BLAW 308 MIDTERM

Intervening events which cut off the P's Power to ratify

1) 3rd party's withdrawal from the contract 2) 3rd party's death or loss of capacity 3) P's failure to ratify within a reasonable time 4) Unfair to bind the 3rd party

liability of agent by agreement

1) made contract in their own name (not P's) 2) obligar (also obligated along the P) 3) guarantor (backs up P) 4) how the A signs the contract

Termination by Act of the Parties

1) mutual agreement 2) time specified, occurrence of event, or after a reasonable time 3) at the option of either party P - revocation (revokes) A - renunciation (renounces) 4) individual taking unilateral action to end agency may be responsible for damages to the other party 5) terminating party is not liable if the action taken is justified by the other party's serious breach of a fiduciary duty

Tort Liability of the Agent

1. An agent can escape liability if she is exercising a privilege of the principal. 2) A principal who is privileged to take certain actions in defense of his person or property may often authorize an agent to do the same. In such cases, the agent escapes liability if the principal could have done so. For example, a Walmart warehouse guard may use force to protect the property in Walmart's warehouse. 3) An agent who makes misrepresentations while conducting the principal's business is not liable in tort unless he either knew or had reason to know their falsity. 4) An agent is not liable for injuries to third persons caused by defective tools or instrumentalities furnished by the principal unless the agent had actual knowledge or reason to know of the defect.

Capacity

A person has the capacity to be a principal if that person has capacity to do the acts for which the agent has been retained. For example, a person competent to make a contract to purchase a building

Authority

Although agency law lets people multiply their dealings by employing agents, a principal is not always liable for his agent's acts. Normally, an agent can bind his principal on a contract or other matter only when the agent has authority to do so. Authority is an agent's ability to affect his principal's legal relations.

Duty Not to Receive a Material Benefit

Other than receiving the compensation the principal gives the agent for acting as her agent, an agent should not profit or receive any other benefit from acting on behalf of the principal. Improper material benefits include bribes, kickbacks, and gifts from parties with whom the agent deals on the principal's behalf.

Contract Liability of the Principal

P will ordinarily be liable for a contract made by an A if the A had actual (express, implied), or apparent authority or if the P choose to bind himself to A's unauthorized act by ratifying it.

Respondeat Superior Liability (let the master answer) (P is also liable)

employer is liable for torts committed by agents.. 1) who are employees and 2) who commit the tort within the scope of employment

Tort Liability of Principal

"A principal may be (1) vicariously liable for an agent's tort under (a) respondeat superior or (b) apparent authority; (2) directly liable for (a) negligence in hiring or supervising, (b) the tort itself for (i) agents which have actual authority or authority through ratification, or (ii) an inherently dangerous act or nondelegable duty"

Duties to Account

1) A must give P any money or property received during course of agency business 2) Agreement - agent retains tips, other benefits 3) Accurate records & accounts of collections, receipts, expenditures 4) don't co-mingle

Duty to Act with Care and Skill

1) Must act with care, competence, and diligence normally exercised by agents in similar circumstances 2) must possess& exercise degree of care & skill standard in that area, that kind of work 3) duty maybe be increased or decreased by agreement

Direct Liability (P is also liable)

1) No requirement that the agent be an employee 2) No requirement that the tort be committed within scope of employment 3) Principal is at fault 4) P directs the conduct & intends for it to occur 5) more common: P is negligent regarding the A a) P gives improper instruction b) no proper regulation to govern A's conduct c) hiring unsuitable A d) not firing on unsuitable A e) not properly supervising the A

Effect of Termination on the A's Authority

1) agency terminates - express & implied authority ends 2) apparent authority may continue 3) apparent authority ends... a) operation of law - 1) principal dies, 2) p's loss of capacity 3) impossibility or illegal b) notice - 1) actual notification - a direct personal statement to the third party or a writing delivered to the third party personally, to his place of business, or to some other place reasonably believed to be appropriate. 2) constructive notification - can be accomplished by advertising the agency's termination in a newspaper of general circulation in the place where the agency business regularly was carried on.

Duty of Loyalty - Confidentiality

1) agent may not use or disclose confidential information acquired through the agency unless the P agrees confidential information - facts valuable to the principal because they are not widely known, or would harm the P's business if they become known 2) Agent may continue to use knowledge or skills acquired after agency relationship ends out lasts the agency relationship

Agent's Notification and Knowledge

1) if the 3rd passes information to an authorized agent, it is as good as the 3rd party passing information to the principal, and vice versa 2) If the A has knowledge of business related matters we assume principal has that information. a) relevant info to the business b) A has duty to notify

Employees vs. Independent Contractors

1) most important distinction: P's right to control the manner and means of the A's performance - details of the work. 2) ex. Attorney working for a firm vs. attorney hired to do a project

Estoppel

1) not apparent authority 2) not ratification 3) 3rd Party changes her position to her detriment in reliance on the belief that someone had authority who really didn't 4) no requirement that the purported P did anything to indicate that the purported A can act for him

Ratification

1) principal chooses to bind himself to A's unauthorized actions - relates back to the time of the action 2) ratified contract = authorized contract 3) express ratification = agrees to contract 4) implied ratification - making payments - silence may or may not be implied ratification

Duty to Provide Information (Notify)

1) promptly notify - information reasonably relevant to agency business, P would be concerned with 2) no duty to notify: confidential info

Duty of Loyalty - Conflict of Interest

1) self dealing - Agent acts in own best interests when a business deal with the Principal (However if the P has full knowledge of all relevant facts & consents, then there is no breach of this duty) 2) Agent may not compete with the P regarding the agency business. 3) Agent authorized to make a certain transaction for the P cannot act on behalf of the other party to the transaction unless the P knowingly consents. 4) can not act as an agent of both parties does not out last the agency relationship

Duty to Reimbursement & Indemnify

1) unless there's agreement to the contrary, agent is entitled to reimbursement for expenses incurred making expressly or impliedly authorized expenditures on the principal's behalf 2) indemnity: implied promise from principal to agent that the principal will pay for losses resulting from agent's authorized activities 3) principal not authorized to pay for losses from - unauthorized acts - solely from A's negligence or fault

addition requirements for ratification

1) valid 2) 3rd party has to know the A is working on someone else's behalf 3) P must be legally competent 4) P must have full knowledge of all material facts in order to ratify 5) all or nothing (whole contract or nothing)

Disclosed Principal

3rd Party knows or has a reason to know: a) A is acting for the Principal b) P's identity c) gen rule: the agent is not liable on authority contracts made for principal for P unless agreement to contrary

Duty to Compensate

A duty that a principal owes to pay an agreed-upon amount to the agent either upon the completion of the agency or at some other mutually agreeable time. 1) contract - if itstates the compensation the agent is to receive, it usually controls questions about the agent's pay. 2) surrounding circumstances - market price - reasonable - customary in that field 3) Compensation may depend on a specific result. 4) Principal does not have to pay the agent if a. there is a material breach by the agent b. serious breach of fiduciary duty c. principal didn't ask for the agent to do something

Nonexistent Principal

A is liable when knows or has reason to know P doesn't exist or lacks capacity

Termination of an Agency

Agency can be terminated by an act of the parties or by operation of law. Once agency has terminated, the agent has no actual authority to bind the principal. For an agent's apparent authority to be terminated, third persons may also need to be notified that the agency has been terminated.

Agency

Agency is the fiduciary relationship that arises when one person (a principal) manifests assent to another person (an agent) that the agent will act on the principal's behalf and be subject to the principal's control.

Nondelegable Obligations

Certain duties or acts must be performed personally and cannot be delegated to an agent. Examples include making statements under oath, voting in public elections, and signing a will.

Actual Authority

For actual authority, this consent must be communicated to the agent An agent has actual authority to take an action "designated" or "implied" in the principal's manifestations to the agent and acts necessary or incidental to achieving the principal's objectives of the agency. 1) express authority - actual authority that the principal has manifested to the agent in very specific or detailed language. 2) implied authority - A may do whatever is reasonable to assume P would want her to An agent generally has implied authority to act in a way the agent reasonably believes is necessary to perform his duties. red flag: A can't sell property or borrow money

Apparent Authority

P's behavior causes the 3rd party to reasonably believe agent has authority to act a certain way red flag: - A can't give himself authority - limitation on A's authority may or may not impact A's apparent authority - Can't borrow money

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. A fiduciary duty exists because agency is a relationship of trust and confidence. The principal's many remedies for an agent's breach of her fiduciary duty include termination of the agency and recovery of damages from the agent.

Duty of Good Conduct

The Restatement (Third) also includes a general duty that agents act reasonably and refrain from conduct that is likely to damage the principal's enterprise. While the scope of this general duty is not entirely clear, it encompasses, for example, an employee's duty not to damage the employer's computer system by exposing the system to harmful computer viruses while visiting unauthorized websites.

Termination by Operation of Law

Usually involves situation where: 1) reasonable to believe P would not want the A to act further 2) or accomplishment of agency objectives has became impossible or illegal 1. The death of an individual principal. (only when the agent has notice of the principal's death. ) 2. The death of an individual agent. 3. The principal's permanent loss of capacity. The principal's permanent incapacity ends the agency even without notice to the agent. 4. The cessation of existence or suspension of power of an agent or principal that is not an individual, such as the dissolution of a corporation or partnership. 5. Upon the occurrence of circumstances from which the agent should reasonably conclude that the principal no longer would want the agent to take action for the principal.

Duty of Loyalty

a fiduciary duty owed by an agent not to act adversely to the interests of the principal. Thus, an agent must subordinate his personal concerns by (1) avoiding conflicts of interest with the principal and (2) not disclosing confidential information received from the principal.

agent

a person who acts or does business for another

Partially Disclosed Principal (unidentified P)

a) 3rd P knows or has reason to know A is acting for a principal b) but doesn't know or have reason to know the P's identity c) gen rule: agent is liable unless agreement to contrary

Undisclosed Principal

a) 3rd party lacks knowledge or reason to know the P's existence or identity b) 3rd P may think A is the P c) rule: A is liable

Duty to Obey Instructions

an agent must obey her principal's instructions unless the principal directs her to behave illegally or unethically 1) reasonable instructions - carrying out agency business 2) not included - illegal or unethical instructions 3) Agent must clarify unclear instructions

Scope of Employment

an employee acts within the scope of employment when performing work assigned by the employer or when engaging in a course of conduct subject to the employer's control. 1. whether employee's act was authorized by employer or incidental to it 2. occurred substantially within authorized time 3. occurred substantially within authorized location 4) motivated at least in part by the purpose of serving the employer Ask: What was the employee doing when the tort occur?

Subagent

basically is an agent of an agent. More precisely, a subagent is a person appointed by an agent to perform tasks that the agent has undertaken to perform for his principal.

Contract Liability of the Agent

focus: what is the nature of the principal?