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24 Cards in this Set
- Front
- Back
Agency exists where...
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One person (the Principal) manifests assent to another (the Agent) that A shall act on P's behalf and subject to P's control and A consents to act
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Agency Triangle
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Principal_________Agent
\ / \ / \ / Third Party -Agency relationship between P and A -A's dealings with T -Create legal liability between P and T |
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Implied Agency
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-An agency that occurs when a principal and an agent to not expressly create an agency
-The agency is implied from the conduct of the parties -The extent of the agent's authority is determined from the particular facts and circumstances of the particular situation |
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Test for if an Agency Relationship Exists
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Rest. 3d § 1.01
-The manifestation of assent by P to A that A shall act on --P's behalf --Subject to P's control -And A manifests assent or otherwise consents |
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Ways an Agent Binds the Principal to a Contract
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-Authority (either express or implied)
-Undisclosed principals--"inherent agency power" -Ratification -Estoppel |
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Actual Express Authority
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Looks at A's reasonable belief based on P's express manifestation
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Actual Implied Authority
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Looks at A's reasonable belief based on P's express manifestations, and includes acts necessary or incidental to accomplish P's objectives, as A reasonably understands
-Includes custom or past dealings |
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Apparent Authority
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Looks at T's reasonable belief traceable to P's manifestations
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Undisclosed Principals
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-History of inherent agency power or inherent authority where P was bound, but didn't fit into the other categories of cases
-When A has actual authority and doesn't disclose there is a P or its identity, both A and P are liable |
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Ratification
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-The retroactive approval of a previously unauthorized act
-When ratified, an act is given effect as if it had been authorized in the first instance (e.g. as if done by A with actual authority). Both P and T are bound and the purported A is discharged |
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Ratification occurs when...
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A) by manifesting assent to the act
B) conduct that justifies a reasonable assumption that the person so consents -At the time of ratification, the purported P must have knowledge of all material facts, and T must not have already withdrawn from the transaction |
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Estoppel
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-Raised where purported agent didn't have actual or inherent authority, but a court may hold P liable due to some fault of P. P is estopped from raising the lack of authority defense
-Estoppel is a one-way street. Only the principal is liable. |
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Agent's Contract Liability:
Fully Disclosed Agency within Scope of Authority |
-When the P is fully disclosed and A is acting within the scope of authority, P is liable to T and A is not
-Exception: if A intends/agrees to be bound to the contract. |
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Agent's Contract Liability:
Undisclosed or Unidentified Principal |
-When the P is undisclosed, both the P and A are liable to the T if the P fails to perform the contract.
-Almost always the same when the P is unidentified |
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Agent's Contract Liability:
Agent Exceeding the Scope of Authority |
-An A who enters into a K on behalf of another impliedly warrants that he or she has the authority to do so (unless A notifies T or T knows A acts without actual authority)
-If the A acted without authority or exceeded the scope of authority, and P did not ratify, A is liable to T for breaching the implied warranty of authority -A also may be liable for fraud if intentionally misrepresented his or her authority |
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Principal's Liability to T for Agent's Tort:
Direct Liability |
-A acts with actual authority to commit tort or P ratifies A's conduct
-P is negligent in selecting, supervising, or otherwise controlling A -P delegates performance of a duty to use care to protect persons or property and A fails to perform duty |
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Principal's Liability to T for Agent's Tort:
Vicarious Liability |
-A is an employee who commits a tort while acting within the scope of employment
-A commits a tort when acting with apparent authority in dealing with T on or purportedly on behalf of P |
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Vicarious Liability Classifications
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-Employee: P liable if within scope of employment {P controls results and physical conduct}
-Non-Employee Agent/Independent Contractor (agent-type): P not liable except in special cases {P has no control over physical conduct} -Non-Agent (service provider)/Independent Contractor (non-agent): P not liable in agency law {P has less control over results and does not control physical conduct} |
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P Liability for Non-Employee Agent
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Not Liable Except When:
-P retains control over the aspect of the work in which the tort occurs (e.g. treated as employee with respect to some limited part of work) -P hires an incompetent contractor -Nondelegable duty (e.g. a land occupier has a duty to keep land safe for business invitees) -Activity contracted for is inherently dangerous (e.g. demolition or blasting) |
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A's duties to P
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-Duty of loyalty
-Duty not to acquire a material benefit from a T for actions taken on behalf of P or through A's use of position -Duty not to act as adverse party to P -Duty to refrain from competing with P during agency relationship -Duty of confidentiality; duty not to use P's property for A's own purposes -Duty to act in accordance with any contract with P -Duty of care, competence, and diligence -Duty to act only within scope of actual authority and duty to obey -Duty of good conduct -Duty to notify P of info that A knows or has reason to know P would want to know |
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Principal's Consent
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-Conduct by A that would otherwise breach a duty listed below does not constitute a breach if P consents, provided that A acts in good faith and discloses all material facts in obtaining the consent:
-duty of loyalty, duty not to acquire material benefit from a T, duty not to act adverse or to compete, duty of confidentiality |
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P's Obligations to A
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-P has a duty to indemnify A for the terms of any contract between them, when A makes a payment within the scope of actual authority, or that is beneficial to P unless A acts officiously in making the payment, or when A suffers a loss that fairly should be borne by P in light of their relationship
-Duty to deal with A fairly and in good faith |
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Terminating Actual Authority
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-Agreement of Parties (K says when it ends)
-By lapse of time (within a reasonable time period or stated time) -Any time by either party after notice -By change of the circumstances that should cause A to realize P would want to terminate authority -Fulfillment of the purpose of the agency relationship -By operation of law (e.g. upon death or loss of capacity of either) |
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Terminating Apparent Authority
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-Termination of actual authority does not end any apparent authority held by A
-Apparent authority ends when it is no longer reasonable for T to believe that A continues to act with actual authority. -The test is whether T knows or reasonably should have known of the termination of A's authority |