Business Law Unit 9

What is a principal – agent relationship in general?

Legal and economic arrangement where the principal gives the agent the authority to act on their behalf

What are all five types of agents?

General Agent

Special Agent

Agency coupled with interest

Subagent

Servant

What is a General Agent?

An agent that has the authority to carry out a broad range of transactions in the name and on behalf of the principal

What is a Special Agent?

An agent that has the authority to act only in a specifically designated instance

What is an Agency coupled with interest?

An agent that has a personal or financial interest in the subject of the agency itself

What is a Subagent?

Agents who appoint their own agents

What is a Servant?

• Someone who is employed by a master

• works under the master’s control and supervision

• performing duties as instructed

What is an Independent Contractor?

A person who works for another but is not an employee, working without supervision

How is an Agency Relationship created?

Created by agreement

• Contract law

  • Consideration

  • Agreement in writing

  • Capacity

Created by operation of law

• Implied Agency - children and family matters

• Apparent Agency - impression that someone is authorized to act for principle

What the main duties of an Agent to the Principle?

Fiduciary Duties

• Position of special trust

• Avoid self-dealing

• Preserve confidential information

General Duties

• Skill and Care

• Good conduct

• Act as authorized and obey

• Give information

What are the main duties of a Principle to the Agent?

Contractual obligations

Employment at will

Duty to indemnify

Duty to compensate

What is workers’ compensation, and how does it relate to the employer’s duties?

No-Fault system:

• By statute, employees get compensation for a job-related injury

• In exchange, they cannot sue the employer

What are the Types of Authority in the contract liability of the principal?

Express authority

• Principal explicitly authorizes the agent

Implied authority

• Authority is implied from the nature of the job or conduct

Apparent authority

• Principal’s conduct leads third parties to believe the agent is authorized

Ratification

• Principal voluntarily approves an unauthorized act, making it binding

What are the Types of Principal‘s Tort and Criminal Liabilities?

Direct liability

Vicarious liability

Agents for whom principals are vicariously liable

Liability for agent‘s intentional torts

Deviations from employment

Principal‘s criminal liability

What is Direct Liability?

When the principal is the agent directing to commit a tort, or he knew about it

What is Vicarious liability?

The principal is held liable for the torts of their agent or employee, even if the principal personally did nothing wrong, as long as the act occurred within the scope of employment or authority.

Who are the Agents for whom principals are vicariously liable?

Employee or Servant

Agent, if they act accordingly

Usually not independent contractors, unless non-delegable duty

What are the Principal’s liabilities to third parties?

The principal is liable for contracts made by the agent within the scope of authority and for torts committed by the agent in the course of employment (respondeat superior).

When can a principal be held liable for an agent’s intentional tort?

Liability for intentional torts is transferred to the principal if the agent is acting to further the principal‘s business

What is the general rule for deviations from employment?

Principal is liable for torts only if the servant committed them “in the scope of employment”

When is an agent personally liable for torts in an agency relationship?

• Own wrongful act

• The principal did not authorize the wrongful conduct

• Must reimburse the principal for any damages the principal paid.

In contract law, when can an agent be held personally liable on a contract made for the principal?

An agent is not liable on contracts they make on behalf of the principal, as they are typically not a party to a contract

What are the main ways an agency relationship can be terminated?

By act of the parties

• Express termination: set time/date

• Implied termination: disloyalty or bankruptcy

By operation of law

• Death of principal or agent