A principal will be
vicariously liable
for
TORTS
committed by its agent if:
1. there is a principal-agent relationship, and
2. the tort was committed by the agent within the scope of that relationship.
Principal-Agent Relationship
A principal-agent relationship requires:
ABC
1. Assent: an informal agreement between the principal who has capacity and the agent
2. Beneft: the agent's conduct must be for the principal's benefit.
3. Control: The principal must have the right to control the agent by having the power to supervi
Principal-Agent Relationship
The principal will be liable for a
sub-
agent's tort only if there is:
ABC between the principal and the sub-agent tortfeasor.
Typically, Assent and Control are missing, so there's no vicarious liability for a sub-agent's tort.
Principal-Agent Relationship
The principal will be liable for an agent borrowed from another principal if there is:
ABC between the principal and the borrowed agent.
Typically, Control is missing (because the loaning agent is under the right of control of the loaning principal) so no vicarious liability.
Principal-Agent Relationship
Key distinction between agent and independent contractor:
There is no right to control an independent contractor because there is no power to supervise the manner of its performance.
Principal-Agent Relationship
Independent contractors (rule and exceptions)
As a rule, there can be no vicarious liability for an independent contractor's torts.
Exceptions, where there will be vicarious liability:
a. inherently dangerous activities (includes brake repair)
b. estoppel: If you hold out your independent contractor
Within the scope of relationship
Scope of principal-agent relationship:
Balancing test:
1. Was the conduct within the job description? If so, it's likely inside the scope.
2. Did the tort occur "on the job"?
- frolic: a new and independent journey. (It's outside scope of agency.)
- detour: a mere departure from an assigned ta
Within the scope of relationship
Are intentional torts inside the scope of agency?
As a rule, intentional torts are outside the scope of agency.
Exceptions:
1. authorized by the principal, or
2. natural from the nature of employment, or
3. motivated by a desire to serve the principal
Principal is liable for
CONTRACTS
entered into by its agent only if:
the principal
authorized
the agent to enter the contract. There are four types of authority:
1. actual express authority
2. actual implied authority
3. apparent authority
4. ratification
1. Actual Express Authority
(form, exceptions, revocation)
Principal used words to express authority to agent. It can be oral and can be private.
Exception: If the contract itself
must
be in writing, then express authority must also be in writing. So any contracts governed by Statute of Frauds must be in writing.
2. Actual Implied Authority
Authority which the principal gives the agent through conduct or circumstance:
1. Necessity: There is implied authority to do all tasks which are necessary to accomplish an expressly authorized task.
2. Custom: There is implied authority to do all tasks w
3. Apparent Authority
Two-part test:
i. Principal "cloaked" agent with the appearance of authority, and
ii. Third party reasonably relied on the appearance of authority.
Also encompasses a situation where a principal limits the actual authority of his agent to act, the agent a
4. Ratification
Authority can be granted
after
the contract has been entered if:
i. principal has
knowledge
of all material facts regarding the contract,
and
ii. principal accepts its benefits.
Exception: If principal tries to alter the terms of the contract ("Great job,
Is agent liable on a contract for which the principal is liable because there was authority?
Generally, no. But if the principal was partially disclosed (only the principal's identity concealed) or undisclosed (fact of principal concealed), the authorized agent may be liable at the
election
of the third party.
Duties agent owes to principal
In return for reasonable compensation and reimbursement of expenses, agent owes principal:
1. duty of care
2. duty to obey instructions that are reasonable
3. duty of loyalty: may never do any of the following:
a. self-dealing: receiving a benefit to detr
The fact that the agent has possession of the principal's goods does not entitle the agent to sell them or transfer good title. For the possessor of goods to be able to transfer good title without authority, she must have either ____________________
or
__
Some indicia of ownership; be a dealer in the goods.
n a few jurisdictions, where a general agent exceeds her actual authority (i.e., violates orders) but the act performed is similar to the act authorized, the principal will be held liable. This is an example of:
Inherent authority
If a principal negligently selects an incompetent independent contractor, she will be liable to the injured third party for __________. A principal will be liable for the independent contractor's negligence if ___________.
her own negligence in selection;
i. inherently dangerous activities, or
ii. nondelegable duties have been delegated, or
iii. the principal hired the incompetent contractor with knowledge of the contractor's incompetence.
If the law requires an agent to have a license (e.g., brokers, insurance agents), ___________. Any person may be an agent, even ___________. A person is not required to have __________ to act as an agent.
A principal must have _______. An agent must have
she cannot act without one;
a minor or a person with
minimal
mental competency;
contractual capacity.
full contractual capacity; minimal mental capacity.
Duties principal owes to agent:
The principal owes the agent a duty to compensate her reasonably for her services. The principal also owes the agent a duty to indemnify her for all expenses or losses reasonably incurred in discharging any authorized duties, a duty to cooperate, and what
Authority of agent to sell property
An agent with authority to sell personal property may give general warranties for quality. Likewise, an agent with authority to sell real property may grant the customary covenants. Payment for property sold must be in cash; the agent may not accept a che