Business Law Ch 32

Duty of Notification

An agent is required to notify the principal of all matters that come to her of his attention concerning the subject matter of the agency.

Duty of Performance

An implied condition in every agency contract is the agent's agreement to use reasonable diligence and skill in performing the work. When an agent fails to perform his or her duties, liability for breach of contract may result.

Constructive Trust

Anything that an agent obtains by virtue of the employment of agency relationship belongs to the principal. (635).

Agency by Operation of Law

Courts may find an agency relationship in the absence of a formal agreement in other situations as well. This may occur in family relationships, such as when one spouse purchases certain basic necessarries and charges them to the other spouse's account. (630)

Agency by Ratification

A person who is in fact not an agent (or who is an agent acting outside the scope of her or his authority) may make a contract on behalf of another (a principal). If the principal approves or affirms that contract by word or by action, an agency relationship is created by ratification. (629)

Duty of Accounting

The agent has a duty to keep and make available to the principal an account of all property and funds received and paid out on behalf of the principal.

Duty of Loyalty

The agent has the duty to act solely for the benefit of his or her principal and not in the interest of the agent or a third party.

Principal's Duties to the Agent

The principal has four duties to the agent: compensation, reimbursement and indemnification, cooperation, and safe working conditions. (633).

Agency by Estoppel

When a principal causes a third person to believe that another person is the principal's agent, and the third person acts to his or her detriment in reasonable reliance on that belief, the principal is "estopped to deny" (prevented from denying) the agency relationship. (629)

Indemnification

When a principal is sued by a third party for an agent's negligent conduct, the principal can sue the agent for indemnification-that is, for an equal amount of damages. (635).

Duty of Obedience

When acting on behalf of the principal, an agent has a duty to follow all lawful and clearly stated instructions of the principal.

Avoidance

When an agent breaches the agency agreement or agency duties under a contract, the principal has a right to avoid any contract entered into with the agent. (635).

fiduciary

a person having a duty created by his or her undertaking to act primarily for another's benefit in matters connected with the undertaking. (624)

independent contractor

a person who contracts with another to do something for him but who is not controlled by the other nor subject to the other's right to control with respect to his physical conduct in the performance of the undertaking. He may or may not be an agent. (625)

Copyright Act of 1976

any copyrighted work created by an employee within the scope of her of his employment at the request of the employer is a "work for hire," and the employer owns the copyright to the work. In contrast, when an employer hires an independent contractor-a freelance artist, writer, or computer programmer- the independent contractor normally owns the copyright. (627)

Agency by Agreement

based on an express or implied agreement that the agent will act for the principal and the principal agrees to have the agent so act. (628)

fiduciary relationship

relationship involoves trust and confidence (624)

Agent's Duties to a Principal

Agent owes the principal five duties: performance, notification, loyalty, obedience, and accounting. (631).

Agency Relationships

Can arise in 4 ways: by agreement of the parties, by ratification, by estoppel, and by operation of law. (628)