What is agency?
- the fiduciary relationship that results when 2 persons agree that 1 (the agent) will act on behalf of and under the control of the
... [Show More] other (the principal)
- Elements: "Co Co Obo"
1) consent
2) control
3) "on behalf of"
- existence is a question of fact
How and when may agency be terminated?
At any time by the withdrawal of consent by either principal or agent
How is agency formed?
- A mutual manifestation of intent by the parties is usually sufficient to create the relationship
- Intent to actually create NOT required (can actually be created in the face of a stated intention not to create an agency)
- Requisite intent is the intent to do those acts which, in law, create agency
- Needn't be contractual, and neither consideration nor contractual capacity of either party is required
Capacity of parties to create agency relationship - principal
- Can be any person who can give a legally binding consent
- Can't be a principal if adjudicated to lack capacity
- Infant principal voidable at instance of infant
Capacity of parties to create agency relationship - agent
- Liability coextensive with their capacity
- Someone without capacity to comprehend nature of fiduciary relationship CANNOT be held personally liable for breach of fiduciary duty
Capacity of parties to create agency relationship - husband & wife
- no presumption of agency arises from the marital relationship, BUT on the basis of restitution, a W has traditionally been empowered to find her H for necessaries
Agent's Duties to Principal
- Agents are fiduciaries - owe their principals duties of care & loyalty, overlain by good faith
- Specific duties owed to principals:
a) Full disclosure of all facts pertinent to the transactions w/in the relationship
b) Exclusivity in the subject matter
**If agent makes "secret profits" in connection with the subject matter of the agency, agent holds those profits in constructive trust for the benefit of the principal & can be compelled to account to principal for them
c) Exercise of reasonable care in the conduct of the P's business & in the mgmt of all property in A's custody & control
Breach & remedies for agent's duty of care to principal
- Breached by negligence
- Remedy is $$ damage
Breach & remedy for duty of loyalty from agent to principal
- Breached by some form of self-dealing
- Remedies include equitable remedies such as injunction, accounting & constructive trust
Principal's Duties to Agent
"DR P's Negligence Reimbursed Conduct Opposing Accounts Indemnified, Not Interfering w/ Commissions"
1) Duty to disclose any risks A might encounter in performance of the agency
2) P liable to A for any injury to A caused by P's negligence
3) Duty of reimbursement for expenses incurred by A in performance of P's business
4) Duty of indemnification to A for liability A may incur in performance of the agency
**Performance must've been w/in the scope of A's authority/power
5) Duty to furnish opportunity for work
6) Duty to keep & render accounts
7) Duty of good conduct
8) Duty to pay compensation
9) Duty not to interfere with commission income
Defenses to Principal's liability to Agent for any injury to Agent caused by Principal's negligence
Fellow servant rule
Assumption of risk
Contributory negligence
Worker's comp
Where one person works for another, what issues arise? What needs to be determined in answering these issues?
- What duties owed between employer & the worker?
- To what extent can worker render employer liable in tort?
- To what extent can worker render employer liable in K?
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- Whether agency existed
- Whether A was a servant
- If a servant, whether A acted w/in scope of employment (P liable in tort)
- Whether A acted w/in scope of authority (P liable in K)
What are independent contractors? What is the independent contractor rule?
- people who perform services for another but who are NOT agents
Rule is that they do NOT bind the person who hires them in either K or tort
What are the two general categories of agents?
servants
non-servants
When an agent is a servant & commits a tort, how may the principal be held liable?
If the tort is committed within the scope of the agent's employment, the principal will be held liable for the tort under respondeat superior as though the principal committed the tort themselves
How may an agent bind the principal in K?
An agent, whether a servant or not, who is duly authorized by the principal, can bind the principal in K or by representations within the scope of the agent's authority
General Agent
- Conducts a series of similar transactions on behalf of P involving a "continuity of service"
- NO general authority to act for P in all matters
- may bind their Ps to agmts within the nature of the general agency EVEN IF outside the scope of their actual authority
- 3rd parties NOT required to inquire into A's authority
Special Agent
- Authorized to conduct a single transaction OR a series of transactions NOT involving a "continuity of service" like a general agent
- normally CANNOT bind P outside the scope of actual or apparent authority
- 3rd parties ARE generally under a duty to inquire as to extend of agent's authority
Co-Agents
- 2+ more agents acting for the same principal
- No rights or obligations run between co-agents, even if 1 subordinate to the other
- Each co-agent's range of agency rights & duties run directly to P
Subagents
- Generally, agnts assigned to a task have NO authority to delegate the task to another
- If P does authorize agent to delegate all or part of a task, that delegate is a subagent
- Subagent's primary relationship is with agent, BUT P & subagent also owe each other the usual duties that run between P & agent
How may a subagent bind a principal?
To bind a P, a subagent's act must be w/in BOTH:
a) the agent's power bestowed by P to delegate authority, AND
b) the authority in fact delegated by the agent
Agent's Agent
- When an agent is NOT authorized by their P to employ further agents to assist in performance of agent's duties, but agent does so anyway, employed person is an agent's agent
- NO duties run between P & agent's agent
- P NOT liable for acts of agent's agent because agent is agent's agent principal
3 Classifications of Principals
1) Disclosed Principal
2) Partially Disclosed Principal
3) Undisclosed Principal
Disclosed Principal
- P is "disclosed" as to a 3rd party who has notice:
a) that the agent is not acting on his own behalf, but is the agent of another, AND
b) of the principal's identity
- Liable to 3rd parties on Ks entered into by agents acting w/in the scope of their authority - 3rd party bound to P
- Agent for disclosed P normally NOT a party to the K & therefore NOT liable on it
Partially Disclosed Principal
- 3rd party knows that agent is an agent, but does not know and couldn't with ordinary prudence ascertain the identity of P
- P & 3rd party bound to each other AS LONG AS agent acted within scope of their authority
- Agent is also a party to the transaction & liable to the 3rd party because agent is the only person whose credit can be evaluated by 3rd party
Undisclosed Principal
- 3rd party has NO notice that an agent is acting on behalf of a P - they believe that the agent is acting on their own behalf
- P & 3rd party bound to each other AS LONG AS agent acted within the scope of his authority BUT NOTE that agent is also a party to the transaction & liable to 3rd party
Can agents create their own authority?
NO! Agency authority must AL [Show Less]