BLAW ch. 33 (Agency liability and termination)

Apparent Authority and Estoppel

A court can apply the doctrine of agency by estoppel when a principal has given a third party reason to believe that an agent has authority to act. If the third party honestly relies on the principal's representations to his or her detriment, the principal may be estopped (prevented) from denying that the agent had authority.

respondeat superior

A doctrine under which a principal-employer is liable for any harm caused to a third party by an agent-employee in the course or scope of employment.

disclosed principal

A principal whose identity is known to a third party at the time the agent makes a contract with the third party.

undisclosed principal

A principal whose identity is unknown by a third party, and that person has no knowledge that the agent is acting for a principal at the time the agent and the third party form a contract.

partially disclosed principal

A principal whose identity is unknown by a third party, but the third party knows that the agent is or may be acting for a principal at the time the agent and the third party form a contract.

notary public

A public official authorized to attest to the authenticity of signatures.

equal dignity rule

A rule requiring that an agent's authority be in writing if the contract to be made on behalf of the principal must be in writing. EXCEPTIONS An executive officer of a corporation normally can conduct ordinary business transactions without obtaining written authority from the corporation. When the agent acts in the presence of the principal, the rule does not apply. When the agent's act of signing is merely a formality, then the agent does not need written authority to sign.

Unauthorized Acts

Acts committed by an agent that are outside the scope of his or her express, implied, or apparent authority. Principal and third party are not bound in contract—unless the principal ratifies prior to the third party's withdrawal.

Actions by E-Agents

An "e-agent" is a semi-autonomous computer program capable of executing specific tasks on behalf of a principal.

Liability for torts and crimes

Any person, including an agent, is liable for his or her own torts and crimes

Apparent Authority

Authority created when the conduct of the principal leads a third party to believe that the principal's agent has authority. Principal and third party are bound in contract.

Express authority

Authority expressly given by one party to another. In agency law, an agent has express authority to act for a principal if both parties agree, orally or in writing, that an agency relationship exists in which the agent has the power (authority) to act in the place of, and on behalf of, the principal. -does not need to be in writing

Express Authority

Authority expressly given by the principal to the agent. Principal and third party are bound in contract

Implied Authority

Authority implied by custom, from the position in which the principal has placed the agent, or because such authority is necessary if the agent is to carry out expressly authorized duties and responsibilities. Principal and third party are bound in contract

implied authority

Authority that is created not by an explicit oral or written agreement but by implication. In agency law, implied authority (of the agent) can be conferred by custom, inferred from the position the agent occupies, or implied by virtue of being reasonably necessary to carry out express authority.

apparent authority

Authority that is only apparent, not real. An agent's apparent authority arises when the principal causes a third party to believe that the agent has authority, even though she or he does not.

power of attorney

Authorization for another to act as one's agent or attorney either in specified circumstances (special) or in all situations (general). special (permitting the agent to perform specified acts only) general (permitting the agent to transact all business for the principal

Authorized Acts

If an agent acts within the scope of her or his authority, normally the principal is obligated to perform the contract regardless of whether the principal was disclosed, partially disclosed, or undisclosed

Unauthorized Acts

If an agent has no authority but nevertheless contracts with a third party, the principal cannot be held liable on the contract. It DOES NOT MATTER WHETHER THE PRINCPAL WAS DISCLOSED, PARTIALLY DISCLOSED, OR UNDISCLOSED. The AGENT is liable

Implied Warranty

If the principal is disclosed or partially disclosed, and the agent contracts with a third party without authorization, the agent is liable to the third party agent's liability here is based on his or her breach of the implied warranty of authority

Disclosed or Partially Disclosed Principal

If the principal is disclosed, the agent has no contractual liability for the nonperformance of the principal or the third party partially disclosed, in most states the agent is also treated as a party to the contract. Thus, the third party can hold the agent liable for contractual nonperformance

vicarious liability

Indirect liability imposed on a supervisory party (such as an employer) for the actions of a subordinate (such as an employee) because of the relationship between the two parties.

Liability for contracts

Liability for contracts formed by an agent depends on how the principal is classified and on whether the actions of the agent were authorized or unauthorized.

Third Party's Knowledge

Note that if the third party knows at the time the contract is made that the agent does not have authority, then the agent is not liable

Liability for agent's misrepresentation

Principal is exposed to tort liability whenever a third person sustains a loss due to the agent's misrepresentation •Principal is always directly responsible for an agent's misrepresentation made within the scope of an agent's authority

Requirements for ratification

The agent must have acted on behalf of an identified principal who subsequently ratifies the action. The principal must know all of the material facts involved in the transaction. If a principal ratifies a contract without knowing all of the facts, the principal can rescind (cancel) the contract.Footnote The principal must affirm the agent's act in its entirety. The principal must have the legal capacity to authorize the transaction at the time the agent engages in the act and at the time the principal ratifies. The third party must also have the legal capacity to engage in the transaction. The principal's affirmation (ratification) must occur before the third party withdraws from the transaction. The principal must observe the same formalities when ratifying the act as would have been required to authorize it initially.

Scope of Agent's Authority

The liability of a principal to third parties with whom an agent contracts depends on whether the agent had the authority to enter into legally binding contracts on the principal's behalf Agents authority can either be Actual(expressed or implied) or apparent if an agent contracts outside the scope of his or her authority, the principal may still become liable by ratifying the contract

Innocent Misrepresentation

The point is that the principal is always directly responsible for an agent's misrepresentation made within the scope of authority.

Indemnification

When a principal's identity is undisclosed and the agent is forced to pay the third party, the agent is entitled to be indemnified (compensated) by the principal The principal had a duty to perform, even though his or her identity was undisclosed,Footnote and failure to do so will make the principal ultimately liable.

Emergency Powers

When an unforeseen emergency demands action by the agent to protect or preserve the property and rights of the principal, but the agent is unable to communicate with the principal, the agent has emergency power.

Principal's Tortious Conduct

a principal may be liable if he or she gives improper instructions, authorizes the use of improper materials or tools, or establishes improper rules that result in the agent's committing a tort. Improper instructions▫ Improper materials/tools▫ Improper rules

Principal's Authorization of Agent's Tortious Conduct

a principal who authorizes an agent to commit a tort may be liable to persons or property injured thereby, because the act is considered to be the principal's. If principal authorizes agent to commit a tort may be liable to persons or property injured, because the act is considered the principal's• Agent can be liable along with the principal even if they were unaware the act was wrong

The Uniform Electronic Transactions Act (UETA)

e-agents can enter into binding agreements on behalf of their principals if consumers place an order over the Internet, and the company (principal) takes the order via an e-agent, the company cannot later claim that it did not receive the order if an e-agent fails to provide an on-screen confirmation of a purchase or sale, the other party can avoid the effect of any errors.

Actual authority

express or implied) arises from what the principal makes clear to the agent

Performance

fulfill the contract, unless one of the following is true: The undisclosed principal was expressly excluded as a party in the written contract. The contract is a negotiable instrument signed by the agent with no indication of signing in a representative capacity The performance of the agent is personal to the contract, thus allowing the third party to refuse the principal's performance.

Lundberg vs Church Farm, inc

had a horse and it got moved which was not in contract. one of the workers signed contract and didn't have authority to do so.

Ratification

occurs when the principal affirms, or accepts responsibility for, an agent's unauthorized act When ratification occurs, the principal is bound to the agent's act, and the act is treated as if it had been authorized by the principal from the outset If the principal does not ratify the contract, the principal is not bound, and the third party's agreement with the agent is viewed as merely an unaccepted offer

Apparent Implied Authority

partners in a partnership generally have the apparent implied authority to act as agents of the firm. Thus, if one of the partners commits a tort or a crime, the partnership itself—and often the other partners personally—can be held liable for the loss.

What does the liability of the principal depend on?

the liability of the principal will depend on whether the agent was authorized to form the contract