Term
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Definition
Bound
Reimbursement
Indemnity
Liability |
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Term
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Definition
| the principal is legally bound to the third party. |
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Term
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Definition
| the principal owes a duty to repay the agent for reasonable expenses incurred in the agency. |
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Term
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Definition
| a party owes a duty to compensate another for expenses the other incurred due to its actions. |
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Term
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Definition
| the party is liable to another. |
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Term
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Definition
Disclosed principal
Unidentified principal
Undisclosed principal |
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Term
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Definition
| principal whose existence and identity are known. |
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Term
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Definition
| principal whose existence is known, but whose identity is not known. |
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Term
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Definition
| principal whose existence and identity are not known. |
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Term
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Definition
Actual authority
Apparent authority |
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Term
Actual authority
(Types of Authority) |
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Definition
| power conferred upon agent by actual consent given by the principal. |
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Term
Actual express authority
(Actual authority) |
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Definition
| derived form written or spoken words of the principal. |
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Term
Actual implied authority
(Actual authority) |
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Definition
| inferred by agent from words or conduct of the principal. |
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Term
Apparent authority
(Types of Authority) |
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Definition
| power conferred upon the agent by acts or conduct of the principal that reasonably lead a third party to believe that the agent has such power, even if it doesn’t. |
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Term
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Definition
Delegation of authority
Ratification |
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Term
Delegation of authority
(Authority) |
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Definition
| is usually not permitted unless actually authorized by the principal; if the agent is authorized to appoint other subagents, the acts of these subagents are as binding on the principal as those of the agent. |
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Term
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Definition
| Example: if you are appointed as an agent and you job is to decorate the interior of a home, you cannot hire subagents to do the job for you unless this is authorized by the principal. |
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Term
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Definition
| approval by the principal of a prior unauthorized act that another has done as her agent or purported agent. |
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Term
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Definition
| Example: you are hired as an agent who manages the principal’s financial portfolio. You buy stocks without the approval of the principal, but the principal later approves this action. |
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Term
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Definition
| ends actual authority, but not necessarily apparent authority. |
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Term
Third Restatement
(Termination of Agency) |
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Definition
Termination of actual authority
Apparent authority |
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Term
Termination of actual authority
(Third Restatement) |
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Definition
| does not end by itself of any apparent authority held by an agent. |
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Term
Apparent authority
(Third Restatement) |
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Definition
| ends when it is no longer reasonable for the third party with whom an agent deals to believe that the agent continues to act with actual authority. |
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Term
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Definition
| Example: you are hired as an agent who buys art for your principal. The principal decides he no longer needs your services, and lets you go. However, you have been lining up a deal with an artist and have promised to buy a collection from her. Even though you no longer have actual authority, you still have apparent authority from the perspective of the artist until she learns of any information regarding your termination. |
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Term
| Rules of Contractual Liability |
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Definition
Disclosed principal
If the agent has actual authority
If the agent has apparent authority but not actual authority
If the agent has no actual or apparent authority |
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Term
Disclosed principal
(Rules of Contractual Liability) |
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Definition
| is contractually bound with the third party if the agent acts within her actual or apparent authority in making the contract. |
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Term
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Definition
| Example: in the art dealer example above, even though you no longer technically work for the principal, he is still liable to pay for the art you ordered on his behalf because you had apparent authority in the eyes of the artist who sold the artworks to you. |
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Term
If the agent has actual authority
(Rules of Contractual Liability) |
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Definition
| the principal is bound to the third party (the principal must pay for the art the artist sold). |
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Term
If the agent has apparent authority but not actual authority
(Rules of Contractual Liability) |
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Definition
| the principal is bound to the third party (must pay for the art). The agent who made a deal knowingly without authority has indemnity and may be liable to the principal. |
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Term
If the agent has no actual or apparent authority
(Rules of Contractual Liability) |
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Definition
| then the agent is liable to the third party and the principal is free from any financial obligation. |
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Term
| Direct Tort Liability of Principal |
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Definition
Acts of principal
Authorized acts of agent
Unauthorized acts of agent |
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Term
Acts of principal
(Direct Tort Liability of Principal) |
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Definition
| a principal is liable for his own tortious conduct involving the use of agents. |
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Term
Authorized acts of agent
(Direct Tort Liability of Principal) |
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Definition
| a principal is liable for torts she authorizes another to commit or that she ratifies. |
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Term
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Definition
| Example: if the principal authorizes the agent to blackmail a third party into making a deal, then the principal is liable for that tort as well as the agent. |
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Term
Unauthorized acts of agent
(Direct Tort Liability of Principal) |
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Definition
| a principal is liable for failing to exercise reasonable care in employing agents whose unauthorized acts cause harm, even if not is scope of employment. |
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Term
| Principal’s Vicarious (Indirect) Liability for Agent’s Unauthorized Acts |
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Definition
Respondent superior
Agent acts with apparent authority
Independent contractor |
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Term
Respondent superior
(Principal’s Vicarious (Indirect) Liability for Agent’s Unauthorized Acts) |
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Definition
| an employer is liable for unauthorized torts committed by an employee in the scope of his employment. |
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Term
Agent acts with apparent authority
(Principal’s Vicarious (Indirect) Liability for Agent’s Unauthorized Acts) |
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Definition
| a principal is liable for torts committed by an agent in dealing with third parties while acting within the agent’s apparent authority. |
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Term
Independent contractor
(Principal’s Vicarious (Indirect) Liability for Agent’s Unauthorized Acts) |
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Definition
| a principal is usually not liable for the unauthorized torts of an independent contractor. |
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Term
Authorized acts
(Criminal Liability of Principal) |
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Definition
| the principal is liable if he directed, participated in, or approved the criminal acts of his agents. |
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Term
| Contract Liability of Agent |
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Definition
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Term
Disclosed principal
(Contract Liability of Agent) |
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Definition
| the agent is not normally a party to the contract she makes with a third party if she is authorized or if the principal ratifies an unauthorized contract. |
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Term
Unauthorized contracts
(Disclosed principal) |
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Definition
| if an agent exceeds her actual and apparent authority, the principal is not bound but the agent may be liable for breach of warranty or for misrepresentation. |
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Term
Agent assumes liability
(Disclosed principal) |
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Definition
| an agent may agree to become liable on a contract between the principal and the third party. |
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Term
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Definition
Authorized acts
Unauthorized acts |
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Term
Authorized acts
(Tort Liability of Agent) |
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Definition
| the agent is liable to the third party for his own torts, but may be entitled to indemnity from the principal. |
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Term
Unauthorized acts
(Tort Liability of Agent) |
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Definition
| the agent is liable to the third party for his own torts. |
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