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Legal Envi. of Bus

FINAL EXAM (Chapters 17-23, 28) Chp 20

QuestionAnswer
agreement between two parties that one party (the agent) can and shall act on behalf of the other party (the principal) in negotiating/transacting business with third parties Agency
______ is a fiduciary relationship, meaning agent owes to the principal the highest duty of loyalty and ethical conduct agency
Two categories of agent: employee & independent contractor
________ of any type of business enterprise who deal with third parties are agents—relationship is governed by agency law and by various aspects of employment law employees
non-employee who performs services but who is not controlled by the principal in how they perform those services independent contractor
-how much control does principal have -does agent work in principal’s business, or another business -is work usually done under principal’s supervision -who supplies tools IRS has developed set of rules to determine status:
-does the agent work for more than one principal -how long will the relationship last -how is agent paid -what is the degree of skill required to perform IRS has developed set of rules to determine status:
Agency relationship generally is ________—parties agree on terms, duration etc.—principal must have capacity to contract, agent does not—no consideration required for agency contract contractual
Formation of the Agency Relationship express or implied agreement that agent will act on behalf of principal—can be written or oral agreement—agent can only act for principal in a way that is consistent with the terms of the agreement Agency by agreement
Formation of the Agency Relationship agent acts before agency contract is formed; principal accepts or affirms act of agent (“ratifies” act) Agency by ratification
Formation of the Agency Relationship principal causes third party to believe that another person is the principal’s agent Agency by estoppel
Formation of the Agency Relationship based on a social or legal duty, often occurs in family context Agency by operation of law
-performance -notification -loyalty -obedience -accounting Agent’s duties to the principal:
implied in every agency contract is the agent’s duty to use reasonable diligence and skill in performing the work contemplated by the agreement Performance
agent must keep principal informed of all developments in work contemplated by agreement—law assumes that notice to agent is notice to principal Notification
agent must act solely in principal’s interest, not his/her own and not on behalf of anyone else, including another principal of same agent Loyalty
agent has duty to follow principal’s instructions Obedience
agent must account to and be responsible to principal for any money or property handled by agent in performing the work contemplated by the agreement Accounting
-compensation -reimbursement and indemnification -cooperation -safe working conditions Principal’s duties to agent:
payment for services rendered Compensation
duty to ______ agent if agent has expended their own funds during performance of work contemplated by the agreement Reimburse
duty to _______ if agent gets sued or incurs loss during performance of work contemplated by the agreement Indemnify
principal cannot hinder agent in performance of work contemplated by the agreement Cooperation
Indemnification is a word for ________ insurance
duty of principal to provide safe workplace, warn of any known dangers safe working conditions
can be written or oral, but should be clear and definite Express authority
if performance of work contemplated by the agency agreement must be in writing, the agency agreement must be in writing Equal dignity rule
written document giving express authority Power of attorney
authority to do what is reasonable and necessary to accomplish agency Implied authority
principal causes third party to believe that agent has authority when in fact agent does not—usually arises from course of conduct over time Apparent authority
agent can act in principal’s best interest even though no express authority Emergency powers
action by agent is beyond scope of agency, but principal accepts or does not repudiate after the fact Ratification
third party is made aware that agent represents a specific principal Disclosed principal
third party knows agent is an agent, just not for whom Unidentified principal
third party does not know that agent is an agent or for whom Undisclosed principal
If contract was within scope of agent’s authority: principal only is liable disclosed
If contract was within scope of agent’s authority: principal and agent can be liable unidentified
If contract was within scope of agent’s authority: agent will be liable to third party but principal will be liable to agent undisclosed
If contract was NOT within scope of agent’s authority, principal (is or is not) liable to third party and agent (will or will not be) liable -principal is not liable -agent will be liable
Principal can be liable for agent’s torts if agent acted within scope of agency—principal not liable if agent acted outside the scope of agency respondeat superior doctrine
a ____ is within scope, detour
a ____ is outside scope frolic
can be terminated just as contracts can Agency is based on contract
-lapse of time -performance -occurrence of specific event -mutual agreement -termination by one party Termination by parties:
Termination by parties: agent performed work contemplated by the contract performance
Termination by parties: as agreed upon occurrence of specific event
Termination by parties: a rescission is also a ____ _______ mutual agreement
Termination by parties: can be a breach of the agency contract termination by one party
Termination by parties: can be specific defined time, or “a reasonable time” lapse of time
-death of one party -impossibility of performance -changed circumstances -bankruptcy of one party -war between principal’s nation and agent’s nation Termination by operation of law:
Created by: 687631825
 

 



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