VA Bar Exam: Agency

What do you need to establish an agency relationship?

1) An agreement b/w agent and principal 2) That agent will act on behalf of the principal 3) Subject to the principal's control

How can a principal be directly liable for the agent's torts?

1) Authorized or ratified conduct 2) Negligent agent selection & supervision 3) Non-delegable duties

When is work-related travel within the scope of employment?

1) Driving to work for commute: No 2) Driving to work for a commute in a company car: Maybe, if company asserts control over how car is used 3) Travel from office to client meeting: Yes

Duties of an agent

1) Duty of loyalty: avoid self-interested acts 2) Duty of care: reasonable diligence, measured by local community standards 3) Duty to obey principal's lawful & reasonable instructions 4) Provide relevant information to principal 5) Keep and render accounts 6) Other contractual duties

Duties of a principal

1) Duty to treat agent fairly and act in good faith 2) Duty to honor the terms of any contract with the agent, e.g., compensation 3) Duty not to interfere with agent's work 4) Duty to indemnify agent for losses incurred in connection with the agency relationship (except for losses arising out of agent's own negligence or illegal acts)

Employer vs. non-employer principals

1) Employer principals: greater control over detailed activities of agent 2) Non-employer principals: looser control over day-to-day activities

Frolic vs. detour

1) Frolic: personal errand that is a significant detour not within scope of employment 2) Detour: tiny deviation from route for a personal errand is within the scope of employment

General vs. special agents

1) General: broad authority over many takss 2) Special: limited authority over maybe one single task

Independent contractor agents vs employee agents

1) Independent contractors agents: high level of independence 2) Employee agents: tasks generally completed under employer's direction

What does the duty of loyalty consist of?

1) May not deal with principal as an adverse party without principal's knowledge 2) May not acquire an unapproved material benefit 3) May not usurp a business opportunity 4) May not compete with the principal 5) Duty of full disclosure & fair dealing 6) May not use confidential information for private gain

When does an agent act within the scope of employment?

1) Performing work that's been assigned by the principal 2) Engaging in a course of conduct that is subject to the principal's control

Requirements for a successful ratification

1) Principal must ratify the entire contract 2) Principal must have the legal capacity to enter into the deal 3) Ratification must be timely 4) Principal must have knowledge of all material facts

What capacity is required to form an agency relationship?

1) Principal: capacity to consent to agency relationship & underlying transaction 2) Agent: capacity to consent to what he was appointed to do

How can a principal be vicariously liable for the agent's torts?

1) Respondeat superior 2) Apparent authority

Ways to terminate an agent's authority

1) Terminate agency relationship 2) Revoke the authority as principal 3) Dramatic change in circumstances 4) Passage of reasonable period of time 5) Death of principal 6) Death of agent 7) Loss of capacity by principal 8) Breach of fiduciary duties by the agent

When can the third party assert an estoppel claim?

1) Third party believes a transaction was formed for the principal 2) Principal intentionally or carelessly caused that belief 3) Third party incurs a detrimental change in position

When does an agent become personally liable on a contract?

1) Third party knows about the existence of the principal but not her identity 2) Third party has no notice of the principal's existence 3) Agent agrees to be personally liable

Vicarious liability for torts under apparent authority

A principal is liable for the tort of an agent when the agent's appearance of authority allow him to commit a tort. Key elements: 1) Third party reasonably believes that the agent acted with actual authority 2) Belief can be traced to some manifestation by the principal

Direct liability for torts that are authorized or ratified

A principal is liable if she authorizes or intends tortuous conduct by an agent

Apparent authority

Agent's authority is derived from the third party's reasonable perception of the authority granted to agent by principal

Agent's warranty of authority

An agent purporting to bind the principal grants an implied warranty of authority to the third party. If agent lacks authority, then the warranty is breached and agent is liable for breach of contract

Subagent

An agent who has been appointed by another agent to help with a task for the principal

Fraudulent concealment

Arises when either the principal or agent has notice that the third party would not wish to deal with the principal. If the agent nevertheless contracts with the third party for the principal and fails to make an affirmative representation about the principal's identity, the third party may avoid the contract.

When can an agent appoint a subagent?

If agent has actual or apparent authority to do so

Actual express authority

Involves communication from principal to an agent, a manifestation to the agent that causes the agent to reasonably believe that he is authorized to act on behalf of the principal

Does an agency relationship require consideration?

No

Actual implied authority

No explicit instruction from the principal, but the agent is understood to be given authority to contract for activities that are properly related the agent's reasonable understanding of his objectives

Does an agency agreement need to be in writing?

No, only in a few special circumstances, e.g., property, power of attorney. Under the equal dignity rule, it only needs to be in writing if the underlying transaction needs to be

Implied authority to delegate

Normally, agents lack this power, except for: 1) Mechanical acts 2) Customary acts in this sphere of business 3) Acts impossible for agent to perform himself

Election of remedies doctrine

Once third party learns of principal's existence, she must usually choose to hold just one party liable

When will an imposter bind the principal under apparent authority?

Only if it is negligent for the principal to allow the agent to have the appearance of actual authority

Negligent hiring/control

Principal is directly liable if she negligently hires an agent or fails to provide reasonable supervision

Respondeat superior

Principal is liable for the torts of an agent when: 1) Agent is an employee agent ("servant") 2) Tort is committed by the agent in the scope of the employment

When is a principal bound by acts of the agent?

When the agent has actual or apparent authority, when the principal is estopped from denying an agency relationship, or when the principal ratifies the contract

Is the agent responsible to the principal for the subagent's conduct?

Yes

Does the subagent owe duties to the principal?

Yes, a duty of loyalty

Can minors be agents?

Yes, as long as they can manifest assent to agency

Is the principal responsible for the actions of the subagent?

Yes, to the same extent he would be liable if the agent had taken the action