EXAM 2 REVIEW BLAW 3430 Chapters 28, 9, 10, 11, 13 and 14 (Currently Still In Progress to Finish)

CHAPTER 28

Definition of Agency

Consensual relationship in which one party (the "Agent") acts as a representative of or otherwise acts on behalf of another party ("the Principal").

Principal has a right to...

control the actions of the agent

Scope of Agency Purposes

Generally, whatever business activity a person may accomplish personally, then he may do through an agent.

Other Legal Relationships

All employees are agents, even those not authorized to contract on behalf of the employer.

Employment Relationship

one in which the employer has the right to control the physical conduct of the employee.

Employment Relationship=

TAKES TAXES OUT FROM CHECK

Independent Contractor

a person who contracts with another to do a particular job and "who is not subject to the control of the other".

Independent Contractor=

DOESN'T TAKE TAXES OUT FROM CHECK AND GETS PAID FULL AMOUNT

Employee v. Independent Contractor can include

• Primarily a Federal Income Tax issue

• Impacts who pays the worker's social security (FICA) and

medicare taxes

• Court applies many factors

• Big factor is who controls the activities of the worker

• Case by case analysis

Formalities

Formed by contract or agreement (written or verbal) between parties; consideration is not required.

Agency relationship consists of 3 basic elements:

• Assent

• Control by the Principal

• Agent's Acting on Behalf of the Principal

Gratuitous Agency

Agency created without compensation to agent.

Agency by Estoppel

Agency created when principal intentionally or negligently gives a third person a "reasonable basis" to "believe" agency is created

Agency by Estoppel Elements include: 1

• (1) a person (''principal'') intentionally or carelessly causes "a third party" to "believe" that another person (the ''agent'') has authority to act on the principal's behalf;

Agency by Estoppel Elements include: 2

(2) the principal has notice of the third party's belief and does not take reasonable steps to notify the third party that agency has not been created;

Agency by Estoppel Elements include: 3

3. the third party "reasonably" and "in good faith relies" on the appearances created by the principal

Agency by Estoppel Elements include: 4

(4) the third party justifiably and detrimentally changes their position in reliance on the agent's apparent authority.

Power of Attorney

written, formal appointment of an agent.

Principal

if the principal is a minor or incompetent, the agency is "voidable" (different from void).

Agent

any person with capacity to act may serve as an agent (even a minor!).

Agent's Duties

• Duties are usually defined in a contract.

• Other duties are imposed by law, unless the parties agree otherwise.

• Agent is a fiduciary (a person in a position of trust and confidence)

Agent owes to principal the duties of:

• Obedience

• Good Conduct

• Diligence

• To Inform

• Provide an Accounting

Duty of Obedience- Agent must act in principal's affairs only:

• as authorized by the principal; and

• must obey all reasonable instructions and directions.

• Any unauthorized action would constitute a breach of this duty

Duty of Good Conduct- An agent has a duty to act:

Reasonably; and

• to avoid conduct that is likely to damage the principal's interests or reputation

Duty of Good Conduct- A breach makes the agent

liable to the principal and subject to rightful discharge or termination.

Duty of Diligence- Agent must act with

reasonable care and skill in performing his work.

Duty of Diligence- Special skills or knowledge possessed by agent

are circumstances to be taken into account in determining whether the agent acted in due care and diligence.

Duty to Inform- Agent must use

reasonable efforts to provide the principal with facts that the agent (1) knows, (2) has reason to know,

Duty to Inform- (3) should know if:

• Agent knows, or has reason to know, that the principal would wish to have the facts; or

• The facts are material to the agent's duties to the principal.

Duty to Account- Agent must maintain and provide

the principal with a true and complete account of money or other property that the agent has received or expended on behalf of the principal.

Fiduciary Duty

agent owes a duty of utmost loyalty and good faith to the principal.

Duty to Account-Agent may NOT

"Mingle the principal's property with any other person's property" AND OR "Deal with the principal's property so that it appears to be the agent's property".

Fiduciary Duty Includes

• Conflicts of Interest

• Self-Dealing

• Duty Not to Compete

• Misappropriation

• Confidential Information

• Duty to Account for Financial Benefits

Contractual Duties- Agency relationship may exist

without a written contract, but many times, a written contract does exist.

Contractual Duties-Principal owes agent

the contractual duties of Compensation, Reimbursement, and Indemnification.

Contractual Duties- Compensation is

a principal must compensate the agent as specified in the contract, or for the reasonable value of the services provided, if no amount is specified.

Indemnification

The principal must pay the agent for losses incurred while acting as directed by the principal.

Reimbursement

The principal must pay back to the agent authorized payments the agent has made on the principal's behalf.

Tort Duties

Principal owes the agent the same duties under tort law that the principal owes to all parties,

Tort Duties Includes

the duty to provide an employee with reasonably safe conditions of employment; and

• the duty to warn employees of any unreasonable risk involved in the employment.

Termination of Agency

• Agency is terminated when Principal withdraws its consent. • Agency can be terminated by the Acts of the Parties OR by operation of law.

Lapse of Time

Authority conferred on agent for a specified period of time terminates at the expiration of such time

Mutual Agreement of the Parties

May occur at any time.

Revocation of Authority

Principal may revoke an agent's authority at any time.

Renunciation by the Agent

Agent may end the agency by notifying principal (Agent quits!).

Death -

of either the principal or the agent.

Incapacity -

of either the principal or the agent (except with durable power of attorney).

Change in Circumstances -

if agent should reasonably conclude that principal's wishes have changed,

Change in Circumstances includes -

• (1) accomplishment of authorized act,

• (2) bankruptcy of either principal or agent, or

• (3) change in business conditions, etc.

Irrevocable Powers

an agency "coupled with an interest" is irrevocable

Irrevocable Powers occurs

where the agent has an interest in the subject matter of the agency.

CHAPTER 9

Contract

a Promise (or a set of promises)

• for the breach of which the law gives a remedy

Contract (OR)

the performance of which the law in some way recognizes a duty

Legal Definition of Contract

a binding agreement that the courts will enforce.

Common Law is

(Law through Court Cases)

presented primarily by the Restatement of Contract Law (summary of existing case law)

Common Law governs....

most contracts including contracts involving: • employment, • services, • insurance, • real property (land and anything attached to it), • patents, and • copyrights.

Uniform Commercial Code (UCC)

Article 2 of the UCC governs the "SALE of GOODS".

Sale

a contract involving the transfer of title to goods from seller to buyer

Goods

tangible personal property

Personal Property

is all property other than an interest in land

Types of Contracts Outside the UCC

Contracts that the Code does NOT apply to

Types of Contracts Outside the UCC INCLUDES

employment contracts; • Service contracts; • Insurance contracts; • Contracts involving Real Property (Land and anything attached to it, including buildings); and • Contracts for the sale of "Intangibles" such as patents and copyrights

Contracts specified above continue to be governed by general contract law

A contract is

a binding agreement that the courts will enforce

Contract also is

a Promise (or a set of promises) • for the breach of which the law gives a remedy

• OR the performance of which the law in some way recognizes a duty

Contract is not a

"thing"

Contract is a relationship between

it's parties

Not all agreements are

enforceable

Most agreements consist of

promises by the promisor (offeror) and the offeree (promissee) to do—or not do— something