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A person who acts on the behalf of another based upon instructions of another.
A person who allows an agent to act on his behalf subject to his control and instruction.
A husband and wife relationship
Does not establish an agency relationship unless the spouse knowingly accepts benefits (ratifies) the unauthorized acts of the other spouse.
Creation of Agency Relationship.
- Agency relationship can be created by (1) appointment, (2) implication, (3) misinterpretation or (4) ratification.
- Principal has to manifest his assent/agreement to be in an agency relationship- either expressly or through implication.
- Agent must agree and consent to act on behalf of the principal, subject to the principals control.
Formation of Agency relationship - Principal
- (1) legal capacity to enter into an agreement
- (2) right to control the agents actions.
- Courts consider the following factors in determining an agency relationship:
- (1) Principal's exercise control over work;
- (2) Principal's supply of tools;
- (3) Payment on structured pay period;
- (4) Specialization of skills of employer; and
- (5) Direction of work to completion.
Formation of Agency relationship - Agent
- The agent must assent to act on the principals behalf and subject to the principals control.
- No consideration required.
- No writing required.
- Minimal competency.
A person with broad grant of authority by the principal.
A person with a special or unique authority to bind the principal to a specific task.
- A person that the agent has appointed to perform tasks that the person has agreed to perform.
- Owes duties and is liable to both A&P
- Will bind the A&P in tort or contract.
- A person who does work for another but is not subject to their control is called an independent contractor.
- An independent contractor is not considered an agent of the person.
- Designation not dispositive.
Burden of proof of agency.
The party seeking to prove agency relationship.
Equal dignities rule.
- When a statute requires a principals authorization to be in writing, the agent must provide written proof of the agency relationship as well.
- MD courts have neither adopted nor rejected the rule.
Power of Attorney.
- (1) in writing
- (2) signed by the principal and then
- (3) notarized and
- (4) attested to by two adult witnesses.
Power to Bind under Contract Law
To bind the principal, the agent must generally act with authority.
Actual authority is what the agent reasonably believes the principal has instructed him to do.
Express actual authority.
- An agent has express actual authority when the agent has a clear, express instruction about what the principal wants him to do.
- Must be both objective and subjective belief.
- Generally, must be communicated directly with the agent.
- Third party notice irrelevant.
Implied actual authority.
Actual implied authority allows the agent to take whatever actions are necessary to carry out the principals express instructions.
CAPE - implied authority factors
- Custom in industry.
- Acquiescence by the agent/failure to object.
- Position provides power for duties.
- Emergency situations gives the agent to take reasonable actions necessary.
- When the principal acts in a manner that causes a 3rd party to reasonably believe that the agent had the authority to act.
- Reasonable belief can arise through:
- (1) position,
- (2) past dealings
- (3) custom
- (4) industry standards and
- (5) principal statements.
- However, if novel/unique without benefit to the principal, then a court may find that the apparent authority does not bind the principal.
If a third party reasonably believes that the principal has given the imposter authority to act, then the imposters actions can bind the principal.
Termination of Authority - actual
To terminate actual authority, there must be some communication between P&A.
Termination of Authority - apparent
To terminate apparent authority, the principal must communicate to the third party that the relationship or authority is terminated.
What can terminate agency relationship.
- Termination can occur through:
- (1) revocation,
- (2) agreement,
- (3) changed circumstances,
- (4) passage of time,
- (5) a termination after a reasonable period of time,
- (6) death of the principal when the agent has knowledge the death,
- (7) death of the agent,
- (8) principals loss of capacity, and
- (9) agents breach of duty.
Durable power of attorney.
- (1) Written statement
- (2) While competent and living
- (3) Granting authority to another to act on his behalf
- (4) Upon occurrence of a named condition.
- Acts taken by agent under POA will bind principal or estate.
Statutory termination - banks
A bank may cash a decedent's checks for up to 10 days after the decedents death despite actual knowledge of his death.
A principal may elect to ratify an act of an agent despite no actual or apparent authority for the action.
Requirements for ratification
- Manifestation of consent by principal which is:
- (1) Capacity
- (2) Timely
- (3) In the entirety
- (4) With knowledge of all material facts.
Principal is estopped from denying existence of an agency relationship when 3P has been induced to detrimentally change her position on reliance of a reasonable belief that A is acting for P's benefit.
- Vicarious liability which holds an employer strictly liable for the tortious actions of his employees, despite absence of wrongdoing.
- Focuses on control of employee and scope of employment.
Respodeat Superior - Control.
Employee and not an independent contractor.
Respondeat Superior - Scope of Employment.
- Acts within actual authority granted to A, or within apparent authority to 3P.
- When outside the express or implied instructions, the employer may still be responsible for detours.
- A personal errand or slight deviation which is relatively minor or for the benefit of the employer is considered a detour.
- Employer liable.
- A significant deviation while running an errand or acting independently and not for the benefit of the employer is considered a frolic.
- Employer not liable.
Principal's Liability for Torts
- Strict liability for acts of employees with actual or apparent authority.
- Strict liability when delegation of a non-delegable duty.
- Negligence in selecting, supervising or controlling the agent.
Agents Liability - Disclosed Principal.
A who discloses existence and identity of P is not party to K and not liable under K.
Agents Liability - Partially Disclosed Principal.
A who discloses the existence but not identity of P is party to K and may be held liable on the K.
Agents Liability - Undisclosed Principal.
When a third party discovers the existence of an undisclosed agent can choose whether to hold the principal or the agent liable under the election of remedies doctrine.
Agents Liability - Torts.
An agent is always liable for their own torts.
Agent's Breach of Warranty - implied
- In dealing with 3P, an agent's representation to a 3P create an implied warranty.
- If agent acts without actual authority, he has breached his implied warranty of agency.
- Only if disclosed or partially disclosed principal.
Agent's Breach of Warranty - express
- Agent may give an express warranty of agency to induce a 3P to deal with him.
- Lack of actual authority is a breach of an express warranty.
- Only if disclosed or partially disclosed principal.