Agency

Definition

Torts

Contracts

3rd Party v. Agent

Agent v. Principal

3rd Party v. Principal

Principal v. Agent

Principal v. agent

Agent v. principal

3rd Party v. Agent

3rd Party v. Principal

Two questions: (1) Who is suing whom?; (2) Tort or contract?

Agency involves only three types of people - an agent, a principal, and a third party. By first identifying the parties involved, you immediately narrow the possible rules

Whether the agency relationship exists in the first place and whether the servant is an independent contractor or an employee (distinction only important for determining tort liability)

Creating an agency relationship - One person, a principal, assents to another person, an agent, to act on the principal's behalf. The agency must also assent to act

Independent contractor or employee?

The employer has no right to control the details of the performance of the independent contractor. Factors considered include:

Skill required in the agent's occupation

Who supplies the tools and place of performance

Work customarily done under a principal's supervision

Length of time the agent is engaged by the principal

Distinct operation or business

Whether the agent is paid by the job or by the hour

Intent of the parties

Whether the principal is in business

If the employer has the right to control the details of the conduct of its agent as to the result and the means to the result, then the agent is likely an employee

Agent is employee

Respondeat superior - Doctrine imposes vicarious liability upon a principal for the torts his agent commits in the scope of employment

Agent performs tasks assigned by the employee or engages in a course of conduct subject to employer's control

Serves employer's purposes

Employer is not liable if the employee substantially deviates from the authorized route (frolic)

Employee can return to the scope of employment after a frolic

Employer is still liable for slight deviations from the assigned task (detour)

Employer's liability is in addition to the agent's liability

Employer and employee are jointly and severally liable

Strict liability doctrine, so no defenses

Agent is independent contractor

General rule - no liability

Exceptions

Inherently dangerous activities - nature and circumstances of the work to be performed are such that injury to others will probably result unless precautions are taken

Nondelegable duty

Negligent selection of independent contractor

Individuals are always liable for their own torts

Agents are liable for breach of their duties to the principal (COLA)

Duty of Obedience

Duty of Loyalty

Duty of Care

Duty to Account

May not usurp a business opportunity belonging to the principal

Duty not to compete

No self-dealing

No dual agency

Individuals are always liable for their own torts

An agent acting within the scope of authority may bind the principal in contract

Types of authority

Actual - manifestation of the principal to the agent that the agent acts for the benefit of the principal in a particular way and that the principal agrees to be bound by the agent's actions

Express - principal directly requests the agent to act (including verbal requests)

Implied

Authority to accomplish the principal's express request; or

Things the agent believes the principal wishes the agent to do based on the agent's reasonable understanding of the principal's expressed request

Apparent - the agent is "cloaked" with authority

Third party reasonably believes the agent has authority to act on behalf of the principal, and

Belief is based on the principal's representations made to the third party

Ratification - principal grants retroactive authority for the agent's earlier unauthorized actions

Ratified act must be one that the principal could have authorized at the time of the act

Once ratified, an act has the same effect as if it were originally done with authority

Disclosed v. undisclosed principal

Fully disclosed principal - agent is not personally liable in contract

Undisclosed principal - agent is personally liable in contract

Partially disclosed principal - agent is personally liable in contract

When the third party learns the identity of the principal, the third party must elect to go after either the agent or the principal, but not both

Breach of warranty of authority - agent acts beyond the agent's authority on behalf of a principal. Agent is personally liable

Contract liability based on the terms of their contract

Not a highly likely test areas as examiners would have to give you the contract terms, but if they do, simply use your contracts mind map

Indemnify - for reasonably incurred legal liabilities

Reimburse - for reasonably incurred expenses

Compensate - per the agency contract

Cooperate

Principal may not interfere with the agent's performance

Principal must affirmatively aid when reasonably required to do so