Business Law Final

agency law

concerned with your responsibility for the actions of others and their obligations to you

principal

person who has someone acting for him

agent

a person who acts for someone else

True

Principals have substantial liability for the actions of their agents (T/F)

agent, principal

In an agency relationship, someone (the ___) agrees to perform a task for, and under the control of, someone else (the ___)

1. Principal

2. Agent

3. mutual consent that the agent will act on behalf of the principal

4. subject to principals control

5. creates a fiduciary relationship

To create an agency relationship, there must be:

consent

to establish __, the principal must ask the agent to do something, and the agent must agree

control

principals are liable for an agent’s acts because they exercise ___ over that person

fiduciary relationship

the trustee must act in the best interests of the beneficiary

fiduciary

agents have a ___ duty to their principals

equal dignities rule

if an agent is empowered to enter into a contract that must be in writing, then the appointment of the agent must also be written

written agreement, formal agreement, compensation

what three things are not required for an agency relationship

consent, control, fiduciary relationship

what three things are required for an agency relationship

loyally

an agent has the the fiduciary duty to act ___ for the principal’s benefit in all amtters connected with the agency relationship

profits

An agent may not receive __ unless the principal knows and approves

confidential

agents can neither disclose nor use for their own benefit any ___ information they acquire during their agency

compete

agents are. not allowed to ___ with their principal in any matter within the scope of the agency business

True

Klein was entitled to buy the “He’s so Fine” copyright after the agency relationship ended; he was just not allowed to use confidential information (T/F)

conflict

Unless otherwise agreed, an agent may not act for two principles whose interests ___

permission

If a principal hires an agent to arrange a transaction, the agent may not become a party to the transaction without the principal’s ___

badly

An agent may not engage in innapropriate behavior that reflects ___ on the principal

Duty to Obey Instructions

Duty: An agent must obey her principal’s instructions unless the principal directs her to behave illegally or unthically

Duty of Care

Duty: an agent has a duty to act within reasonable care

true

An agent with special skills is held to a higher standard because she is expected to use those skills (T/F)

gratuitous agent

someone not paid for performing duties

gross, ordinary

gratuitous agents are liable if they commit ___ negligence, but not ___ negligence

Duty to Provide Information

Duty: An agent has a duty to provide the principal with all information in her possession that she has reason to believe the principal wants to know. She also has a duty to provide accurate information

damages, profits, rescission

3 potential remedies for principal when an agent breaches her duty

damages

The principal can recover from the agent any ___ the breach has caused: Angie has to pay 500 a month for one year

profits

If an agent breaches the duty of loyalty, he must turn over to the principal any __ he earned as a result of his wrongdoing

True

Some states also allow punitive damages against disloyal employees (T/F)

Rescind

If the agent has violated her duty of loyalty, the principal may ___ the transaction

Duty to Indemnify

Duty of Principals: A principal must reimburse an agent for any expenses or damages reasonably incurred in carrying out his agency responsibilities

Duty to Cooperate

Duty of Principals: the principal must furnish the agent with the opportunity to work, the principal cannot unreasonably interfere with the agent’s ability to accomplish the task, the principal must perform her part of the contract

true

Either the agent or the principal has the right to terminate the agency relationship at any time (although there may be financial consequences), In addition, the relationship sometimes terminates automatically (T/F)

term agreement

If the principal and agent agree in advance how long their relationship will last, they have a…

time, achieving a purpose

common variables in a term agreement

mutual agreement

no matter what the principal and agent agree at the starty they can always change their mind later on

agency at will

if they make no agreement in advance about the term of the agreement, either principal or agent can terminate at any time

wrongful termination

if an agency relationship is not working out, the courts will not force the agent and principal to stay together

right

Either party always has the power to terminate, they may not however have the __ to terminate

gratuitous agent

kind of agent that has both the right and the power to quit at any time he wants

True

If the principal or agent can no longer perform required duties, the agreement terminates

1. either the agent or the principal fails to obtain/keep required license

2. Agent or Principal become bankrupt

3. either the principal or agent dies/becomes incapacitated

4. the agent violates her duty of loyalty (T/F)

Change in Circumstance

Reason for Termination: After the agency agreement is negotiated, ___ change, if the changes are significant enough to undermine the purpose of the agreement, the relatioship ends automatically Examples: War, change of law, loss or destruction of subject matter

True

Once an agency relationship ends, the agent no longer has the authority to act for the principal, if she continues to act, she is liable to the principal for any damages he incurs as a result (T/F)

duty to indemnify agent, confidential information

Two things that both the principal and agent continue even after the relationship ends

authority, ratified

The principal is liable for the acts and statements of his agent if:

1. the agent had ___

2. the principal ___ the acts of the agent

true

the principal is deemed to know any information that the agent know or should know

express authority

the principal grants express authority by words or conduct that reasonably interpreted, cause the agent to believe the principal desires her to act on the principal’s account

implied authority

unless otherwise agreed, authority to conduct a transaction includes authority to do acts that are reasonably necessary to accomplish it

apparant authority

a principal can be liable for the acts of an agent who is not, in fact, acting with authority if the principal’s conduct causes a third party reasonably to believe that the agent is authorized

ratified

If a person accepts the benefit of an unauthorized transaction or fails to repudiate it, then he is bound by the act as if he had originaly authorized it. He has ___ the act

intermediary agent

someone who hires subagents for the principal

subagent

someone appointed by an agent to perform the agent’s duties

true

an agent is not liable for any contracts she makes on behalf of a fully disclosed principal (T/F)

unidentified principal

in the case of an ____, the third party can recover from either the agent or the principal

always, only

the principal is ___liable, but the agent is ___liable when the principal’s identity is unknown

joint and severally liable

all members of a group are liable; they can be sued as a group, or any one of them can be sued individually for the full amount owed, but the plaintiff cannot recover more than the total she is owed

True

If the agent has no authority, the principal is not liable to the third party, the agent is (T/F)

respondeat superior

a principal is liable for certain torts committed by an agent

intentional

An employer is liable for ___ torts negligently committed by an employee acting within the scope of employment

False

An employer is responsible for the physical torts of an independent contractor (T/F)

negligent hiring

A principal is liable for both the negligent and intentional physical torts of an independent contractor only if there was this

true

An act is within the scope of employment even if expressly forbidden, if it is of the same general nature as that authorized or if it is incidental to the conduct authorized (T/F)

frolic

the employer is not liable if the employee is on a __ of his own

detor

the employer is liable if the employee is simply on a ___ from company business

1. purpose to serve the employer

   1. employer was negligent in hiring or supervising employee

when is a principal liable for the intentional torts of employees

nonphysical tort

one that harms only reputation, feelings, or wallet

authority

nonphysical torts are treated like a contract claim: the principal is liable only if the employee acted with express, implied, or apparent ___

always

agents are ___liable for their own torts