Chapter 19 Relationship of Principal and Agent

Acts of Parties

-lapse of time -mutual agreement of the parties -revocation of authority -renunciation by the agent

Operation of Law

Death- of either the principal or the agent Incapacity- of either the principal or the agent -change in circumstances

Duty to Account

If you mishandle money you must show and tell people. You must disclose your mistake. an agent must maintain and provide the principal with an accurate account of money or other property that the agent has received or expended on behalf of the principal

Independent Contractor

a person who contracts with another to do a particular job and who is not subject to the others control

Irrevocable Powers

a power given as security- including an agency coupled with an interest- is irrevocable

Compensation

a principal must compensate the agent as specified in the contract, or for the reasonable value of the service provided, if no amount is specified

Formalities

agency may exist without consideration

Disclosed Principal

agent doesn't mention Principal and who they work for

Gratuitous Agency

an agency created with out an agents right to compensation.

Agent

any person able to act may act as an agent

Requirements of Formalities

appointments of agents for a period of more than one year must be in writing

fully disclosed principal

everything is said and informed to the principal

"qui faccio per alium, facit per se"

he who acts through another, acts himself

Principal

if the principal is a minor or an incompetent not under a guardianship, his appointment of another to act as an agent is voidable, as are any resulting contracts with third parties

Tort and Other Duties

include 1-the duty to provide an employee with reasonably safe conditions of employment 2-the duty to deal with the agent fairly and in good faith

Duty of Diligence

must act promptly and with reasonable care, and do what you can.

Duty to Inform

must communicate with clients and your principal

Employment Relationship

the employer has the right to control the manner and means of the employees performance of work

Reimbursement

the principal must pay back to the agent authorized payments the agent has made on the principals behalf. Secretary example: jane goes and buys printer paper with her own money the principal needs to reimburse her for that

Indemnification

the principal must pay the agent for losses the agent incurred while acting as directed by the principal

Scope of Agency Purposes

whatever business activity a person can he can may do through an agent

Duty of Good Conduct

within the scope of the agency relationship, an agent must act reasonably and refrain from conduct that is likely to damage the principals interests

Power of Attorney

written, formal appointment of an agent. States agents authority.

vicarious liability

you are responsible for your subordinates

Creation of Agency

Agency is a consensual relationship that the principal and agent may form by contract or agreement. The Restatement defines an agency relationship as "the fiduciary relationship that arises when one person (a principal) manifests assent to another person (an agent) that the agent shall act on the principals behalf and subject to the principals control, and the agent manifests assent or otherwise consents so to act."

Agents and Employees

Although all employees are agents, not all agents are employees and are referred to as independent contractors. Not all independent contractors are agents because the the person hiring the contractor has no right of control over the independent contractor.

Agent Function

An agent functions as an agent by dealing with third persons, thereby establishing legal relationships between the principal and those third persons. Agency is primarily governed by state common law.

Agency by Estoppel

Apparent Agency or Ostensible Agency arises when 1) a principal intentionally or carelessly causes a third party to believe that another person (the agent) has authority to act on the principals behalf. 2) the principal has notice of the third partys belief and does not take reasonable steps to notify the third party. 3) the third party reasonably and in good faith relies on the appearances created by the principal and the third party justifiably and detrimentally changes her position in reliance on the agents apparent authority.

Termination of Agency

Authority of agency is based upon the consent of the principal, the agency is terminated when such consent is withdrawn or otherwise ceases to exist. Two Forms: mutual agreement or accomplishment

Agency

Consensual relationship authorizing one party (the agent) to act on behalf of the other party (the principal) subject to the principals control

Duty of Obedience

an agent must obey all lawful instructions and directions of the principal

Fiduciary Duty

an agent owes a duty of utmost loyalty and good faith to the principal; it includes -conflicts of interest- I don't represent one client against the another or a former client. Don't serve two masters. -duty not to compete= agent can't assist competitors -misappropriation= agent can't us property of principal -confidential information=agent can't use disclosed info -duty to account for financial benefits= can't profit secretly ex: principal tells agent to sell land for $5 and the agent turns around and sell it for $10 and pockets the rest.