Agency & Partnership
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- Person who agrees to act on behalf of another
- Person who buys and/or sells for another
- Person who appoints the agent
- Person on whose behalf the agent acts
- Person for whom agent buys or sells
- Person who transacts with the agent
- Usually attempting to hold principal liable for transaction on principal's behalf by agent.
Third Party v. Principal
- Principal refuses to honor contract agent signed with third party
- Agent commits tort against third party, and third party wants principal to pay
Third Party v. Agent
Principal not bound on contract, and third party wants agent to pay
Principal v. Agent
- Agent fails to follow principal's instructions or does poor job.
- Rarely a focal point of the question, but may be a subsidiary issue. Agents bad acts give the principal a cause of action against him. The agent has a duty of loyalty (no secret profits), has a duty of reasonable care, has a duty of disclosure (leading to the imputation doctrine), and has a duty to act within authority.
- Agent must account for all profits or can be liable
Agent v. Principal
Principal fails to fulfill obligations to agent
- First question is always whether an agency relationship was formed.
- Must be a concensual Relationship: Agent must 1) consent to act on the behalf of another (the principal) and 2) be subject to his or her control. Principal must consent to have the agent act on his or her behalf.
- BOTH PARTIES MUST CONSENT!
- Contract is not needed. A gratuitous undertaking can be agency. No writing is required, unless the equal dignity rule applies.
- Equal Dignity Rule: If the agent apponted to execute a contract that must itself be in writing, then the agent principal relationship must be in writing.
- Agent's lack of capacity does not matter!
- Minors can serve as agents, and principal is still bound. Likewise with an incompetent agent
- However, principals lack of capacity may matter.
- A minor can appoint an agent, but any resulting contracts are voidable, just as though the minor had signed.
- Adjudicated Incompetents cannot appoint agents
- Non-adjudicated incompetents can appoint agents, but the contracts are voidable.
- Pay at an agreed rate
- reimburse reasonable expenses
- Take reasonable care to prevent injuries
- Two types of Agents: general and specific
- Four types of authority: Actual (Express or implied), Apparent, Agency By Estoppel, and Inherent Agency (undisclosed principal situations)
- Must discuss authority on contract questions!
- A specific agenet is one for a one time transaction.
- A general agent is one for for a continuous series of transactions.
- General Agents have more power than a specific agent to bind the principal
- Based on the communication between principal and agent.
- Express: principal expressly told agent to do it
- Implied: Agent resonably believed he had authority based on what the principal had said. (i.e. implied authority to expend reasonable money on advertising when selling a car)
- Based on communication between principal and third party
- What does the third party reasonably believe based on the principal's statements.
- Ex. P to T, Joe is selling my car. Joe has apparent authority. May also have actual authority if P and Joe had an agency relationship.
Differences between actual and apparent
If based on what P told A, the actual. If based on what P told T, then apparent authority. A cannot create apparent authority., except that A, when authorized by P, may state his position which creates apparent authority.
Agency by Estoppel
- Similar to apparent Authority:
- 1. Holding out by the purported principal
- 2. On which the third party can reasonably rely
- 3. third Party actually relies
- Recovery is limited to reliance damages. No expectancy damages
- Recovery based on the nature of the agency.
- Hard to distinguish from apparent authority
- Usually limited to undisclosed principal situations
- Can't prove apparent authority because there is no holding out
- Scope: Whatever is customary for an agent of that type.
a will often have more than one type of authority. On bar, state all of them.
Principal liability for unauthorized contracts (Ratification
- Even where A not authorized, P still bound if he ratifies the agreement.
- Ratification is the manifestation of intent to be bound or retention of the benefits. It must be done with full knowledge and may need to be in writing if the equal dignities rule applies. Ratification relates back to the original signing.
T does not know A working as agent. In an action , T can elect to sue either A or P to enforce. T cannot enforce against both. THis is the doctrine of election.
Partially disclosed principal
T knows A is an Agent, but does not know the identity of P. In an action , T can elect to sue either A or P to enforce. T cannot enforce against both. THis is the doctrine of election.
T knows that A is working for P and knows P's identity.
Agent liability for contract
Agent is not liable on contracts signed on behalf of the principal unless 1) A is signing in a personal capacity or 2) A lacks authority (in which case he is liable to T for breach of implied warranty of authority and to P for acting outsider of authority
P liability for torts
- Requires: 1) Master/ Servant relationship and 2) Servant acting within the scope
- Doctrine is called respondeat superior or vicarious liability
Definition of Servant
An agent of whom the master has the right to control the physical performance of the task. Hired plumber no, plumber on staff yes.
Must be done in the furtherance of the interests of the master. If done at work during work hours, it is prresumed to be within the scope.
No longer on masters business
Still on masters business though there has been a deviation
Look to who has control. M1 is not liable if servant has been transferred to M2. Look to legnth of transfer, who can fire, and whether it is hourly or salaried. Liability usually follows control,
Intentional Tort Liability
Respondeat Superior applies to intentional torts as well as negligence. Exception is only if the servant is acting for purely personal reasons.
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