Chap. 20- Agency Law

Agency

A relationship between a principal and an agent formed by informal oral agreement or formally written contract that grants the agent the authority to act on behalf of the principal.

Agency Relationship

A legal connection where one party (the agent) is authorized to act for another party (the principal) in business dealings, either through explicit or implicit agreements.

Double Power of Attorney

A document that an agent’s authority is intended to continue beyond the principal incapacitation

Agency By Estoppel (Apparent Agency)

Occurs when a principal's actions lead a third party to believe that an agency relationship exists, thereby preventing the principal from denying the agency.

Agency by Ratification

A confirmation of a prior act that was performed without authority, creating a binding agreement between the parties involved.

Two requirements fr Agency by Ratification

An individual must misrepresent themselves as an agent for another party, and the principal either accepts the benefits of the act or affirms it.

Agent

An individual authorized to act on behalf of another party, typically the principal, in dealings with third parties.

Principal

The party who authorizes an agent to act on their behalf, ultimately holding responsibility for the agent's actions in dealings with third parties.

Fiduciary

A person in a position of trust & confidence who is obligated to act in the best interest of another party, typically the principal.

Distinguished Employee and Independent Contractor

A worker classification that differentiates between individuals employed directly by an organization and those who operate independently, often with different levels of control, benefits, and legal responsibilities.

Duty of Reimbursement and Indemnification

The obligation of a principal to repay an agent for expenses incurred while performing duties on behalf of the principal and to protect the agent from losses arising from authorized actions.

Duty of Cooperation

The obligation of a principal to work with the agent to achieve the objectives of their agreement and to provide necessary support to facilitate the agent's performance.

Duty of Obedience

The obligation of an agent to follow the lawful instructions and directives of the principal while carrying out their duties.

Duty of Accounting

The obligation of an agent to keep accurate records of all transactions and financial activities conducted on behalf of the principal, ensuring transparency and accountability.

Constructive Trust

A legal remedy used to prevent unjust enrichment, where a party holds property for the benefit of another due to circumstances that warrant trust, even if no formal trust exists.

Indemnification

A provision that protects an agent or party by compensating them for losses or liabilities incurred while acting on behalf of the principal or another party.

Express Authority

The specific authority granted to an agent by the principal, either explicitly through words or written agreement, to perform certain actions on the principal's behalf.

Implied Authority

The authority that is not explicitly stated but is assumed to be granted to an agent to perform acts necessary to fulfill their duties on behalf of the principal, based on the circumstances or the principal's conduct.

Contractual Liability

The legal responsibility arising from a contract that requires one party to fulfill their obligations or compensate the other party for any losses resulting from a breach.

Disclose Principal

The act of revealing the identity of the principal to a third party by the agent, which affects the agent's liability in transactions.

Partially Disclosed Principal

A principal whose identity is not fully revealed to a third party in a transaction, leading to the agent retaining some potential liability.

Undisclosed Principal

A principal whose identity is completely concealed from a third party, leaving the agent fully liable for the transaction and unable to seek compensation from the principal.

Liability for unauthorized acts of agent

The principal may be liable for acts of an agent performed without authority if they subsequently ratify those acts. However, if the acts are entirely unauthorized and not ratified, the agent holds full liability.

Respondent Superior

A legal doctrine holding that an employer can be held liable for the negligent actions of an employee performed within the course of their employment.

Frolic And Detour

Refers to a situation where an employee deviates from their employer's business for personal reasons, and the employer may not be liable for actions taken during this time.

Liability for Independent Contractor’s torts

The principal is generally not liable for torts committed by an independent contractor during the performance of their work, unless the contractor was engaged in an inherently dangerous activity or the principal was negligent in selecting the contractor.