SBP Agency

Agency relationship

Agency is a fiduciary relationship, where a person or entity (the agent) acts on behalf of another (the principal)

Elements of an agency relationship

An agency relationship exists if there is:
1) Assent
2) Benefit
3) Control

Actual authority

An agent has actual authority when acting within their reasonable understanding of authority, even if the principal later shows the agent was mistaken.

Express actual authority

Granted by the principal's explicit directions to the agent, either orally or in writing

Implied actual authority

Authority necessary to carry out the agent's expressly authorized duties. Agent acted similarly in prior dealings with the principal or it's customary for an agent in that position.

Apparent authority

Apparent authority exists when a third party reasonably believes the agent has authority to act on behalf of the principal and that belief is traceable from the principal holding the agent out as having authority.

How does a principal hold an agent out as having authority?

When the prinicpal:
1) Gives a position or title indicating authority;
2) Previously held the agent out and did not publish a revocation; OR
3) cloaked the agent with the appearance of authority

When is apparent authority NOT applicable?

Apparent authority is NOT applicable if:
1) the third party had knowledge that the agent did NOT have actual authority; OR
2) the transaction was not within the ordinary usages of business.

Universal agent

Has broad authority and is authorized for all acts the principal can perform

General agent

Has authority to conduct a series of transaction over a period of time

Speical agent

Has limited authority either for a specific act or transaction or a specified period of time

Termination of an agency relationship

An agency relationship terminates:
1) A manifestation by either party that the relationship is terminated;
2) Expiration of a specified term of authority
3) Death or principal or agent (by operation of law) OR
4) Incapacity or the principal or agent (by operation of law) - except if a durable power of attorney exists.

Agency contracts

Principal can terminate the agent at any time. However, the principal may be liable for damages if the agent is terminated prior to the expiration of a contract (unless the agent materially breached the contract)

Ratification

Makes the principal liable for an agent's contract entered into without authority

Ratification occurs when the principal:
1) has knowledge of all material facts or contract terms; AND
2) assents to the same through words or conduct

Agent will still remain liable if principal was not disclosed

Agent's contractual liability

Generally, an agent has no liability if they:
1) fully disclose the principal to a third party; AND
2) have actual or apparent authority

Agents will be liable if both elements are not met.

Indeminfication

Agent may seek indemnification from a prinicipal if:
1) agent is liable; AND
2) his conduct was authorized

Employee vs. independent contractor test/factors

Primary focus is whether the principal had the right to control the manner and method in which the job was performed.

Factors:
1) type of work
2) pay (hourly vs. per project)
3) who supplied tools
4) degree of supervision
5) extent to which prinicipal controls details of work
8) whether the agent/contractor is engaged in a distinct business
9) length of time employed/engaged
10) characterization and belief of relationship

Respondeat superior

An employer is liable for an employee's negligent acts if the employee was acting within the scope of the employment.

Scope of employment test

An employee acts within the scope of employment when
1) Performing work assigned by the employer; OR
2) Engaging in a course of conduct subject to the employer's control

Time, place, and purpose test

To determine the scope of employment, courts analyze whether the conduct:
1) Is of the kind that employee is employed to perform
2) Occurs substantially within the authorized time and space limits
3) Is motivated (in whole or part) to serve the employer

Exception to the rule about intentional torts

Intentionally torts are generally considered outside the scope of employment UNLESS
1) The act was specifically authorized by the employer
2) The act was driven by a desire to serve the employer OR
3) The act was the result of naturally occurring friction from the type of employment

Duties owed by the agent to the prinicpal

Care, loyalty, and obedience

Duty of care

duty to use reasonable care when performing agent's duties

Duty of loyalty

duty to act solely and loyally for the principal's benefit

Duty of obedience

duty to obey all reasonable directions of the principal

Liability if respondeat doctrine is inapplicable

A principal/employer will be liable for an agent's act outside the respondeat superior if:
1) Principal intended the conduct/consequences
2) Principal was negligent or reckless in selecting, or controlling the agent;
3) Agent had apparent authority, the agent's actions taken with apparent authority constitute the tort (or enable it to be concealed) and the third-party reasonably relied on such authority.

Liability for independent contractors

Generally, an employer/principal has NO liability for an independent contractor's torts.

Exceptions:
1) Inherently dangerous activities
2) Non-delegable duty owed by principal
3) Estoppel - the principal holds out the contractor as his agent, third-party reasonably relied on contractor's skill and the third-party suffered harm