Agency Law
usurping an opportunity
An agent cannot usurp an opportunity that belongs to the principal.
duty of notification
The agent's has a duty to notify the principal of any information that is important, Imputed knowledge
work-related test
Only applied in some jurisdictions. If agent commits intentional tort within a work-related time or space, the principal is liable. Agent's motivation immaterial.
independent contractor
Principals often employ outsiders (persons or businesses who are not employees) to perform certain tasks on their behalf.
implied agency
An agency that occurs when a principal and an agent do not expressly create an agency. The agency is implied from the conduct of the parties. The extent of the agent's authority is determined from the particular facts and circumstances of the particular situation- Incidental authority is the implied authority to act.
express agency
An agency that occurs when a principal and an agent expressly agree to enter into an agency agreement with each other: Exclusive agency contract, Power of attorney. Express agency contracts can be either oral or written unless the Statute of Frauds stipulates that they must be written.
partially disclosed agency
Both the principal and the agent are liable to the third party if the principal fails to perform the contract.
employer-employee relationship (short)
The employer has the right to control the physical conduct of the employee.
principal
the party who employs another person to act on his or her behalf
principle authorization
A principal can authorize an independent contractor to enter into contracts. Principals are bound by the authorized contracts of their independent contractors.
liability for independent contractor's torts
A principal is generally not liable for the tortious conduct of independent contractors it hires. Independent contractors are personally liable for their own torts. The rationale behind this rule is that principals do not control the means by which the results are accomplished.
the nature of agency
Agency relationships are formed by the mutual consent of a principal and an agent. Agency is the fiduciary relationship "which results from the manifestation of consent by one person to another that the other shall act in his behalf and subject to his control, and consent by the other so to act."
apparent agency
Agency that arises when a principal creates the appearance of an agency that in actuality does not exist. When an apparent agency is established, the principal is estopped from denying the agency relationship. It is the principal's actions that create an apparent agency.
duty of accountability
Agent has duty to maintain accurate accounting of all transactions undertaken on the principal's behalf.
self-dealing
Agents are generally prohibited from undisclosed self-dealing with the principal.
competing with the principal
Agents are prohibited from competing with the principal.
termination of an agency
An agency contract is similar to other contracts in that it can be terminated by: Acts of the parties, or Operation of law. Once an agency relationship is terminated, the agent can no longer represent the principal or bind the principal to contracts.
dual agency
An agent cannot meet a duty of loyalty to two parties with conflicting interests.
agent's duty of loyalty to principle
An agent owes a fiduciary duty not to act adversely to the interest of the principle.
agent exceeding the scope of authority
An agent who enters into a contract on behalf of another party impliedly warrants that he or she has the authority to do so. If the agent exceeds the scope of his or her authority, the principal is not liable on the contract unless the principal ratifies it. The agent is liable to the third party for breaching the implied warrant of authority.
contract liability to 3rd parties: the agent can be held liable under some circumstances:
Fully disclosed agency, Partially disclosed agency, Undisclosed agency
notification required for:
Parties who dealt with the agent must be given direct notice, Parties who have knowledge of the agency must be given direct or constructive notice, Parties who have no knowledge of the agency are owed no notice
partially disclosed agency occurs if:
The agent discloses his or her agency status but does not reveal the principal's identity, and The third party does not know the principal's identity from another source
principal-agent relationship (short)
The agent has the authority to act on behalf of the principal as authorized by the principal and implied from the agency. An employee is often the agent of his employer.
tort liability to third parties
The principal and the agent are each personally liable for their own tortious conduct. The principal is liable for the tortious conduct of an agent who is acting within the scope of his or her authority. The agent only is liable for the tortious conduct of the principal if he or she directly or indirectly participates in or aids and abets the principal's conduct.
wrongful termination of an agency or employment contract
The termination of an agency contract in violation of the terms of the agency contract. The nonbreaching party may recover damages from the breaching party.
fully disclosed agency
When the third party entering into the contract knows: That the agent is acting as an agent for a principal, and The actual identity of the principal. The principal is liable to the third party. The agent is not liable.
innocent misrepresentation
occurs when an agent negligently makes a misrepresentation to a third party.
agent's duties to the principal
performance, accountability, notification, loyalty
agency law
the large body of common law that governs agency. A mixture of contract law and tort law
agent
the party who agrees to act on behalf of another
principle has a duty to reimburse the agent for expenses if:
1. Authorized by the principal. 2. Within the scope of the agency. 3. Necessary to discharge the agent's duties in carrying out the agency.
termination by operation of law includes:
1. Death of the principal or agent 2. Insanity of the principal or agent 3. Bankruptcy of the principal 4. Impossibility of performance 5. Changed circumstances 6. War between the principal's and agent's countries
Two tests to determine the scope of employment boundaries
1. motivation test 2. work-related test
misrepresentation
A principal is liable for the intentional and innocent misrepresentations made by an agent within the scope of employment.
principle's duties2
A principal owes a duty to indemnify the agent for any losses the agent suffers because of the principal. Such duty arises when the agent is held liable for the principal's misconduct. The principal owes a duty to cooperate with and assist the agent in the performance of the agent's duties and accomplishments of the agency.
contract liability to third parties
A principal who authorizes an agent to enter into a contract with a third party is liable on the contract. The third party can enforce the contract and recover damages from the principal
employer-employee relationship
A relationship that results when an employer hires an employee to perform some form of physical service. An employee is not an agent unless he or she is specifically empowered to enter into contracts on the principal employer's behalf.
frolic and detour
Agents sometimes do things during the course of his or her employment to further their own interests, rather than the principal's.
persons who can initiate an agency relationship2
An agency can be created only to accomplish a lawful purpose. Agency contracts that are created for illegal purposes or are against public policy are void and unenforceable.
irrevocable agency
An agency coupled with an interest: Special type of agency relationship, Irrevocable by the principal, Not terminated by the death or incapacity of either the principal or the agent, Terminates only when the agent's obligations are performed
Termination by acts of the parties
An agency may be terminated by the following acts of the parties: 1. Mutual agreement 2. Lapse of time 3. Purpose achieved 4. Occurrence of a specified event
dual-purpose mission
An errand or other act that principal requests of an agent while the agent is on his or her own personal business.
persons who can initiate an agency relationship
Any person who has the capacity to contract can appoint an agent to act on his or her behalf. Persons who lack contractual capacity cannot appoint an agent. e.g., insane persons and minors
undisclosed agency
Both the principal and the agent are liable to the third party if the principal fails to perform the contract.
degree of control
The crucial factor in determining whether a person is an employee or an independent contractor is the degree of control that the principal has over that person.
principle's duties
The principal has a duty to compensate an agent for services provided within a mutually agreeable time. If the agent spends his or her own money, on the principal's behalf, the principal owes a duty to reimburse the agent for all such expenses
principal-independent contractor (short)
The principal has no control over the details of the independent contractor's conduct. An independent contractor is usually not an agent of the principal.
notification required
The principal is responsible to give certain third parties notification of the agency termination.
distinction between the power and the right to terminate and agency
distinction is critical. - revocation of authority, renunciation of authority
negligence
frolic and detour, "coming ang going" rule, dual-purpose mission
common breaches
self-dealing, usurping an opportunity, competing with the principal, misuse of confidential information, dual agency
formation of the agency relationship
express agency, agency by ratification, implied agency, apparent agency
agent's duty of performance
1. Performing the lawful duties expressed in the contract 2. Meeting the standards of reasonable care, skill, and diligence implicit in all contracts.
agents duties
An agent who enters into a contract with a principal has two distinct obligations. Collectively, these are referred to as the agent's duty of performance.
principal-agent relationship
An employer hires an employee and gives that employee authority to act and enter into contracts on his or her behalf. The extent of this authority is governed by any express agreement between the parties and implied from the circumstances of the agency.
misrepresentation liability
The principal is liable for the intentional and innocent misrepresentations made by an agent acting within the scope of his or her authority.
intentional tort liability: work-related test
The principal is liable if the agent committed the intentional tort within work-related time and space.
intentional tort liability: motivation test
The principal is liable if the agent's motivation in committing the intentional tort was to promote the principal's business.
negligence liability
The principal is liable under the doctrine of respondeat superior if the agent's negligent act was committed within his scope of employment.
intentional torts
The principal is not liable for intentional torts of agents and employees that are committed outside the principal's scope of business.
respondent superior
This doctrine rests on the principle that if anyone (principal) expects to derive certain benefits from acting through others (agent), that the person should also bear the liability for injuries caused to the third party by the negligent conduct of an agent who is acting within the scope of their employment.
"coming and going" rule
Principal is generally not liable for injuries caused by its agents and employees while they are on their way to or from work.
motivation test
If the agent's motivation in committing an intentional tort is to promote the principal's business, the principal is liable for injuries caused by the tort. If agent's motivation is personal, principal is not liable.
a principle is liable for tortious conduct of an independent contractor involving:
Inherently dangerous activities, The negligent selection of the independent contractor. (Crucial factor is degree of control)
misuse of confidential information
The agent is under a legal duty not to disclose or misuse confidential information during or after course of the agency.
negligence
Principals are liable for negligent conduct of agents acting within the scope of their employment. Liability is based on the common law doctrine respondent superior.
principal-independent contractor relationship
Principals employ persons or businesses who are not employees to perform certain tasks on their behalf.- These persons and businesses are called independent contractors.
undisclosed agency occurs when the third party is unaware of either:
The existence of an agency, or The principal's identity
kinds of employment relationships
employer-employee relationship, principal-agent relationship, principal-independent contractor relationship
by ratification (short)
def- Acts of the agent committed outside the scope of his authority. enforcement- Principal and third party are not bound to the contract unless the principal ratifies the contract.
apparent (short)
def- Authority created when the principal leads a third party into believing that the agent has authority. enforcement- Principal and third party are bound to the contract.
express (short)
def- Authority is expressly given to the agent by the principal. enforcement- Principal and third party are bound to the contract.
implied (short)
def- Authority is implied from the conduct of the parties, custom and usage of trade, or act incidental to carrying out the agent's duties. enforcement- Principal and third party acts are bound to the contract.
intentional misrepresentation
occurs when an agent makes statements that he or she knows are untrue.
agency by ratification
An agency that occurs when: 1. A person misrepresents himself or herself as another's agent when in fact he or she is not, and 2. The purported principal ratifies (accepts) the unauthorized act.
