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Agency/Partnerships/CorporationsAgency Relationship Formalities
(1) ASSENT-both parties must manifest assent to work with one another (only factor determinative
when a party disclaims existence of agency);
(2) BENEFIT-the agent agrees to work for the benefit of the principal; and
(3) CONTROL-the agent agrees to work subject to the control of the principal
[Creating an agency relationship is relatively easy because:
(a) An agent need not receive consideration (a gratuitous agent); and
(b) A principal's appointment of an agent generally need not be in writing or comply with other
formalities.]
Required Capacity of Agent
Minimal Capacity
[Depends on whether they are subjectively capable of meeting above three formation requirements
(i.e., can include minors/legally incompetent)]
Required Capacity of Principal
Legal Capacity (to possess rights and incur obligations can be a principal)
[Excludes minors/intoxicated/unincorporated associations]
Terminating Agency Relationship 100%
Default is that agency is at will, so either party can choose to terminate agency relationship
unilaterally.
May be changed by agreement
Types of Agents & Relative Control
(1) servant/employee-principal has right to control agent's physical conduct of work;
(2) independent contractor-principal does not control/have the right to control agent's physical
conduct of work
Independent Contractor Characteristics
(1) maintains high level of independence;
(2) free to work for other people;
(3) paid on a fixed fee (rather than regular basis);
(4) typically owns their own tools
Contract Liability for Agent Contract
(1) principal authorized agent to enter into contract; and
(2) agent acted with legal authority
Types of Legal Authority (Agency)
(1) actual-express authority (principal expressly told agent);
(2) actual-implied authority (principal impliedly told agent);
,(3) apparent authority (principal told third-party so);
(4) ratification;
(5) estoppel
Actual-Express Authority (Agency)
(1) communication
(a) between principal & agent (written/spoken words)
(b) to do something for principal;
(2) requisite intent
(a) subjective-agent must believe they are doing what principal asks;
(b) objective-belief must be objectively reasonable
(3) termination
(a) agreement-bilateral or unilateral;
(b) principal's death-once agent has actual knowledge of principal's death;
(c) agent's death-automatically
Actual-Implied Authority (Agency)
(1) communication
(a) between principal & agent (written/spoken words or other conduct)
(b) to take steps necessary to achieve principal's objective;
(2) agent has implied authority to act within:
(a) accepted business custom; or
(b) general trade usage 100%
Apparent Authority (Agency)
(1) communication
(a) between principal & third-party (written/spoken words);
(b) that cause third-party to reasonably believe principal consents to agent's acts;
(2) third-party belief must be reasonable (can look at prior dealings)
(3) termination must be communicated to third-party
Ratification of Agent Conduct
(1) principal has knowledge of the material terms of contract; and
(2) principal then accepts the contract's benefits (can be communicated to either the agent or
third-party)
Agency by Estoppel
A (purported) principal may be estopped from denying the existence of an agency relationship or an
agent's authority for the appearance of authority arising solely from the principal's failure to take
reasonable steps and use ordinary care (i.e., no actual communication between principal and third
party).
Estoppel applies when a third party justifiably believes that the transaction was entered into on behalf
of the principal and either the principal:
(a) intentionally or carelessly caused the belief; or
, (b) with notice of third party's belief, failed to take reasonable steps to notify them of agent's lack of
authority
Disclosed Principals
When the third-party knows
(a) the agent is acting on behalf of a principal; and
(b) the principal's identity
Partially Disclosed Principals
When third-party knows
(a) the agent is acting on behalf of a principal;
(b) but not the principal's identity
Undisclosed Principals
When the third-party doesn't know either
(a) the agent is acting on behalf of a principal; or
(b) the principal's identity
Disclosure of Principal Effect on Contract
(1) Disclosed- parties to contract are third-party & principal (can't sue agent);
(2) Partially Disclosed- parties to contract are third-party, principal & agent (can sue anyone);
(3) Undisclosed- parties to contract are third-party & agent (can't sue principal)
Tort Liability for Agent Conduct (Vicarious Liability)
(1) principal has sufficient control over agent's physical conduct; and
100%
(2) tort committed by agent within scope of employment
Sufficiency of Control-Vicarious Liability for Agents
(1) servant/employee-always sufficient control;
(2) independent contractor-only if
(a) inherently dangerous,
(b) principal negligently hired contractor; or
(c) principal retains control over certain task in which tort occurred
Scope of Employment-Vicarious Liability for Agents
(1) considerations
(a) did agent intend to benefit principal?
(b) was agent's conduct of the kind hired to perform?
(c) did tort occur "on the job"?
(2) definitions
(a) frolic-significant deviation from assigned path (outside scope);
(b) detour-de minimis deviation from assigned path (within scope);
(3) intentional torts-generally outside scope of employment, unless (same three factors above)
(a) agent was motivated in some part to benefit the principal;
(b) act is of a kind that the agent was hired to perform; and
(c) conduct occurred within general space and time limits of employment
Agent Fiduciary Duties to Principal
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