Chapter 25 Agency Law

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Chapter 25 Agency Law Flashcards

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Agency Law
The large body of common law that governs agency; a mixture of contract law and tort laws. 
A party who employs another person to act on his or her behalf.
A party who agrees to act on behalf of another. 
The principal-agent relationship; the fiduciary relationship " which results from the manifestation of consent by one person to another that the other shall act in his behalf and subject to his control, and consent by the other so to act" 
Principal-agent relationship
a relationship formed when an employer hires an employee and gives that employee authority to act and enter into contracts on his or her behalf. 
Employer-employee relationship
a relationship that results when an employer hires an employee to perform some task or service but the employee has not been authorized to enter into contracts on behalf of his employer. 
Principal-independent contractor relationship 
the relationship between a principal and an independent contractor who is not an employee of the principal but that has been employed by the principal to perform a certain task on behalf of the principal. 
Independent contractor
principals often employ outsiders- persons and businesses that are not employees-to perform certain tasks on their behalf.
Professional agent
an independent contractor who is a professional (such as a lawyer)
Express agency
an agency that occurs when a principal and an agent expressly agree to enter into an agency agreement with each other. 
Exclusive agency contract
a contract a principal and agent enter into that says the principal cannot employ any agent other than the exclusive agent. 
Power of attorney
an express agency agreement that is often used to give an agent the power to sign legal documents on behalf of the principal. 
general power of attorney
a power of attorney where a principal confers broad powers on the agent to act in any matters on the principal's behalf. 
special power of attorney
a power of attorney where a principal confers powers on an agent to act in specified matters on the principal's behalf. 
Implied agency
an agency that occurs when a principal and an agent do not expressly create an agency, but it is inferred from the conduct of the parties.
Agency by ratification 
an agency that occurs when (1)a person misrepresents himself or herself as another's agent when in fact he or she is not and (2) the purported principal ratifies the unauthorized act.
Apparent agency (agency by estoppel)
agency that arises when a principal creates the appearance of an agency that in actually does not exist. 
Duty to compensate
a duty that a principal owes to pay an agreed-upon amount to the agent either upon the completion of the agency or at some other mutually agreeable time. 
Duty to reimburse
unless otherwise agreed, the principal owes a duty to reimburse the agent for expenses incurred by the agent if the expenses were (1) authorized by the principal (2) within the scope of the agency and (3) necessary to discharge the agent's duties in carrying out the agency. 
Duty to indemnify 
a principal owes a duty to indemnify the agent for any losses the agent suffers because of the principal's conduct. 
Duty to cooperate
unless otherwise agreed, the principal owes a duty to cooperate with and assist the agent in the performance of the agent's duties and the accomplishment of the agency. 
Duty to perform
an agent's duty to a principal that includes (1) performing the lawful duties expressed in the contract and (2) meeting the standards of reasonable care, skill, and diligence implicit in all contracts. 
Duty to notify
an agent owes a duty to notify the principal of important information concerning the agency. 
Imputed knowledge
information that is learned by an agent that is attributed to the principal.
Duty to account (duty of accountability) 
a duty that an agent owes to maintain an accurate accounting of all transactions undertaken on the principal's behalf. 
Duty of loyalty
a fiduciary duty owed by an agent not to act adversely to the interests of the principal.
Tortious conduct
a principal and an agent are each personally liable for this each. The principal is liable for an agent who is acting within the scope of his or her authority. The agent is liable for the principal only if he or she directly or indirectly participates in or aids and abets the principal's conduct. 
Tort liability 
for principals and agents are negligence, intentional torts, and misrepresentation. 
Respondeat superior 
a rule that says an employer is liable for the tortious conduct of its employees or agents while they are acting within the scope of its authority.
Vicarious liability 
liability without fault. occurs where a principal is liable for an agent's tortious conduct because of the employment contract between the principal and agent, not because the principal was personally at fault. 
Doctrine of negligence 
rests on the principal that if someone (i.e the principal) expects to derive certain benefits from acting through others (i.e the agent) that person should also bear the liability for injuries caused to third persons by the negligent conduct of an agent who is acting within their scope of employment. 
Frolic and detour
a situation in which an agent does something during the course of his or her employment to further his or her own interests rather than the principals. 
Coming and going rule 
a rule that says a principal is generally not liable for injuries caused by its agents and employees while they are on their way to or from work. 
Dual - purpose mission 
an errand or another act that a principal requests of an agent while the agent is on his or her own personal business. 
Intentional torts
include such acts as assault, battery, false imprisonment, and other intentional conduct that causes injury to another person. A principal is not liable for this of agents and employees who are committed outside the principal's scope of business. 
Motivation test 
a test that determines whether an agent's motivation in committing an intentional tort is to promote the principal's business; if so the principal is liable for any injury caused by the tort. 
Work-related test
a test that determines whether an agent committed an intentional tort within a work-related time or space; if so the principal is liable for any injury caused by the agent's intentional tort. 
Intentional misrepresentation
a deceit in which an agent makes a statement that he or she knows is not true.  (fraud or deceit) Third party can either (1) rescind the contract with the principal and recover any consideration paid or (2) affirm the contract and recover damages. 
Contract liability 
agency law imposes this on principals and agents, depending on the circumstances. 
Fully disclosed principal
an agency in which a contracting third party knows (1) that the agent is acting for a principal and (2) the identity of the principal. 
Partially disclosed agency 
an agency in which a contracting third party knows that the agent is acting for a principal but does not know the identity of the principal. Nondisclosure may be because (1) the principal instructs the agent not to disclose his or her identity to the third party or (2) the agent forgets to tell the third party the principal's identity. 
Undisclosed agency 
an agency in which a contracting third party does not know of either the existence of the agency or the principal's authority. 
Implied warranty of authority 
a warranty of an agent who enters into a contract on behalf of another party that he or she has the authority to do so. To recover the third party must show (1) reliance on the agent's representation and (2) ignorance of the agent's lack of status. 
Ratification of a contract
a situation in which a principal accepts an agents unauthorized contract. A principal is bound on the contract only if he ratifies the contract. 
Independent contractors 
"a person who contracts with another to do something for him who is not controlled by the other not subject to the other's right to control with respect to his physical conduct in the performance of the undertaking"
Degree of control 
the crucial factor in determining whether someone is an independent contractor or an employee that the principal has over the agent. 
Inherently dangerous activities
principals cannot avoid liability over these that they assign to independent contracts (i.e use of explosives, clearing of land by fire, crop dusting, and other inherently dangerous activities involve special risks)
Terminated by an act of the parties
an agency can be terminated (1) by the mutual assent of the parties, (2) if a stated time has lapsed, (3) if a specified purpose is achieved, or (4) by the occurrence of a stated event.
Wrongful termination 
the termination of an agency contract in violation of the terms of the agency contract. The non-breaching party may recover damages from the breaching party .