What are the requirements to create an agency relationship?
- Assent - both parties agree
- Benefit - will work for principal
- Control - A agrees to work for control
No CX needed
What is a principal?
Any individual or entity with the legal capacity to possess rights and incur obligation who agrees to be bound by the acts of an agent within the scope of the agent’s authority.
Who cannot be a principal?
Incapacitated persons, the intoxicated, the very ill, etc.
What entities can be principals?
Employers, corporations, partnerships
What entity cannot be a principal for want of legal capacity?
Unincorporated associations
Who can be an agent?
Any person with minimal capacity
Who can be a principal?
Any person with legal capacity.
What is required for minimal capacity?
The ability to:
- Assent to the agency relationship;
- Perform the tasks on behalf of the principal; and
- Be subject to the principal’s control
What characteristics define independent contractors?
- Maintain a high level of independence
- Free to work for others
- Paid on a fix fee
- Have own tools
Who can terminate an agency relationship?
Either party can terminate an agency relationship unilaterally.
When is a principal liable for contracts entered to by an agent?
The principal is bound on a contract when the principal has authorized the agent to enter that contract.
What are the four types of legal authority?
- Actual express authority.
- Actual implied authority.
- Apparent authority.
- Ratification.
What is actual express authority and what is required for it?
Actual express authority requires:
- The principal expressly grants authority to the agent.
- The agent must have the subjective intent of doing what the principal wants him to do.
- The belief must be reasonable
What is actual implied authority?
Actual implied authority is words or conduct that conveys authority to that may reasonably be understood by the agent to authorize taking whatever steps are necessary to achieve the principal’s objectives.
When does death end authority?
Actual express authority ends when the agent has actual knowledge of the principal’s death or when the agent dies.
What is apparent authority?
Apparent authority is created by words or conduct that cause a third party to reasonably believe the principal consents to have acts done by the agent.
This may be established by prior dealings, trade usage, and the like.
Does an agent have actual implied authority to act within general business custom or trade usage?
Yes, unless there is express instruction to the contrary otherwise.
What is required to ratify an act as an agency relationship?
- P ratifies entire K
- P and 3d party have legal capacity to enter K
- Ratification occurs before 3dP withdrawal
- P knows material facts of t/n
When does authority terminate?
- Revocation
- Agency agreement
- Passage of time
- Death
- P’s loss of capacity
- Statutory mandate
- A’s breach of fiduciary duty
When is a principal estopped from denying an agency relationship exists?
A principal is estopped from denying the existence of an agency relationship when:
- A third party is justifiably induced to make a deterimental change in position
- That was done on the reasonable belief it was for the principal;
AND either
- the principal intentionally or carelessly caused that belief; OR
- Had notice and failed to take reasonable steps to cure the confusion.
When is a principal liable under respondeat superior?
A principal may be liable for torts committed by an agent within the scope of his employment.
What duties does a principal owe to an agent?
- The duty to deal fairly and in good faith and not to injure A’s reputation.
- To provide compensation, if so agreed
- The duty not to interfere with completion of A’s work
- The duty to indemnify against pecuniary loss suffering in connection with the agency relationship.
What duties does an agent owe to a principal?
- The duty of loyalty
- The duty to perform with due care and diligence
- The duty of obedience
- The duty to provide relevant information and not to commingle accounts
What is the election of remedies doctrine?
When a principal is undisclosed and later discovered, and the agent is bound by a contract, the third party must select one - and only one - to recover from for breach
