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Chapter 31 & 32 BAFN
| Question | Answer |
|---|---|
| Define Agency | a relationship in which the agent agrees to perform a task for, and under the control of, the principal |
| To create an agency, there must be: (5 Parts) | 1) A principal, 2) An agent, 3) Who mutually consent that the agent will act on behalf of the principal, and 4) Be subject to the principal’s control, 5) Thereby creating a fiduciary relationship |
| Name the ABC's of creating an agency relationship | Assent, Benefit, and Control |
| Elements not required for an agency relationship include: (3 parts) | 1) A written agreement (unless the business of the agent requires a written contract). 2) A formal agreement (acting like agent and principal is enough to establish agency). 3) Consideration (an agent does not have to be paid). |
| Define Express agency (2 parts) | 1) An agency that occurs when a principal and an agent expressly agree to enter into an agency agreement with each other 2) A power of attorney is a formal type of agency agreement |
| Define Implied Agency | An agency that occurs when a principal and an agent do not expressly create an agency, but it is implied from the conduct of the parties |
| Define Apparent agency (agency by estoppel) | Agency that arises when a principal creates the appearance of an agency that in actuality does not exist |
| Define Agency by ratification | Agency that occurs when 1) A person misrepresents himself or herself as another’s agent when in fact he or she is not. 2) The purported principal ratifies (accepts) the unauthorized act. |
| True or False: A principal is bound by the acts of an agent if the agent has authority | True |
| True or False: A principal is also bound by the acts of subagents – those hired by his agent | True |
| True or False: Only express and implied are actual authority | True |
| In _____ authority, the agent seems to be authorized, but is not. The principal is still bound by the agent’s actions | apparent |
| Define Express authority: (2 Parts) | 1) Granted by words or conduct that, reasonably interpreted, cause the agent to believe the principal desires her to act. 2) In ambiguity about the principal’s intent, the courts look at the principal’s objective manifestation not his subjective intent |
| Define Implied Authority | Unless otherwise agreed, authority to conduct a transaction includes authority to do acts that are reasonably necessary to accomplish it |
| Define Estoppel | applies when the principl doesnt want the benefit of the contract but delays in teling the inocent 3rd party of the mistak |
| Define Ratification (2 Parts) | 1) If a person accepts the benefit of an unauthorized transaction or fails to repudiate it, then he is as bound by the act as if he had originally authorized it 2) applies when the principal accepts the benefits of the contract |
| Duties of the Agent (1-3) | 1) must act for the benefit of the principal. 2) may not receive outside benefits without approval of the principal. 3) can neither disclose nor use for her own benefit any confidential information. |
| Duties of the Agent (4-5) | 4) is not allowed to compete with his principal within the scope of the agency business. 5) may not act for two principals whose interests conflict |
| Duties of the Agent (6-7) | 6) may not become a party to a transaction without the principal’s permission. 7) may not engage in inappropriate behavior that reflects badly on the principal |
| 5 categories of duties | 1) Duty of performance 2) Duty of notification 3) Duty of accountability 4) Duty of Obedience 5) Duty of Loyalty |
| What happens when a Agent breaches his duties? (3 part) | 1) The principal can recover damages caused by the agent’s breach. 2) The agent must refund any profits made from the agency, if he breaches his duty of loyalty. 3) The principal may rescind a transaction with an disloyal agent |
| Duty to Reimburse the Agent for Reasonable Expenses | A principal must also indemnify an agent for an unauthorized purchase if the agent reasonably believed he was authorized and the principal received a benefit |
| Torts Committed by the Agent | A principal must indemnify an agent for tort claims brought by a third party if the principal authorized the agent’s behavior and the agent did not realize he was committing a tort |
| Contracts Entered into by the Agent | The principal must indemnify the agent for liability she incurs as a result of a contract on the principal’s behalf, including attorney’s fees and reasonable settlements |
| Duty to Cooperate (3 parts) | 1) Cannot unreasonably interfere with the agent’s ability to accomplish his task. 2) Unless the contract provides otherwise, the principal may not compete with her agent. 3) Principal must perform her part of the contract |
| _______ of the agency ends the agent’s power to act on behalf of the principal | Termination |
| Principal’s duty to reimburse expenses of the agent ends with the end of the _____ | agency |
| “power coupled with an interest.” means... | When a lender has the power to sell collateral upon the default of a borrower, the lender may appear to be the borrower’s agent. |
| The agent can be held liable in some circumstances (2 parts) | 1) Partially disclosed agency 2) Undisclosed agency |
| Define Fully Disclosed Principal | An agent is not liable for any contracts |
| Define Unauthorized Agent | The principal is not liable and the agent is |
| True or False: Principals are liable for negligent conduct of agents acting within the scope of their employment | True |
| True or False: Liability is based on the common law doctrine respondeat superior | True |
| True or False: Principal is generally not liable for injuries caused by its agents and employees while they are on their way to or from work | True |
| Define Authorization | An act is within the scope of employment, even if expressly forbidden, if it is of the same general nature as that authorized or if it is incidental to the conduct authorized |
| True or False: A principal is liable for the intentional and innocent misrepresentations made by an agent within the scope of employment | True |
| True or False: The principal is liable for intentional torts of agents and employees that are committed outside the principal’s scope of business. | False |
| Define Motivation Test: | The principal is liable if the agent’s motivation in committing the intentional tort was to promote the principal’s business |
| True or False: A principal is generally not liable for the tortious conduct of independent contractors it hires | True |
| True or False: Independent contractors are personally not liable for their own torts | False |
| A principal is, however, liable for the tortious conduct of an independent contractor involving: (3 parts) | 1) Inherently dangerous activities. (car repossession) 2) The negligent selection of the independent contractor 3) Non-delegable duty |
| Termination of an Agency includes : (6 parts) | 1) Mutual agreement 2) Lapse of time 3) Purpose achieved 4) Occurrence of a specified event 5) Changed circumstances 6) War between principal’s country and agent’s country |
Created by:
ryan3743