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