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Bar - Agency with FL Distinctions
Agency with FL Distincitons

Additional Law Flashcards




Two parties to agency relationship
agent and principal; agent does things on behalf of principal
Three components of agency relationship
Assent: both parties agree: principal agrees to have agent work for him and agent agrees to work for principal

Benefit: agent agrees to work for principal's benefit

Control: agent agrees to act subject to principal's control

no requirement of consideration

When one or more parties disclaim the creation of an agency relationship, courts will look to manifestations of assent, which can range from formal letter, spoken words, physical actions
Who can be a principal
almost any person or entity that has legal capacity, but excludes: minors and those under influence of drugs, alcohol or mental illness. Employers, corporations and partnerships can be principals

Unincorporated associations cannot be principals because they lack legal capacity
Who can be an agent
any person or entity who has minimal capacity; minor can serve as an agent

to have minimal capacity, agent must be able to: assent to agency relationship, perform task on behalf of principal, and be subject to principal's control

generally, any type of business entity may serve as an agent
Formalities for creating an agency relationship
assent, benefit, control, but no consideration

no evidence in writing is necessary
Types of agents
Servants/employees: employer has the right to control the agent's physical conduct of work

Independent contractors: principal does not control or have the right to control the agent's physical conduct of work. Characteristics:
-maintain a high level of independence
-free to work for other people
-paid on a fixed fee
-has his own tools
Terminating agency relationship
either party can terminate agency relationship unilaterally
When is a principal liable for Ks that an agent enters on behalf of the principal?
principal is bound o nK when the principal has authorized that agent to enter into K; if the agent acted with legal authority
Four types of legal authority
-actual express authority
-actual implied authority
-apparent authority
Legal authority: actual express authority
Look to communication between agent and principal; principal creates actual express authority by using words (written or spoken) to convey authority to the agent
-subjective intent: agent must believe that he is doing what the principal wants him to do
-objective intent: belief must be reasonable
-upon the death of the principal, actual express authority terminates when the agent has actual knowledge of the principal's death. Actual express authority terminates immediately upon death of the agent
Legal authority: actual implied authority
Look to communication between agent and principal; principal creates actual implied authority by using words, written or spoken, or other conduct to convey authority to the agent to take whatever steps are necessary to achieve the principal's objectives
-agent has actual implied authority (absent express instructions to the contrary) to act within general business custom or general trade usage
Legal authority: apparent authority
Look to communications between principal and third party; principal creates apparent authority by words, written or spoken, that cause third party to reasonably believe that principal consents to have acts done on principal's behalf by the agent
Legal authority: ratification
There's no pre-act communication to consider, so nothing occurs until after. It requires that the principal has knowledge of all material facts of the K and the principal then accepts the K
Three types of principals
1) disclosed principals: third party knows the agent is acting for a principal and the identity of the principal
-parties to the K are the third party and the principal

2) partially disclosed principal: third party knows agent is acting for a principal but does not know who the principal is
-parties to the K are the third party, principal, and agent

3) undisclosed principal: third party knows neither that the agent is working on behalf of a principal nor the identity of the principal
-parties to the K are third party and agent
Vicarious liability
Respondeat superior: principal may be liable for the tortious acts of his agent; two requirements
-principal has sufficient control over the agent's conduct such that the agency relationship is employer-employee; and
-the tort committed by the agent was committed while the agent was acting in the scope of that relationship

scope of employment:
-did agent intend to benefit the principal
-was the agent's conduct of the kind that the agent was hired to perform
-did the tort occur on the job? frolic (significant deviation from assigned path) v detour (de minimis deviation from assigned path)

Principal does not have vicarious liability for torts committed by an independent contractor EXCEPT for: 1) tasks that are inherently dangerous, 2) principal was negligent in hiring the independent contractor, or 3) principal retains certain control over some of these acts and tort occurs within those tasks
Intentional torts
generally, intentional torts are not considered within the scope of employment and no liability for the principal

-conduct occurred within the general space and time limits of employment
-agent was motivated in some part to benefit the principal
-act is of a kind that the agent was hired to perform
Fiduciary duties
three duties that all agents owe to principals, even if the agent is unpaid: duty to exercise reasonable care, duty to obey reasonable instructions, duty of loyalty

duty of loyalty:
-agent cannot take business opportunities
-agent cannot take in secret profits
-agent cannot compete directly with the principal
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