LSE Chapter 17

What authority is ended with the termination of an agency relationship?

Actual authority

For what terminations does a principal NOT have a duty to notify third parties?

Agencies terminated by operation of law

Who can terminate an agency relationship?

Either the agent or the principal may terminate.

What must a principal do to terminate an agency at will?

Simply notify the agent of the termination.

How does a principal become liable to third parties on contracts?

The principal's agent has the authority to bind the principal in a contract with a third party.

Is a principal liable for the tortious actions of the principal's agent?

Yes, but the agent must reimburse the principal.

Who is liable to third parties for damage caused by an agent's tortious conduct if the principal had directed the agent to take that action?

both the agent and the principal

What is the term for the act of terminating an agency relationship? Choose 2 answers.

revocation, if done by the principal renunciation, if done by the agent

What are the fiduciary duties of an agent to her principal? Choose 3 answers.

accounting obedience loyalty

If harm is done by an agent, and it is discovered that this agent has been convicted of the same harm before at a previous job, what might a principal be liable for?

negligent hiring

Is a principal under a duty to compensate an agent who works on the principal's behalf?

Yes, if the contract requires compensation.

What will terminate an agency relationship? Choose 3 answers.

achievement of the purpose of the agency lapse of a pre-specified time mutual agreement between agent and principal

Homeowners Zander and Anita Elba hired Ken Manos, doing business as OutCreate, to undertake a landscaping project. Ken signed the parties' contract as "Ken Manos, Representative of OutCreate." The Elbas made payments on the contract with checks payable to "Ken Manos," who deposited them in his personal account. OutCreate did not have a bank account. Later, alleging breach of contract, the Elbas filed a suit in a state court against Ken Manos as an individual. Manos defended that he could not be liable because the contract was not between the Elba family and him personally but was between the Elba family and OutCreate. He claimed that he was the agent of a company called Forest Green Landscapes and Irrigation, Inc., which had been operating under the name "OutCreate" at the time of the contract and had since filed for bankruptcy. The name "Forest Green" was not in the contract. Should Manos be liable on this contract?

OutCreate would be a disclosed principal in the contract. This type of principal is liable to a third party for contracts made by its agents. In this situation, OutCreate is liable on that contract. Assessment question At trial, Manos claimed that he was an agent for Forest Green Landscapes and Irrigation, Inc. and claimed that OutCreate was just another name for Forest Green Landscapes and Irrigation, Inc. . Forest Green was not mentioned in the contract and would be an undisclosed principal. This type of principal generally is bound to perform the contract. Assessment question Once an undisclosed principal's identity is revealed, the third party generally can hold either the principal or the agent liable on the contract. Forest Green is bankrupt and therefore cannot perform the contract. Because the undisclosed principal is the same entity as the disclosed principal, and that undisclosed principal cannot perform on the contract, a court likely will find that Ken Manos is liable on the contract. Assessment question What If the Facts Were Different? Assume that the Elba family looked for landscapers in the phonebook and found Forest Green. When they called the number, Manos answered with the name "OutCreate" and told the Elba family that OutCreate was another business name for Forest Green. Manos still signed the contract as "Ken Manos, Representative for OutCreate" and still had the check made out to him personally. Under these facts, the landscaper in the contract is OutCreate . Because of the phone conversation between Manos and the Elba family, Forest Green is a disclosed principal. Because of this, Forest Green is liable on the contract. Assessment question And because of the type of agency, Manos is not liable on the contract. Under these facts, the court should dismiss Manos from the suit.

When is an agent liable on a contract that the agent entered into in the business of the agent's principal? Choose 3 answers.

if the agent entered into the contract in a personal capacity when the agent is acting without authority when the principal is undisclosed