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Agency
Oregon State Bar 2013
63
Law
Post-Graduate
06/30/2013

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Term
Agency
Definition
when one person (the principal) manifests an intention that another person (the agent) shall act on his behalf.
Term
Requirements of Agency
Definition
Consent
Principal must have contractual capacity
Agent needs only minimum capacity

No consideration or writing required
Term
Equal dignities rule
Definition
If the subject of an agency relationship is under SOF, agency contract must be under SOF
Term
Modes of Creation
Definition
i. agent and principal agree
2. principal holds out another to his agent as third party
3. principal may agree to unauthorized acts
Term
Modes of creation: operation of law
Definition
Estoppel: apparent authority makes the principal a party to the contract- without contractual rights and liabilities- whereas estoppel is merely a remedy to protect innocent party against loss

Statute
Term
Duties of agent to principal
Definition
TERMS OF AGREEMENT

Loyalty
Obedience
Care
Term
Duty of loyalty
Definition
The fiduciary duty of an agent to his principal is one of undivided loyalty.
Term
Duty of obedience
Definition
An agent must obey all reasonable directions of his principal.
Term
Duty of reasonable care
Definition
An agent owes a duty to her principal to carry out her agency with reasonable care, in light of the local community standards
Term
Duty to Notify
Definition
The duty of care includes a duty to notify the principal of all matters that come to the agent's knowledge affecting the subject of the agency
Term
Remedies of Principal
Definition
Breach of K? (REMEMBER: K requires consideration. Thus, must be compensated)

Tort: all agents

Action for secret profit
Accounting
Withholding compensation (intentional torts/breaches)
Term
Action for secret profits
Definition
Example: A sells good for over price and realizes additional money. Additional money belongs to P.
Term
Duties of subagent to principal agent
Definition
Where a subagent has been appointed with proper authority, she too will owe the principal the same duties as would the agent.

Agent always liable for subagent breach.
Term
Liability of subagent to agent
Definition
Subagent owes the agent the same duties she owes the principal; thus, she will be liable to the agent for her breaches
Term
Unauthorized subagent
Definition
Where the subagent has been appointed without authority, the subagent owes no duties to principal
Term
Duties of Principal to Agent
Definition
1. Compensation
2. Reimbursement
3. TERMS OF AGREEMENT
4. Duty to cooperate: help agent carry out duties
Term
Remedies of agent
Definition
Breach of contract

Agent's lien
Term
Real estate broker: exclusive contract
Definition
An exclusive contract entitles a real estate broker to her commission if she or anyone else

Nonexclusive: broker furnishes buyer
Term
Actual authority
Definition
Power AGENT REASONABLY THINKS SHE POSSESSES.

Principal will be bound regardless of whether the third party knew of the agent's authority, and the agent cannot be held liable to the principal for breach because she acted within scope of her authority.
Term
Types of actual authority
Definition
Express or implied

Express: contained in the agreement.

Implied: agent reasonably believes that she has as a result of the actions of the principal.
Term
Implied authority from express authority
Definition
Express authority granted to an agent to accomplish a particular result necessarily implies authority to use all means reasonably necessary for accomplish.
Term
Agent Authority to Delegate
Definition
Generally, an agent's authority will not be construed to permit her to delegate any of her authority.

Exceptions: (1) ministerial acts; (2) delegation required by circumstances; (3) custom; (4) impossibility.
Term
Implied authority: authority to purchase
Definition
Authority to pay and authority to accept delivery
Term
Implied authority: authority to sell
Definition
Authority to warrant, authority to collect, authority to deliver
Term
Termination of actual authority: time lapse
Definition
Specified time OR reasonable time
Term
Termination of actual authority:
Definition
1. time
2. by happening of event
3. Change in circumstances
4. Breach of agent's fiduciary duty
5. Unilateral act of principal or agent
6. Operation of law
Term
Termination of actual authority: change in circumstances
Definition
a. Destruction of the subject matter authority
b. a drastic change in business conditions
c. a change in relevant laws
d. insolvency of agent or principal
Term
Termination of actual authority: unilateral act
Definition
Either the principal or the agent can unilaterally terminate the agency relationship.

Communicate termination.

Can terminate, but look for breach
Term
Termination of actual authority: operation of law
Definition
Death or loss of capacity by either party, dissolution of a corporation or partnership, insanity of person
Term
Durable power of attorney
Definition
a power of attorney is a written instrument an authorizing agent to perform specific acts and is usually used by the agent to evidence his authority to third parties.
Term
Irrevocable agencies
Definition
1. Agent has an interest in subject matter

2. Power is for security.
Term
Apparent authority
Definition
Where the principal holds out another possessing certain authority, thereby inducing others reasonably to believe that authority exists the agent has apparent authority to act
Term
Holding out by principal
Definition
The principal must have done or so failed to do something that causes the third party's belief.

Mere assertion of agent is insufficient.
Term
Apparent authority: imposters
Definition
When the principal negligently permits an imposed to be in a position where the imposter appears to have authority to act for the principal, the principal will be held liable for the imposter's act undertaken with such authority.
Term
Apparent authority: death or incompetency
Definition
Death or incompetency of the principal terminates all authority of the agent without notice to either the agent or third parties.
Term
General vs. special agent
Definition
A general agent is one who is authorized to engage in a series of transactions involving a continuity of service.

Special agents do not have any continuity of service.
Term
Apparent authority: inherent authority
Definition
Inherent authority results in a principal being bound by his agent's acts in certain situations even though the agent has no actual authority
Term
Improper disposition of goods
Definition
Issue: one recurring problem is the improper disposition of goods by a person to whom they have entrusted

Mere possession is insufficient

Need an indica of ownership
Term
Ratification: Adoption
Definition
There are several situations in which the ratifaction is considered effective on the date of ratification and does not relate back.

Principal is deemed to have ADOPTED K
Term
Ratification
Definition
Principal has or reasonably should have knowledge of the material facts at time of affirmance.

Principal must accept the entire transaction.

Principal must have capacity, no consideration needed.
Term
Methods of ratifying
Definition
1. Express
2. Implied (acceptance, silence, suit to enforce)
Term
Ratification: withdrawal by third party
Definition
If prior to ratification, the third party indicates that she will not be bound by the contract, the principal will not ratify.
Term
Ratification: material change of circumstances
Definition
Where there has been a material change of circumstances so that it would not be equitable to hold the third party to the contract, there can be no ratification.
Term
Ratification: by whom?
Definition
Only the principal

No ratification by undisclosed principal. (third party never relied)
Term
Third party vs. principal
Definition
If the agent had authority, principal is liable.
Term
Third party vs. agent: disclosed principal
Definition
A disclosed principal is one whose existence and identity are known to the third party.

Disclosed principals are liable, agents generally not liable.
Term
Disclosed principal: agent liability to third party
Definition
1. TERMS OF AGREEMENT

2. IMPLIED WARRANTY OF AUTHORITY
Term
Implied warranty of authority
Definition
When an agents enters into a contract purportedly on behalf of principal, agent makes an implied warranty of authority.

Mainly, that the agent has authority to enter into transaction.

Disclosed principal, can be held liable
Term
Third party vs. agent: undisclosed principal
Definition
A partially disclosed principal is one whose existence, but not identity, is known to the third parties.

An undisclosed principal is one whose existence and identity are unknown.

Both principal and agent are liable. Third party can elect who to bind prior to judgment.
Term
Right to hold third party liable to contract
Definition
Disclosed principal: principal can enforce K

Partially disclosed / undisclosed: either principal or agent can enforce contract
Term
Situations where principal may not enforce contract against third party
Definition
1. Fraudulent concealment of principal's identity (needs affirmative action)

2. Increase of Burden to third party
Term
Respondeat Superior: Elements
Definition
1. Employer-employee relationship

2. Conduct within scope of employment

Liability is derivative, joint and several.

Could be direct.
Term
Employee or independent contractor
Definition
The single overriding factor in determining whether a person is an employee is whether the principal has the right to control the manner and method by which the person performs his task.

Apply to borrowed employees.
Term
Determination of control: factors
Definition
1. Characterization by parties 2. Distinct business 3. Custom regarding supervision 4. Skill required 5. Tools and facilities 6. Period of employment
7. Basis of compensation 8. Understanding 9. Business purpose
Term
Respondeat superior: subservants
Definition
A principal may also be liable for the torts committed by a duly authorized subservant. In determining whether a subservant is authorized, you have to determine whether the person who hired him had an authority to do so.
Term
Employer-employee estoppel
Definition
Where the principal creates the appearance that an employer-employee relationship exists, and a third person relies upon the appearance, the principal may be estopped from denying the existence of the relationship.
Term
Liability for acts of independent contractors
Definition
1. Inherently dangerous activities

2. Selection of an incompetent contractor
KNOWING = contractor's negligence
Negligence = own negligence

3. Nondelegable duties (ex. landowner)
Term
Scope of employment
Definition
Same general nature?

Substantially removed from the authorized time and space limits of the employment?

Part purpose to serve employer?
Term
Scope of employment: authorization
Definition
To be within the scope of employment, the employee's conduct does not have to be actually authorized. Furthermore, the fact than an act was forbidden by the employer or performed in a manner forbidden by the employer does not necessarily remove it from the scope of employment.
Term
scope of employment: frolic and detour
Definition
Small or minor deviations from an employer's directions fall within the scope of employment, while major deviations fall outside scope.
Term
Motivation to serve employer
Definition
At the time of the act, the employee must be motivated by a desire to serve purposes of employer.
Term
Intentional torts
Definition
Employer is usually not liable for the intentional torts of her employee; intentional torts are outside scope of employment.

Exception: natural incident to carrying on business, benefit running to employer, or force is authorized.
Term
Ratification
Definition
An employer may ratify the unauthorized tortious acts of employee.
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