LGST Chapter 10 Master
Hypo: Priscilla authorizes Agnes to buy diamonds. Agnes spots choice diamonds and secretly buys them for herself for $1 million. Agnes then resells the diamonds for $2 million. (1) What duties did Agnes Breach? (2) What remedies does Priscilla have?
(1) Agnes the agent has breached the duty of loyalty by (1) Self Dealing in that she did benefit herself to the principal's detriment and (2) by usurping the principals diamands and (3) by making a secret profit on the resale of the diamonds as well. (2) The principal may recover losses that are caused by the breach and also may disgorge profits made by the breaching agent.
3 Main Agency Problems
(1) Liability of Principal to Third Parties for Torts of an Agent (2) Liability of Principal to Third Parties for Contracts Entered into by an Agent f (3) Duties Which Agents Owe to Principals.
ACTUAL IMPLIED AUTHORIZATION TO ENTER INTO THE CONTRACT
(1) Necessity - there was implied authority to do the task because it as necessary to accomplish an expressly authorized task. (2) Custom - there is implied authority to do all tasks which are customarily performed by persons with the agent's title or position. (3) Prior dealings - there is implied authority to do all tasks which the agent believes to be authorized to do from prior acquiescence by the principal.
WHAT REMEDIES DOES A PRINCIPAL HAVE AGAINST AN AGENT THAT HAS BREACHED HER DUTY OF LOYALTY?
(1) Principal may recover losses caused by the breach Recission - you can cancel the contract (2) Principal may also disgorge profits made by the breaching agent.
ACTUAL EXPRESS AUTHORIZATION TO ENTER INTO THE CONTRACT
(1) Principal used words to express authority to agent (2) Oral, private, narrow communications are acceptable (3) EXCEPT: if the contract involves an interest in land lasting more than one year, the express authorization must be in writing -Answer: "A principal is liable only on its authorized contracts. In this case, actual express authority terminated upon Paula's death. Therefore, Paula's estate will not be liable on this unauthorized contract. This means Alice, the agent, will be personally liable, because at the time she entered the contract, she was not an authorized agent.
REVOCATION OF EXPRESS AUTHORITY TO ENTER INTO A CONTRACT
(1) Unilateral act of either party, or (2) Death or incapacity of the principal EXCEPTION: express authority cannot be revoked if (3) The principal gives the agent a "durable power of attorney." (written authority to enter into a transaction on the principal's behalf) (4) This can survive incapacity, not death.
SCOPE of Principal-Agent Relationship Factors
(1) Whether the conduce was OF THE KIND agent was hired to perform? - w/in job description = w/in scope (2) Whether the tort occurred in the job? - Frolic v. Detour (DEFINE BOTH!!) - FROLIC: New and independent journey. Outside scope of agency - DETOUR: Near departure from an assigned task. Within scope of agency. (3) Whether Agent INTENDED TO BEENFIT the Principal. - Partial benefit is enough to put conduct inside the scope.
employee vs. independent contractor
* In general, a principal is liable only for torts committed by agents who are employees, not for torts of agents acting as independent contractors. Turns on control. If the principal has control over the agent, it is an employee; if not, it is an independent contractor. In determining the existence of the right to control, consider: -The characterization by the parties -Whether the business is distinct -The customs of the locality regarding supervision of work -The degree of skill required on the job -Whose tools or facilities are used -What the period of employment is (definite and/or short is IC, indifinite/long is employee) -What the basis of compensation is (if on a time basis, more likely employee; if on a job basis, more like IC) -What the understanding of the parties is -Whether the person was hired to further the principal's business (nonbusiness purpose, like mowing the lawn, is more likely to be an IC) key distinction: the principal does not have the power to supervise the manner and method of the IC's performance
WHEN CAN EMPLOYER BE VICARIOUSLY LIABLE FOR TORTS COMMITTED BY AN INDEPENDENT CONTRACTOR
*In general, an employer is not vicariously liable for the torts committed by an independent contractor. Exceptions: 1) Ultra-hazardous activities : employers may be liable if the independent contractor was engaged in ultra- hazardous activities vicarious liability 2) nondelegable duties have been delegated 3) the principal knowingly selected an incompetent IC (not just negligent) Note: Estoppel - if the employer holds out your independent contractor with the appearance of agency, then vicarious liability results
WHETHER A NEGLIGENCE TORT WAS COMMITTED WITHIN THE SCOPE OF THE PRINCIPAL-AGENT RELATIONSHIP
*To determine whether the tort was within the scope of employment, consider: 1) the connection between the time, place, and occasion of the act; 2) the history of the relationship between the employer and employee; 3)whether the act is commonly done by such an employee; 4) the extent of departure from normal methods of performance; and 5) whether the emlpoyer could have anticipated the specific act. *if you have assent, benefit, and control, then go to this test: within scope if 1) The tortious conduct was "of the kind" the agent was hired to perform 2) The tort occurred "on the job," - Frolic: new and independent journey (outside scope) -Detour: mere departure from an assigned task (within scope) 3) The agent intended, at least in part, to benefit the principal essay answer should read: This is the type of principal-agent relationship that has assent, benefit, and control sufficient to create vicarious liability. An employer will be liable for its employees torts committed within the scope of the agency. In this case, the agent was on a detour, a near departure from an assigned task because the tort occurred on the way back to work. Therefore, it was within the scope and there is vicarious liability.
duties of agent to principal
*agents are fiduciaries of the principal. have three obligations: 1) Duty of reasonable care: this means the agent must exercise reasonable care in carrying out her job, including keeping the principal informed of what is going on 2) Duty to obey reasonable instructions: this is a duty of obedience, but not to lie or break the law 3) Duty of Loyalty: act loyally to the principal means the agent can never do: -Self deal: can never receive a benefit for itself at the detriment or expense of the principal. -Usurp an opportunity that rightly belongs to the principal -The agent cannot take secret profits for himself that rightly belong to the principal that arise as a result of the principal agent relationship. -Often all appear together. Any one counts. 4) Hypo: -What are the duties, if any, has Agnes breached? "Agnes has breached her duty of loyalty in three ways: 1) Self dealing: she benefited to P's detriment by keeping the choice diamonds, 2) usurping P's chance to buy the diamonds, and 3) by making a secret profit on the resale of the diamonds at P's expense. The principal can recover her losses caused by the breach. The principal can also cause the breaching agent, Agnes, to disgorge her profits. "
RATIFICATION OF CONTRACT ENTERED INTO BY AGENT
*authority can be granted after the contract has been entered, if: (1) Principal has knowledge of all material facts regarding the contract, (2) Principal accepts its benefits, and (3) The principal did not alter the terms of the contract (if changed or attempted to change, no ratification) answer: The principal is liable only on its authorized contracts. " Then look at all possible authority types we have looked at. "In this case, there was no actual express or implied authority, or even apparent authority, to buy wooden barrels. Nevertheless, Priscilla arguably ratified this contract through her knowledge of its material terms and acceptance of its benefits. However, the ratification was not valid because it was not ratification of the complete deal. Therefore, there was no ratification.
WHEN CAN PRINCIPAL BE VICARIOUSLY LIABLE FOR TORTS COMMITTED BY AGENT
*doctrine of respondeat superior imputes joint and several liability to the employer-principal for the torts committed by the employee-agent within the scope of the employee's employment (1) Principal-agent relationship exists, and (2) The tort was committed by the agent within the scope of that relationship * an employer can be liable for employee's tort as well as her own negligent hiring (high level of public conctact, the employees are entrused for caring for vulnerable), the employer should have known there was an issue
APPARENT AUTHORITY TO ENTER INTO THE CONTRACT
*this is not actual authority, just the appearance of it. it arises from the reasonable beliefs of third parties; if a principal indirectly or directly holds out another as possessing certain authority, and induces reasonably reliance by others, that person has apparent authority. what has to happen for it to exist: (1) Principal "cloaked" the agent with the appearance of authority, and (2) A third party reasonably relied on the appearance of authority.
agency, generally
1) Agency refers to the legal relationship whereby an agent is authorized to represent a principal in business dealings with third parties. 2) Agency is consensual. Not all contractual formalities are necessary to create an agency relationship. 3) Creation of Agency: -Parties may create an agency by agreement between the principal and agent (actual authority), holding out by the principal (apparent or inherent authority), or ratification. -Agency can also be created by operation of law. Estoppel creates agency because it is virtually the same as apparent authority in that it requires third-party reliance on the principal's communication. So does a statute
DUTIES A PRINCIPAL OWES TO AN AGENT
1) The principal owes the agent all of the duties imposed by their contract, reasonable compensation, and reimbursement for expenses. The principal also generally should cooperate with the agent and not unreasonably interfere with the agent's performance. 2) If the agency agreement is silent regarding compensation, the agent is entitled to reasonable compensation. A principal generally has no duty to compensate a subagent even if the agent had authority to hire the sub-agent.
types of apparent authority
1) When the Agent has no Actual Authority: even though at the time the agent acts he has no actual authority, the principal may still be bound: -Imposters: Where the principal negligently permits an imposter to be in a position to appear to have agency authority, the principal will be held liable for the imposter's actions undertaken with such authority. -Lingering authority: a) Notice may be necessary: Where an agent's actual authority has terminated (unless due to death or incompetence), he will have apparent authority to act on the principal's behalf as to all third parties with whom the principal knows he dealt unless and until the third parties receive either actual or constructive notice of the termination. b) Writing manifesting authority: where an agent's actual authority has been terminated but third parties rely on a written authority of the agent, the agent's apparent authority is not considered to be terminated. c) Death or Incompetency: either of these of the principal terminates all authority of the agent WITHOUT NOTICE to either the agent or third parties. There is a limited exception for a bank honoring transactions for a customer's account until it learns of the customer's death or incompentency and has a reasonable time to act. 2) When the Agent Exceeds Actual Authority: there are situations when the agent exceeds his authority, yet the principal is still bound -Prior acts: Where the principal previously permitted the agent to exceed his authority and knows that the third party is aware of this, the principal is bound by the agent's unauthorized act. -Position: Where the agent is in a position that customarily carries with it certain responsibilities, the principal is liable for the agent's acts that come within these customary responsibilities. -Secret limiting instruction: where the principal secretly limits the agent's actual authority, and the agent acts beyond that limitation, the principal will be bound by the agent's acts.
rule for liability for borrowed agents
1) issue: will a principal who borrows another principal's agent be vicariously liable for the borrowed agent's tort? 2) rule: the principal will be liable for a borrowed agent's tort if there is assent, benefit, and the right to control the borrowed agent. -This is when employer 1 borrows an employee from employer 2, and the employee commits a tort while under the supervision of employer 1. Note: if there is a fact pattern with a borrowed agent, you are unlikely to find control. In most questions, the issue is who has the primary right to control how the loaned agent does its job. In most, the answer will be the lender continues to have the primary right to control the borrowed agent. However, this outcome will change if there is an actual change in the relationship between the lender and the borrowed agent. In this rare case, you can also find control. If the assent and benefit are also satisfied, then the borrower can be liable. But very uncommon.
rule for liability for sub-agents
1) issue: will the principal be vicariously liable if the agent gets the help of a "sub-agent" and the sub-agent commits the tort? 2) rule: The principle will be liable for a sub-agent's torts if there is assent, benefit, and the right to control the sub-agent. -"sub-agent" arises when a principal instructs an agent to do a task, and the agent hires someone else to do it. Typically, the sub-agent is the tort-feasor. -Assent here goes to whether or not the agent had the authority to retain the sub-agent. It can be express authority or implied authority from the scenario, standards, etc. Note: If there is a sub-agent question, it is unlikely you will find assent or control elements, and you need all three, so usually the Principal will not be liable. Note: an agent has absolute liability to the principal for breaches by a sub-agent. Also, if appointed with proper authority, the sub-agent owes the principal the same duties as the agent. If the sub-agent is unauthorized, he owes no duties to the principal, but does owe duties to the agent.
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
Apparent Authority
2 PART TEST: (1) Principal CLOAKED Agent with the APPEARANCE of authority AND (2) Third-party REASONABLY RELIES on appearance of authority.
misrepresentation
A principal is liable for the intentional and innocent misrepresentations made by an agent within the scope of employment.
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.
Agent's Remedies for Breach
ANSWER IT
Hypo: Priscilla gives Agnes a power of attorney only to purchase steel drums. Agnes enters a contract to purchase 11,000 wooden barrels. Priscilla tells Agnes, "Great job! I love wooden barrels, but I only need 10,000." Is Priscilla bound?
AS A GENERAL RULE, Principal is liable only on it's authorized Ks. IN THIS CASE, there was no express or implied or even apparent authority to buy wooden barrels--only to buy steel drums. NONETHELESS, Priscilla arguably ratified the K through knowledge and acceptance of its benefits. She could become liable on this basis BUT ratification here was not valid because Priscilla altered the terms of the K making ratification not complete. Thus, Priscilla is not liable on this unauthorized contract.
Hypo: Paula collects rare books. She hires Alice to find a rare book to complete her collection. Alice searches everywhere for the rare book. As Alice is about to pay for the book, Paula dies. Is Paula's estate bound by the contract and liable to pay for the book?
AS A RULE, the principal is liable on its authorized contracts. IN THIS CASE, Alice was authorized to buy the book by actual express authority but it terminated upon the death of Paula the principal. Therefore, no liability by Paula's estate on this unauthorized K. Alice becomes personally liable.
Scope of Employment Hypo: Employer instructs Employee to drive across town to deliver files to a branch office. On the way back, Employee stops to pick up shirts at the dry cleaner for work the next day. In the parking lot of the dry cleaner, Employee hits a pedestrian. Is Employer liable?
AS A RULE, the principal will be liable for it's agents torts within the scope of the agency. IN THIS CASE, the agent was on a 'detour'--a a mere departure from an assigned task--b/c the tort occurred on the way back to work. Therefore, he was within the scope of the employment and there will be vicarious liability for the employer.
Agents and Independent Contractors Hypo: Tory Victus went to E-Stop-L Gas Station to have her brakes repaired. E-Stop-L Gas Station had an independent contractor arrangement with Brake Repairer. Brake Repairer tortiously repaired Tory's brakes, resulting in an accident. Is E-Stop-L Gas Station Liable?
AS A RULE, there is no vicarious liability for an IC's torts EXCEPT for (1) estoppel situations and (2) inherently dangerous activities. IN THIS CASE, brake repair is an inherently dangerous activity. Therefore, there will be vicarious liability. ALTERNATIVELY, EstopL will have held out its brake repairer with the appearance of agency and will be estopped from denying liability on this ground as well.
Duties of agent after termination
After termination, agents have a duty not to use or disclose to 3rd parties trade secrets or information learned during the course of the representation
Expressed Agency (Agency by Agreement)
Agency relationship formed through oral or written agreement
duty of accountability
Agent has duty to maintain accurate accounting of all transactions undertaken on the principal's behalf.
Contingency Fee
Agent's compensation that consists of a percentage of the amount the agent secured for the principal in a business transaction
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.
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.
Power of Attorney
An agency agreement used to give an agent authority to sign legal documents on behalf of 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.
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
dual agency
An agent cannot meet a duty of loyalty to two parties with conflicting interests.
usurping an opportunity
An agent cannot usurp an opportunity that belongs to the principal.
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.
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.
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
Expressed Authority
Authority that arises from specific statements made by the principal (employer) to the agent (employee).
Principals duty to agent
Compensation Indemnification Performance
Is there a principal/agent RELATIONSHIP? [ABC]
ELEMENTS: Principal/Agent relationship requires: (1)ASSENT = an informal agreement between the principal (who has capacity) and the agent (2) BENEFIT = Agent's conduct must be for Principal's benefit (3) CONTROL = the principal must have the right o control the agent by having the power to supervise the manner of the Agent'e performance.
Agency
Fiduciary relationship between two persons in which one (the agent) acts on behalf of, and is subject to the control of, the other (the principal)
Rules of Liability on the Contract.
GENERAL RULE: A principal is liable on its authorized Ks, and therefore as a rule an authorized agent is not liable on its authorized Ks. AUTHORIZED AGENTS ARE NOT LIABLE UNLESS THERE IS AN UNDISCLOSED PRINCIPAL. EXCEPTION: The undisclosed principal - If principal is partially disclosed (only the identity of the principal concealed) or undisclosed (fact of principal concealed), authorized agent may nonetheless be liable at the election of the third party.
Will the Principal be vicariously liable if it's Agent gets the help of a SUB-AGENT and the SUB-AGENT commits the tort?
GENERAL RULE: Generally, no vicarious liability for Principal for torts committed by sub-agents. (1) Principal will be liable for a sub only if there is ASSENT, BENEFIT, AND CONTROL between the Principal and the sub-agent tortfeasor. NOTE: Typically you won't have assent or control w/o benefit. You need all 3. So NO vicarious liability for sub-agents tort.
Principal Tort Liability for Agent's Intentional Torts
GENERAL RULE: Intentional torts are generally outside the scope of agency. EXCEPTIONS: Intentional torts are within the scope if the conduct was: (1) AUTHORIZED by the principal; (2) NATURAL from the nature of employment (bar bouncer); OR (3) MOTIVATED by a desire to serve the principal.
WHICH PARTY (PRINCIPAL OR AGENT) IS LIABLE ON THE CONTRACT
General Rule: (1) No authority: principal is not liable; agent is liable (2) Authority: principal is liable; agent is not liable exception: if principal is PARTIALLY disclosed (only the identity of the principal is concealed), or UNDISCLOSED (fact of principal concealed), authorized agent may nonetheless be liable at the election of the third-party -may choose to sue the agent or undisclosed principal or both
termination of actual authority
If you have determined that actual authority was created, you must then consider whether that authority has been terminated. Termination of actual authority occurs by: -Lapse of reasonable or specified time; -happening of a specified event; -change in circumstance, operation of law, death of principal.
WHETHER AN INTENTIONAL TORT WAS COMMITTED WITHIN THE SCOPE OF THE PRINCIPAL-AGENT RELATIONSHIP
In general, intentional torts are outside the scope of agency Exceptions: (1) The conduct was authorized by the principal, (2) The conduct was a natural incident to carrying out the employer's directions (3) Motivated by a desire to serve the principal -example: bouncer in a bar Note: employer can ratify the tort if it meets the requirements for ratification and employer knows all relevant facts
Duties Agnet Owes to Principal
In return for reasonable compensation and reimbursement of expenses, agents owe principals: (1) Duty of CARE (2) Duty to OBEY INSTRUCTIONS (3) Duty of LOYALTY: The agent may never do any of the following: - (a) SELF-DEALING: Agent cannot receive a benefit to the detriment of the principal. - (b) USURPING the principal's opportunity, or - (c) SECRET PROFITS: making a profit at the principal's expense without disclosure. RECOVERY: Principal may recover: (1) Losses caused by the breach AND (2) may disgorge profits made by the breaching agent
Actual Authority
Includes expressed authority as well as implied authority, or that authority customarily given to an agent in an industry, trade, or profession
inherent authority
Inherent authority results in the principal's being bound even though the agent had no actual authority to perform the particular act. This occurs because courts wish to protect innocent third parties. 1) Respondeat Superior: under this doctrine, the principal is held liable for the torts of her employee committed within the scope of the employment 2) Conduct Similar to that Authorized: where an agent exceeds his actual authority, but the conduct is similar to acts authorized, the principal will be held 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)
Resondeat Superior
Legal doctrine imposing liability on a principal for torts committed by an agent who is employed by the principal and subject to the principal's control
Indemnity
Obligation of the principal to reimburse the agent for any losses the agent incurs while acting on the principal's behalf
Employer-Employee
One in which an agent (employee) who works for pay and is subject to the control of the principal (employer) may enter into contractual relationships on the latter's behalf
Principal-Agent Relationship
One in which the principal gives the agent expressed or actual authority to act on the former's behalf
Undisclosed Principal
One whose identity and existence are both unknown to the third party
Disclosed Principal
One whose identity is known by the third party when the latter enters into an agreement negotiated by the agent
Partially Disclosed Principal
One whose identity is not known to the third party at the time of the agreement, though the third party does know the agent represents a principal
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
"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.
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.
independent contractor
Principals often employ outsiders (persons or businesses who are not employees) to perform certain tasks on their behalf.
Actual Implied Authority
RULE: Actual implied authority is authority which the Principal gives the Agent through conduct or circumstance. 3 WAYS IT COMES ABOUT: 1. NECESSITY: Implied authority to do all tasks necessary to accomplish the expressly authorized task. 2. CUSTOM: Implied authority to do all tasks customarily performed by person's with the agents title or position. 3. PROPR ACQUIESCENCE BY THE PRINCIPAL: There is implied authority to do all tasks which the agent believes to have been authorized to do from PRIOR acquiescence by the principal.
Ratification
RULE: Authority can be granted after the contract has been entered, if: (1) Principal has KNOWLEDGE of all material facts regarding the contract, AND (2) Principal accepts its BENEFITS. EXCEPTION: Ratification CANNOT ALTER the terms of the contract
Will a Principal who borrows another Principal's agent be vicariously liable for the borrowed agent's torts?
SITUATION: Employer #1's agent goes out and borrows Employer #2's agent. Borrowed agent commits the tort. GENERAL RULE: Generally, no vicarious liability for Principal for torts committed by a borrowed agent. (1) The Principal will be liable for the borrowed agent's torts only if there is ASSENT, BENEFIT, AND CONTROL between the borrowing principal and the borrowed agent tortfeasor. NOTE: Often there is assent and benefit w/o control. You need all 3. So NO vicarious liability for borrowed agent's torts.
Is the Principal liable for the contracts entered into by its agents?
TEST: Principal is liable for contracts entered into by its Agent ONLY IF the principal AUTHORIZED the agent to enter the contract. 4 Types of Authority: 1. Actual Express Authority 2. Actual Implied Authority 3. Apparent Authority 4. Ratification
Will the Principal be vicariously liable for torts committed by its agent? 2 Part test:
TEST: Principal will be liable for torts committed by its agent if: (1) a principal/agent RELATIONSHIP exists AND (2) the tort was committed by the agent within the SCOPE of that relationship.
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.
duty of notification
The agent's has a duty to notify the principal of any information that is important, Imputed knowledge
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.
undisclosed agency occurs when the third party is unaware of either:
The existence of an agency, or The principal's identity
Joint/Several Liability
The legal principle that makes two or more people liable for a judgement, either as individuals or in any proportional combination. Under this principle, a person who is partially responsible for a tort can end up being completely liable for damages.
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.
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
WHEN PRINCIPAL IS LIABLE FOR CONTRACTS ENTERED INTO BY ITS AGENTS
The principal is liable for contracts entered into by its agent if the principal authorized the agent to enter the contract.
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.
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.
Will the Principal be vicariously liable for torts committed by its independent contractor?
There is no right to CONTROL an independent contractor because there is no power to supervise the manner of its performance. GENERAL RULE: Generally, a Principal is not vicariously liable for an independent contractor's torts. EXCEPTIONS: (1) INHERENTLY DANGEROUS ACTIVITY EXCEPTION = If Principal's independent contractor commits a tort while engaged in an inherently dangerous activity, the Principal will be vicariously liable for that tort. (2) ESTOPPEL = If Principal HOLDS OUT their independent contractor with the appearance of agency, the Principal will be estopped from denying vicarious liability.
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.
Actual Express Authority
WHEN? Principal actually uses words to express authorization. RULE: Actual express authority can be oral and even private. EXCEPTION: If the K itself must be in writing (SOF) then the express authority must be in writing as well. - Usually a conveyance of land REVOCATION: Authorization can be revoked by: (1) UNILATERAL ACT of either the Principal or Agent; OR (2) DEATH OR INCAPACITY of the Principal. EXCEPTION: When Principal gives Agent a DURABLE POWER OF ATTRNEY - POA = a written expression of authority to enter a transaction Durable = clear survival language CONSTRUCTION: Actual express authority is narrowly construed (limited to the actual words used to give authorization)
Hypo: Charles owns an antique store. A shipment of antique clocks arrives from London. Charles tells his employee Dufus not to sell a special grandfather clock. Charles goes to lunch. Dufus sells the clock. Is Charles bound on the sales contract?
Yes. As a general rule, a Principal is liable for all authorized Ks. In this case, there was no actual express or implied authority to sell the clock. NONETHELESS, there was apparent authority IN THIS CASE because Charles cloaked dufus with the appearance of authority as an employee and the 3rd party relied on the appearance of authority to buy the clock. Therefore, Charles is liable based on a apparent authority.
gratuitous agent
an agent that works for free
distinction between the power and the right to terminate and agency
distinction is critical. - revocation of authority, renunciation of authority
kinds of employment relationships
employer-employee relationship, principal-agent relationship, principal-independent contractor relationship
negligence
frolic and detour, "coming ang going" rule, dual-purpose mission
intentional misrepresentation
occurs when an agent makes statements that he or she knows are untrue.
innocent misrepresentation
occurs when an agent negligently makes a misrepresentation to a third party.
common breaches
self-dealing, usurping an opportunity, competing with the principal, misuse of confidential information, dual agency
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
principal
the party who employs another person to act on his or her behalf
