Agency generally
Agent does things on principal’s behalf and principal directs agent’s acts.
Agency Liability –Generally
If there’s a valid agency, principal can be liable to 3rd party for agent’s actions re torts & contracts
Forming Agency Relationship:
3 requirements for agency relationship
Need to have ABC:
Assent: both parties assent for agent to work for principal
Benefit: Agent agrees to work on principal’s benefit
Control: Agent agrees to work subject to principal’s control
(don’t need consideration)
–if one party denies creation of agency relationship, ct will look to manifestations of assent (words, letter, etc)
Principal
Right to control result or ultimate objectives of A’s work.
Can be anyone with legal capacity: individual, employer, etc.
Agent
Anyone who has minimal capacity (including minor)
Minimal Capacity: Must be able to assent to relationship, perform tasks on behalf of principal, be subject to principal’s control.
Formalities for Creating Agency Relationship
Assent, Benefit, and Control.
–Don’t need consideration or writing.
Types of Agents
–Servants/Ees: ER has the right to control agent’s physical conduct of work.
–I/C: Principal doesn’t have control or right to control agent’s physical conduct of work.
(I/C tends to have own tools, can work for others, etc).
Relevant bc principals tend to be more liable when they have more control
Terminating Agency Relationship
Either party can terminate agency relationship unilaterally.
Liability of Principals to 3rd Parties re: Contracts
General Liability/Rule
Principal is liable for ks that an agent enters on behalf of the principal when the principal authorized the agent to enter into k. (in other words, when agent acted with legal authority)
Liability of Principals to 3rd Parties re: Contracts
Legal Authority: 4 types
- Actual Express Authority
- Actual Implied Authority
- Apparent Authority
- Ratification
(note actual vs apparent: actual there is communication between P and A. Apparent, communication between P and 3rd P)
Liability of Principals to 3rd Parties re: Contracts
Actual Express Authority
look to communication between P and A
Created when principal uses words (written or spoken) to convey authority to the agent.
Needs to be Subjective and Objective Intent:
- -subjective-agent must believe that he’s doing what the principal wants him to do
- -objective-belief must be rsbl
Authority terminates when agent has actual knowledge that principal died. Terminates immediately when agent dies.
(generally A can’t delegate without express authorization)
Liability of Principals to 3rd Parties re: Contracts
Actual Implied Authority
look to communication/conduct between P and A
Created when Principal uses written/spoken words, OR OTHER CONDUCT, to convey authority to agent to take whatever steps are necessary to achieve P’s objectives.
Result: Agent has actual implied authority (unless express instructions to contrary) to act within general business custom to achieve that goal.
(generally A can’t delegate without express authorization)
Liability of Principals to 3rd Parties re: Contracts
Apparent Authority
look to communication between P and 3rd P
Created when P (through written or spoken words) caused 3rd P to rsbly believe that the principal agrees to have acts done on the principal’s behalf by the agent.
3rd p’s belief can be based on: past dealings betwn P and A; trade customs; industry stds etc.
(can’t be apparent auth if undisclosed P. Then, look to detrimental reliance)
Liability of Principals to 3rd Parties re: Contracts
Ratification
There’s no pre-act communication to consider.
Ratification requires:
- P has knowledge of all material facts of K and
- P then accepts K’s benefits.
Liability of Principals to 3rd Parties re: Contracts
Termination of Authority
Revocation/renunciation (as soon as either party gives notice to other party)
Agree to terminate
Change of circumstances –cause A to rsbly believe that P no longer consents to A acting on P’s behalf.
Passage of time (rsbl)
P’s death or suspension of powers
P’s loss of cpacity –automatic upon NOTICE
A’s death–automatic
Statute mandates end of authority.
Liability of Principals to 3rd Parties re: Torts
Vicarious Liability generally and EE-ER
Vicarious Liability: P can be liable for the tortious acts of his A.
Requirements for Vicarious Liability to apply:
1. P has sufficient CONTROL (so that EE-ER) +
2. Tort happened when A was acting within scope of employment.
control = control manner and means
Scope of Employment:
Detour (liable) vs. frolic (not liable, significant deviation)
Liability of Principals to 3rd Parties re: Torts
Vicarious Liability I/C
Principal not vicariously liable for torts committed by I/C
EXCEPTIONS:
- Task inherently dangerous OR
- P negligent in hiring incompetent I/C OR
- P retains control over some of the tasks of IC and the tort occurs within those tasks.
Liability of Principals to 3rd Parties re: Torts
P’s direct liability for A’s Intentional Torts
Generally, P not liable for Intentional Torts bc not within scope of employment
Exceptions:
- -A has actual authority or P’s ratification (i.e. this is the type of task that A was hired to do)
- -Negligence in selecting, supervising, or controlling A
- -Nondelegable Duties (super important responsibility)
A’s Liability: Contract Liability
A’s liability to a party to a contract:
–Disclosed P: A doesn’t become party to k if he enters into it on P’s behalf and party knows P existence and identity
–Partially Disclosed P: A becomes party to k when 3rd P knows of P’s existence but not identity
- -Undisclosed P: If A binds P to the k and 3rd P doesn’t even know P exists, P and A are both parties to k.
- *****3rd P liability to undisclosed P: liable unless A fraudulently concealed ( = did so bc knew 3rd P wouldn’t work with P) P’s existence OR k expressly excludes P
- ****Undisclosed P’s liability to 3rd P: liable if the 3rd P detrimentally changes position bc of A without actual authority and P knew of A’s conduct and didn’t take rsbl steps to notify 3rd p.
–If A lacks power to bind P to k, then A’s breached his warranty of authority
A’s Liability: Tort Liability
A is liable to the 3rd party for negligent and intentional conduct but not liable for P’s authority.
A’s fiduciary duties to P
Even if A unpaid, A owes P:
- Duty to exercise rsbl care
- Duty to obey rsbl instructions
- Duty of Loyalty
- Agent can’t usurp business opportunities
- -Agent can’t take in secret profits
- -Agent can’t compete directly with P
Liability of Principals to 3rd Parties re: Contracts
Estoppel
(I believe this only applies when there’s an undisclosed P. P can still be held liable to the 3rd party for the k IF): Applies when 3rd p justifiably induced to make a detrimental change in position bc that 3rd p believed that the transaction was entered into for P and P failed to take rsbl steps and use ordinary care.
