2. The parties to an agency?
•Agency is a fiduciary relationship where the agent holds a
position of trust, manages the principal’s affairs or funds, and
has a duty to the principal to act in a trustworthy manner.
•Principal: the party in an agency that authorizes the agent to
act on that party’s behalf
•Agent: the party that is authorized by the principal to act on
the principal’s behalf
3. By Appointment: The principal authorizes the agent to act in her behalf
and the agent assents to the appointment. Can be express of implied.
Real property requires principal’s signature.
By Estoppel: The principal’s words or conduct cause a 3rd party to
reasonably believe that an agency exists and the 3rd party materially
relies upon the words or conduct, e.g. consignee given space in a
shop. Not a genuine agency, protects 3rd Party only.
By Ratification: Results when a principal adopts (ratifies) the act of
another who has purported to act for the principal and has neither the
power nor authority to perform the act for the principal, e.g.
insurance agents without LOA. Principal may refuse to approve
unauthorized acts.
4. Match the duty to the party:
Loyalty & Obedience Principal to Agent
Compensation Agent to Principal
Accounting Agent to Principal
Reasonable Care Principal to Agent
Expense Reimbursement Subagent to Principal
Duties are not owed for dishonest, immoral, or illegal acts
5. Agent purports to act for “someone”
Principal must ratify entire transaction, not just
favorable parts
Principal must ratify before 3rd party withdraws from the
agreement
Principal must have all material facts available before
the ratification is binding
6. • The liability of multiple defendants either collectively or
individually for the entire amount of damages sought by
the plaintiff regardless of their relative degree of
responsibility. (Deep pockets)
7. Just cause (fraud, criminal activity, flagrant contract violation)
Lapse of time (expiration or reasonable period)
Accomplishment of purpose
Revocation (requires notification by word or act)
Renunciation (agent’s termination of the relationship, “I quit”)
Death or Incapacity (incapacity of principal terminates agency,
incapacity of agent confers right to terminate agency to principal)
Changed Circumstances ( e.g. bankruptcy, discovery oil on land)
8. If the principal’s words or actions lead a 3rd party
to believe that an agency exists, the principal
cannot subsequently deny the agent’s authority
to act on the principal’s behalf.
9. Independent Contractor = A person hired to
perform services for another under the direction
and control of the other party
TRUE or FALSE?
Real Answer:
Independent Contractor = A person or organization hired to
perform services without being subject to the hirer’s
direction and control regarding work details.
10. • The legal principle under which an employer is
vicariously liable for the torts of an employee acting
within the scope of employment
• Let the master answer because the employer controls or
has the right to control how the agent performs the
assigned work.
11. In contracts arranged by agents, both the
principal and agent may have right of recovery
against 3rd parties.
12. A principal may be liable to a 3rd party
for misrepresentation by an agent
when:
The principal intended that an agent make a misrepresentation during the
transaction.
When an agent has actual or apparent authority to make true statements about
a particular subject, whether the principal knew about the misrepresentation
or not.
When an agent does not have actual authority, misrepresents a particular
subject, but has no assets, whether the principal knew about the
misrepresentation or not.
A & B only
A, B & C
The principal intended that an agent make a misrepresentation during
the transaction. & When an agent has actual or apparent authority to
make true statements about a particular subject, whether the principal
knew about the misrepresentation or not.
13. Certain tasks which do not require
judgment or discretion
Nondelegation Rule: Generally an agent cannot delegate their
duties except:
1. Ministerial duties (no judgment required)
2. Customary appointments (custom of the particular business)
3. Emergency appointments (to protect the principal’s interest)
Ministerial describes an act or a function that conforms to an
instruction or a prescribed procedure. It connotes obedience,
performed without the use of judgment by the person performing
the act or duty.
14. Selecting appropriate individuals as agents
Giving them clear instruction
Providing them with appropriate tools, equipment, and
materials
Monitoring their performance
Discharging those who do not perform appropriately
