Business Law Chapter 34

These Are About Liability To Third Parties And Termination. They Are Form Chapter 34.
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express authority
The principal has explicitly instructed the agent to do something. (binding)
equal dignity rule
when express authority is granted for an agent to enter into a contract that is legally required to be in writing, grant of authority must also be in writing (otherwise voidable)
2 Exceptions to equal dignity rule
1. when executive officer is conducting business in the usual discourse of her job, she need not obtain written approval from the corporation for every decision she makes
2. rule does not apply to agent when in the presence of principal
special power of attorney
grants the agent express authority over specifically outlined acts
disclosed principal
third party is aware that the agent is making an agreement on behalf of a principal and the third party also knows the identity of the principal
agent=not liableprincipal=liable
partially disclosed principal
third party is aware that the agent is making an agreement on behalf of a principal, but does not know the identity of the principal
agent=maybe liableprincipal= liable
undisclosed principal
third party does not know an agent is acting on behalf of a principal
agent= liableprincipal=liable
Describe when an agent could be the only party liable:
1. contract expressly excludes principal from the contract2. principal is not liable if agent enters into a contract as a negotiable instrument3. the third party enters into a contract with an agent such that the performance of the agent is required4. if the principal or agent knows a third party would not enter into a contract with the principal if the principal's identity were disclosed, but the agent enters into a contract with the third party anyway.
Agents who go beyond their authority when the principal is disclosed or partially disclosed are liable for a _____________
breach of implied warranty
If a third party believes the agent has authority, but it was really an unauthorized act who is liable?
If a third party believes that the agent is mistaken about her authority, and it is an unauthorized act who is liable?
agent=not liableprincipal=not liable
Law holds a principal directly responsible for agent's tortious conduct under three conditions:
1. principal directs an agent to commit a tort2. principal fails to provide proper tools, instruments or adequate instructions3. principal liable to third party for negligent hiring of an agent
Respondeat Superior
The principal/employer holds vicarious liability for any harm caused by the agent/employee during the time the agent/employee is working for the principal--not because he is at fault but because of negligent hiring
If third party is injured due to negligence of an employee, how is employer liability established
third party must establish the act occured within the scope of employment
(substantial departure would absolve liability)
Classification of Principal
must be classified as either disclosed, partially disclosed, or undisclosed
Agent Misrepresentation
if agent misrepresents himself to third party, principal may be tortiously liable for agent's misrepresentation--misrepresentation liability depends on whether the principal authorized agent's act
If an agent has misrepresented herself, the third party has two options:
1. the third party can cancel the contract with the principal and be compensated for any money lost2. The third party can affirm the contract and sue the principal to recover damages
Principal's liability concerning an independent conractor
GENERAL RULE: individual who hires independent contractor is not liable for independent contractor's tortious actions under doctrine of respondeat superior, UNLESS contractor engages in hazardous activities
Crime and agency relationships
1. if agent commits crime, agent is liable for crime2. if agent commits crime in scope of employment without authorization of principal, principal is not liable for agent's crime3. Principal is liable for agent's crime if principal authorized agent's criminal act
Termination by acts of parties
1. Lapse of time (if time is not stated, reasonable time)2. Fulfillment of Purpose 3. Occurence of Specific Events 4. Mutual Agreement5. Revocation of authority (principal can revoke authority, but can be held liable if a contract is involved)6. Renunciation by agent7. Agency Coupled with an Interest (created for agent's benefit, can only be terminated by agent)
Actual notice of termination
given when third parties are directly informed orally or in writing, that an agency agreement has terminated
constructive notice of termination
given to parties not directly involved in agency agreement, general announcement
Termination by Operation of Law
1. Death2. Insanity3. Bankruptcy4. Changed Circumstances5. Change in Law6. Impossibility7. Disloyalty of agent8. War

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