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Agency relationships can be created by:
1. Oral or written communication of intent
2. Implied conduct of the principal
3. Third party misinterpretation
Elements of creating an agency relationship:
1. Principal manifests intent to an agent
2. Agent acts on the principal's behalf
3. Agent's actions are subject to the principal's control (whether the principal excercises this right or not)
4. Agent manifests assent or otherwise consents
An agent has power to bind the principal when:
1. The agent has actual authority (express or implied)
2. The agent has apparent authority (derived from the reasonable reliance of a third party and traceable to a manifestation by the principal)
3. The principal is estopped from denying the agent's authority because a third party detrimentally relied on a belief that an agency relationship existed, and that belief was caused by the principal (intentionally, carelessly, or by having notice and failing to take reasonable steps to correct the mistake)
What is the difference between implied actual authority and apparent authority?
1. Implied actual authority exists when the AGENT reasonably believes that he has authority to act.
2. Apparent authority exists when the principal causes a THIRD PARTY to reasonably believe an agent has authority to act.
Ways to terminate actual or apparent authority:
1. Principal's revocation
2. Agreement between principal and agent
3. Change of circumstances
4. Passage of a reasonable period of time
5. Death or suspension of powers of either the principal or the agent
6. Principal's loss of capacity
7. Statutorily mandated termination
Respondeat Superior:
A principal is vicariously liable to a third party harmed by the agent's conduct when:

1. The agent is an employee, and
2. The agent commits a tort while acting within the scope of employment
Intentional torts may fall within the scope of employment when:
1. The conduct is within the space and time limits of employment
2. The agent was motivated in part to act for the employer's benefit, and
3. The act was the kind of act the employee was hired to perform
Frolic vs. Detour
1. A frolic involves a significant deviation from the path that otherwise would be taken for the purposes of performing work, and is not within the scope of employment
2. A de minimis departure from an assigned route is only a detour and is still within the scope of employment
A principal is directly liable to a third person harmed by an agent's conduct if:
1. The principal authorizes or ratifies the agent's conduct
2. The principal is negligent in selecting, supervising, or otherwise controlling the agent, or
3. The principal delegates to an agent performance of a non-delegable duty to use care to protect other persons or their property and the agent breaches that duty
To avoid becoming a party to a contract, an agent must:
1. Enter into the contract on behalf of a disclosed principal
2. Affirmatively disclose to the third party both the existence and identity of the principal, and
3. Not agree to become a party to the contract
Duties of agents to principals:
1. Duty of care to perform with reasonable diligence and skill
2. Duty to provide information regarding all matters relating to the agency relationship
3. Duty of loyalty to the principal to work only for his benefit
4. Duty of obedience, and
5. Duties not to usurp a business opportunity, not to take financial gain without consent, provide accountings, and not to commingle the principal's property with that of a third party
Duties of principals to agents:
1. Deal fairly and in good faith
2. Contractual duties
3. Duty to pay compensation, if obligated
4. Duty not to interfere with agent's completion of work
5. Duty to indemnify against pecuniary loss suffered by the agent while acting within the agency relationship and with actual authority
The duty of loyalty includes:
1. Not dealing with the principal as an adverse party without the principal's knowledge
2. Refraining from acquiring a material benefit without the principal's consent
3. Not usurping business opportunities
4. Not competing
5. Not disclosing when an agent owes duties of disclosure, good faith, and fair dealing to multiple principals
6. Not using the principal's confidential information for anyone other than the principal
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