery against agent or restitution; agents loss of right to compensation

Parol evidence rule

By signing the agreement, the parties have declared it to be their contract, and the terms it contains represent the contract they have made. Neither party is later permitted to show that the contract they made differs from the terms and provision that papear in the written agreement.

The possibility test

Can the contract possibly be performed within one year

Contractual duties - duties of principal to agent

Compensation, reimbursement, indemnification

act solely in interest of princ ipal, not own interest or in interest of another. Not represent principal in any transaction in which agent has a person interest; Not act on behalf of adverse parties to a transaction without principals consent; Not dealing with the principal as an adverse party

Conflicts of interest in Fiduciary duty...an agent must..

Principals death or loss of capacity and effect of termination of agency

Consistent with the Third restatement but not the second, a principals death or loss of capacity does NOT automatically end the agents apparent authoiryt. In these instances, apparent authority terminates when the third party has 1. notice of the principals death or 2. has notice that the principals loss of capacity is permanent or that the principal has been adjudicated to lack capacity.

Tort Duties

Disclose actually/implied known risks invloved in agency; provide reasonably safe conditions, deal with agent fairly and in good faith, and warn of unreasonable risks.

Third Restatement

End of actual authority does not itself end apparent authority; apparent authority ends when third party no longer reasaonbly blieves that agent acts with actual authority--> It is reasonable for a third party to assume that an agent's actual authority continues, unless and until a third party has notice of circumstances that make it unreasonable to continue that assumption.

Compliance with the statute of frauds

Even though a contract is within the Statute it will be enforced if there is a sufficient writing, memorandum or record that complies with the requirements of the statute of frauds

Principal is disclosed

Existence and identity known (when an agent and a third party interact...a third party has notice that the agent is acting for a principal)

Principal is undisclosed

Existence/identity unknown, the third part has no notice that the agent is acting for a principal.

Actual notice

Express statement to a third party of the termination of an agency relationship. In fact knowledge expressly communicated--> written or oral. If by mail, it is effective upon delivery, but not upon dispatch.

Void

Guardianshiop for incompetency (void or voidable)

"Qui facit per alium, facit per se"

He who acts through another, acts himself-->accurately describes the relationship between principal and agent.

Constructive notice

Implied/inputed knowledge

Tort liability of Principal

In addition to being contractually liable to third persons, a principal may be liable in tort to third persons because of the acts of her agent. It arises direcrly/indirectly (vicariously) from agent's authorized or unathorized acts.

Contracts within the statute of Frauds

Include certain oral contracts only, state (UETA) and federal (E-sign) legislation removing certain Statute of Frauds writing requirements as obstacles to enforcing electronically enetered (internet, email, machines) contracts

Vicarious liability for principal for unauthorized acts of an agent

Indirect legal responsbility for another's act depends on whether agent is an employee; principal liable for unathorized tort committed by employee in course of employement; principal not liable for tort commited by indpendent contractor.

Voidable

Intoxication (void or voidable)

Ratification

Is binding on the minor (affirmation of the entire contract) but only if it occurs after the minor reaches legal age

(Agent had authority) 1. Express Authority 2. Implied Authority 3. Apparent Authority (Principal ratified) 1. Express or 2. Implied

Issue: Liability of principal for contract by agent. Law: Liabile if

1. Principal was negligent (hiring, supervision, retention) 2. Agent was authorized to commit tort 3. Tort was occurred within agents scope of employment

Issue: Liability of prinicpal for tort by agent. Law: Liable if...

The effect of Ratification

It's equivalent to prior authority-->means that the effect of ratifaction is substantially the same as if the agent or purported agent had been actually authorized when she perfomed the act. The respective rights, duties and remedies of the principal and the third party are the same as if the agent had originally possessed actual authority

Principal is partially disclosed/unidenfitied principal

Known existence but not identity

Original promise

Made by a promisor to become primarily liable is not within the Statute of Frauds

Duty to account

Maintain, provide true/complete accounts of money, property received, expended on principals behalf; keep principals property seperate

Electronic Signatures in Global and National Commerce (E-SIGN)

Makes electronic records and signatures valid and enforceable across the US for many types of transactions in or affecting interstate of forgein commers. Doesn't require any person to agree to use or accept electronic records or electronic signatures.

Full performance by one party

Makes the promise of the other party enforceable

Voidable

Mental illness or defect (void or voidable)

Voidable

Minority (void or voidable)

Agents

More emphasis is place on who's duties? Principal or agent?

Duty not to compete (Fiduciary duty)

Not compete with principal nor act on bhealf of a competitor

Confidential information (fiduciary duty)

Not use/disclose confidential information, unique business methods, trade secrets, business plans, customer lists obstained in course of agency for own benefit or contrary to interest of principal; May reveal confidental information relation to principal's criminal behavior.

To be effective, ratification must

Occur before the third party gives notice of his withdrawal to the principal or agent. And the purpoted principal must have been in existence when the act was done.

Indemnification (duties of principal to agent)

Pay agent for losses incurred while acting as directed

Reimbursement (duties of prinicpal to agent)

Pay back authorized payments bade by agent, paid out of agent's own pocket

Concurrent conditions

Performance by two promisors that are to take place at the SAME TIME

Duties of agent to principal

Primarily determined by the express and implied terms of any contract terms or impoesd by law, liability of agents for losses caused by breach of duties.

Authorized acts of agent

Principal who authroizes his agent to commit a tortious act with respect to the property or person of another is liable for the injury or loss that person sustains.

Requirements of ratification

Principal's intent to ratify entire act or contract with knowledge of all material facts; demonstrated by express language or implied from conduct

Actual express authority

Principal's spoken/written words communicated to agent. Deoes not depend on the third party having knowledge of the manifestations or statemnts made by the principal to the agent

Actual implied authority

Principal's words/conduct creating impression of agency, based on custom, trade usage of business. The bigger the title, the more authority and more implication.

Second Restatement

Termination by operation of law ends apparent authority without notice to third parties. Termination by act of parties ends apparent authority with actual notice or constructive notice to third parties depending on specific situation

Respondeat Superior

The doctrine that makes the principal liable for the agents torts. Liability without fault based on rationale that person who CARRIES OUT business activites through employees or agents, not independent contractors, should be liable for their torts committed while carrying out business purposes. "Let the superior respond". Must be acting within the normal scope of employment for it to take effect.

Effect of noncompliance to

The oral contracts are unenforceable

1. acts in good faith 2. discloses all material facts that the agent knows, has reason to know, or should know would reasonably affect the principals judgement and 3. otherwise deals failry with the principal

The principal may agree th at the conduct by an agent that would otherwise constitute a breach of fudciary duty shall not constitute a breach of that duty provided that in obtaining the principals consent the agent...

Ratification

The principals confirmation or adoption of an agent's unauthorized act. The confirmation or affirmance of by one person of a prior unathorized act performed by another who is his agent or who purports to be his agent. It binds principal and third party as if agent had been authorixed.

The promisor is not primarily liable

The promise is in a suretyship provision is said to be COLLATERAL, meaning...

three parties and two contracts

The rule of suretyship provision only applies to cases involving

General contracts provision

The writing must specify the parties to the contract, the subject matter, the terms, and it must be signed by the party to be charged or by her agent. Must be writtin with essntial terms and one signature

Computation of time

The year runs from the time the agreement is made

Express Condition

These are xplicilty set forth in language. "Provided that", "on condition that" "if" "subject to", "while", "after", "upon"

Duty to inform

Use reasonable efforts to privde relevant, accurate information to principal; notice to agent is notice to principal

Fuduciary Duty

Utmost loyalty and good faith. An agent has this duty act loyally for the principals benefit in all matters connected with the agency relationship.

The liability of the principal under respondeat superior is

Vicarious or derivate and depnds upon proof of wrongdoing by the employee within the scope of his employment

1. Control 2. Distinct bussiness 3. Skill req'd 4. Provision of tools and instrumentalities 5. Place of work 6. Length of employement 7. Payment method 8. Relationship to employer's business 9. Parties belief 10. Provision of Assistent

What are the 10 Factors in determing whether an agent is an employee

1. Employer has no right to control manner and means by which project is done. 2. Person hires out to a number of customers 3. Special expertise required 4. Person provides his own tools and instrumentatlites 5. Other than employers place of business (Work is done in his own shop) 6. Employment is done once the project is done 7. Paid by the whole project 8. The person is not part of the regular business 9. He is called an independent contractor 10. He's by himself at the job site.

What are the 10 factors /persuasion arguments that the court look at and conclude that the person is an independent contractor

1. Employer regulates how things are done 2. Person only works for this employer 3. No special skill 4. Employer provides the tools and instrumentatlies 5. Employers place of business 6. Employer has right ot make the additional assignements 7. Paid by the hour 8. Part of regular business 9. Called employee 10. The mployer is at the business-->provision

What are the 10 factors/persuasion arguments that the court look at and conclude that the employee is an agent

1. A contract that is partly written and partly oral 2. A clerical or typographical error that obviosuly does not represent the agreement of the parties 3. Evidence showing the lack of contractual capacity of one of the parties 4. A defense of fraud, misrep, duress, undue influence, mistake, illegality or unconsciouabilty 5. A condition precedent to which the parties agreed orally at the time tehy executed the written agreement and to which they made the entire agreement subject 6. A subsequent mutual recission or modification of the written contract 7. Parol evidence is admissible to explain amgious terms in the contract 8. The rule does not prevent a party from proving the existence of a seperate, distinct contract betwen the same parties.

What are the 8 situations to which the rule does not apply

Employment relationship and Independent contractors

What are the two other legal relstionships that overlap with agency?

The agent's actual authroity ceases.

What happens when an agency termintes

Scope of agency purposes

Whatever activity persons may accomplish personally may be done through an agent. Conversly, whatever he cannot legally do himself, he cannot authorize another to do for him.

1. (What?) Agent engaged in services for which hired 2. (Where) Agent within authorized geographic areas 3. (When) Agent within working hours 4. (Why) Agent serving (at least in part) principals interest.

When talking about the law of liability of principal for tort by agent and the third law...tort occured within agents scope of employement...The course of employement is a function of what different factors?

Negligent hiring

When the principal does not exercise proper care in slecting an agent for the job to be done...didn't do a good job job-screening.

Compensation (duties of principal to agent)

agent right unless agency gratuitious; duty to pay reasonable value of authroied serivces performed when no definite sum state; loss of righ tot compensation triggerd by breaching duties of obedience, loyalty or proper performance on contract

Respondeat superior creates...

an economic incentive for employers to exercise care in choosing, training, and supervising employees.

Conditions

is an event whose happening or non-happening affects a duty of performance under a contract

Minor

persons who are under the age of majority (usually 18 years).

Incompetent Persons

persons who lack mental capacity

Once ratification is made it can never be

revocable

A person may ratify an act if

the actor acted OR purported to act on the persons behalf.

Duty of good faith

within scope of relationship, agent must act reasonably, not damaging principals enterprise.