Va Bar Prep: Agency
What is actual implied authority? Exceptions? Revocations?
-Authority which principal gives through conduct or circumstance. There is implied authority to do all tasks which: 1) are necessary to accomplish an expressly authorized task (Necessity) 2) by custom are performed by persons w/ agent's title or position--essentially inherent authority (Custom) 3) the agent believes to be authorized to do (From Prior Acquiescence by the Principal)
What is the nature of a principal's liability?
1) *Derivative* 2) *Joint and several*-D may elect who to recover from 3) Possibly even *directly liable* where she gave agent *actual authority to commit the tort* or *ratified the tort* or may be liable for own *negligence in hiring, retaining, or supervising* an agent if principal *knew or should have known of the agent's dangerous or careless proclivities*
What are the factors considered in determining whether a principal has the right to control the manner and method by which a person performs his tasks?
1) characterization by parties (how do they refer to the relationship?) 2) Is the person hired engaged in a distinct business/occupation of her own? 3) Customs of the locality regarding the supervision of the type of work to be performed. 4) Degree of skill required? 5) Who supplies the tools and facilities? 6) Length of employment period? 7) Basis of compensation (time or by job)? 8) Understanding of the parties through contract (explicit on right to control)? 9) Hired for business purpose or other purpose (like mowing lawn?)
Was there termination of Actual Authority?
1) lapse of a specified or reasonable time 2) Happening of specified event 3) Change in circumstances (destruction of subject matter of agency, insolvency of either, change in law or business conditions) 4) Agent's breach of fiduciary duty, 5) Either's unilateral termination (can still be breach of contract) 6) Operation of law-death, loss of capacity--> expect w/ durable power of attorney
Creation of Agency Relationship
1)* Capacity* (i) Principal MUST have contractual capacity. (Partnerships and other organized business entities can be principals) (ii) Agent-at least minimal mental capacity 2) *Formalities* (i) Consent of both parties (ii) No consideration needed (iii) No writing except as required by statute of frauds. 3) *Modes* (i) Act of Parties Agreement (actual), holding out by the principal (apparent), or ratification (ii) Operation of Law Estoppel (virtually same as apparent authority)--> requires third party reliance on principal's communication. Statute
Did the tort occur within the scope of the agent's employment?
3 Part Multifactoral case-by-case weighing test: *1) Was conduct "of the kind" agent was hired to perform?* *2) Did the tort occur "on the job"?* -->*Frolic*: new and independent journey? -->*Detour*: mere departure from an assigned task (were they on their way back to work?) *3) Did the agent intend to benefit the principal? (even in part?)*
Difference between an agent and an independent contractor?
A principal has no right to control the manner and method in which an independent contractor performs the job.
What three things are needed in a principal/agent relationship?
ABCs of agency 1) *Assent*- formal or informal agreement btw. principal who has capacity and the agent 2) *Benefit*-the Agent's conduct must be for the benefit of the principal 3) *Control*- the principal must have the right to control the agent by having the power to supervise the manner of the agent's performance
Did the Agent Have Actual Authority?
Actual Authority: 1) Express--actually contained in four corners of agency agreement (effective even if granted by mistake or misrepresentation) 2) Implied-authority agent reasonably believes she has as result of principal's actions: -incidental to express authority -arising out of custom know to agent -resulting from prior acquiescence by principal -to take emergency measures -to delegate authority -to pay for and accept delivery goods where authorized to purchase -to give general warranties as to fitness and quality and grant customary covenants in land sales, collect payment and deliver where authority to sell. -manage investments/ "prudent investor" standard
Was the Agency Irrevocable?
Agency + an interest, or Agency + security--> can't be unilaterally terminated by P if agency was given to protect agent's rights and is supported by consideration.
What is ratification? Exceptions? Revocations?
Authority can be grant AFTER the contract has been entered if: 1) Principal has knowledge of all material facts regarding the contract AND 2) Principal accepts its benefits 3) Ratification does not/cannot alter the terms of the contract
To Whom is the 3rd Party Liable
Disclosed Principal --ONLY the Principal Partially and Undisclosed Either P or A--> if A, the P entitled all rights and benefits thereunder P can't enforce a contract where there has been a fraudulent misrepresentation of P's identity or an unforeseen increased burden to third party due to fact that performance is due to P and not to A
When will an agent be liable on a contract?
Disclosed Principal (existence and identity known) 1) Principal liable 2) Agent generally not liable--> EXCEPT: where contract makes liable and under implied warranty that a principal w/ capacity exists, and that agent had authority to contract for principal. Partially Disclosed (existence known, but not identity) or Undisclosed Principal 1) BOTH P and A are liable. 3rd can go against both, then upon objection can elect who to go against. Can later sue principal if finds out identity later and judgment wasn't satisfied
Principal's duties? Remedies?
Duties: 1) Duties imposed in contract 2) Reasonable compensation (if contract is silent as to compensation this is the default) 3) Reimbursement of expenses. Remedies: 1) Usual contract remedies (w/ duty to mitigate any damages) 2) Possessory lien for any money due Nonexclusive Contracts -entitled to compensation upon production of a ready willing an bale buyer--> even though sale not consummated Exclusive Contracts -Enable broker to get commission if anyone produces a ready, willing and able buyer.
When will a principal be liable for an independent contractors torts?
Generally, they won't be, but as a matter of public policy, liability will be imposed upon the principal where: (1) *Inherently Dangerous Activity* (acts to be performed are of an inherently dangerous nature (blasting, demolition, possibly changing brakes) (2) *Estoppel*- if you hold out the IC as agent (with the appearance of an agent) you will be estopped from denying liability on that ground. (3) *Selection of IC* -->*knowledge* of incompetence, will be liable for IC's negligence -->*negligent selection/hiring* -->where a principal has *a nondelegable duty to act* and *delegates it to an IC*, principal will be liable for IC's negligence
If no actual authority, was there apparent authority?
If a P directly or indirectly holds out another as possessing certain authority, thereby inducing reasonable reliance by others, the person so held out has apparent authority. KEY: what transpires btw. P and 3rd party. 1) Impostors--> where P negligently permits impostor to be in position to appear to have agency authority 2) Lingering Apparent -Where actual authority has terminated, there is apparent authority to all 3rd parties w/ whom the P know he dealt UNLESS, the 3rd parties get actual/constructive notice of termination. -where 3rd parties rely on written authority of agent -Majority view that death does not automatically terminate agent's apparent authority. 3) Agent exceeds authority -principal previously permitted and knows 3rd party is aware of this -Agent in position that customarily carries certain responsibilities--> P liable for acts that come with these customary responsibilities 4) Inherent Authority Respondeat Superior Conduct Similar to that Authorized 5) Improper Disposition of Goods -Where Agent was given some indicia of ownership, or agent is a dealer in the particular goods.
What are the duties of the agent to the principal? What remedies are available to principal if agent breaches her duties?
In return for reasonable compensation and reimbursement of expenses, in addition to contractual duties, agents owe principals: 1) *Duty of reasonable care *(including duty to disclose all relevant information) 2) *Duty to obey instructions that are reasonable* 3) *Duty of loyalty*. Agents can never: --> *self-dealing* (receive a benefit to the detriment of the principal) -->*usurping the principal's opportunity*, or -->*secret profits* (making a profit at the principal's expense w/out disclosure Remedies for breach: 1) Principal may *recover losses* that are caused by the breach; and 2) May *disgorge profits* made by the breaching agent 3) May withhold compensation for intentional torts or intentional breach of fiduciary duty 4) Actions include tort, contract, actions for secret profits, equitable actions, constructive trust
When may a principal not enforce a contract against a third party?
Principal may not enforce contract where there has been an affirmative fraudulent misrepresentation of the principal's identity or if there is an unforeseen increased burden to the 3rd P due to fact that performance is due to the principal and not the agent.
When will a a principal be vicariously liable for torts committed by its agent?
Principal will be liable for torts committed by its agent if: (1) there is a *principal/agent relationship* and (2) the tort was committed by the *agent within the scope of that relationship*.
Is an intentional tort ever w/in scope of employment such that it would make the principal liable?
Rule: Intentional torts are generally outside the scope of the principal/agent relationship. Exceptions: Intentional torts are w/in the scope if the conduct was: *1) authorized by the principal* *2) natural (from the nature of the employment)* *3) motivated by a desire to serve the principal* e.g. bouncer in a bar
What is actual express authority? Exceptions? Revocations?
Rule: Principal used words (oral or written, even in private) to express authority to agent. Exception: If the contract itself must be in writing, the the express authority to enter the contract must be in writing as well. (i.e., a writing that is subject to the statue of frauds--look out for conveyance of land) Revoked by: (1) unilateral act of either the principal or the agent, or death or incapacity of the principal. Exception: If principal gives the agent a durable power of attorney (conspicuous survival language " survives death") Rule of construction: narrowly construed to the authority expressed in the words
When is an agent liable on its principal's contracts?
Rule: The Principal is liable on its authorized contracts, and therefore as a rule authorized agents are generally not liable on their authorized contracts. Exception: The undisclosed principal--if a principal is partially disclosed (only the identity of the principal concealed) or undisclosed (fact of principal concealed), authorized agent may nonetheless be liable as the election of the third party
When is a principal liable for contracts entered into by its agent? What are the four types of authorization?
Test: Principal is liable for contracts entered into by its agents ONLY IF the principal authorized the agent to enter the contract. 1) actual express authority 2) actual implied authority 3) apparent authority 4) ratification
When will a principal be liable for the torts of an agent whom he borrowed from another principal
The principal will be liable for a *borrowed agent's* tort *only if there is assent, benefit and control* between the principal and the subagent. (often there is assent and benefit but no control)
When will a principal be liable for torts committed by a subagent?
The principal will be liable for a *sub-agent's tort only if there is assent, benefit and control* between the *principal and the subagent*. (often there is benefit but no assent or control)
Agency (general def.)
The relationship that arises when one person (the principal) manifests *an intention* that another person (the agent) shall act on his behalf. A principal may appoint an agent to do any act *except an act which, by its nature, by public policy, or by contract, requires personal performance by the principal*.
What is apparent authority? Exceptions? Revocations?
Two-part test: 1) Did the principal "cloak" the agent with the appearance of authority? 2) Did a third party reasonably rely on that appearance of authority? (employee in shop selling item he was told not to sell)
If no actual or apparent authority, was there ratification?
Where agent purports to act on behalf of principal and principal subsequently validates the act and becomes bound. Retroactive effect UNLESS principal had no contractual capacity at time or interferes w/ intervening 3rd party rights P must know or have reason to know all material facts, must accept entire transaction, and have capacity. Express acceptance, implied through acceptance of transaction's benefits, or suing on transaction. Can ratify UNLESS--> illegal, 3rd party has withdrawn, or material change in circumstances. ONLY a disclosed or partially disclosed P can ratify
