ch 33- agency liability and termination

Scope of Agent’s Authority

Expressed Authority

• Definition: Authority explicitly granted by the principal to the agent, either in writing or verbally.

• Equal Dignity Rule: If an agent is to enter into a contract that must be in writing, the agent's authority to do so must also be in writing unless the agent acts in the presence of the principal.

• Power of Attorney: A legal document that gives one person (the agent or attorney-in-fact) the power to act for another (the principal), often used when the principal is incapacitated or unable to manage their affairs.

Implied Authority

• Definition: Authority that can be reasonably inferred from the agent's position, duties, or from the principal's conduct.

• Consider a Pattern of Conduct: The agent's authority can be implied from a history of similar actions taken by the agent with the principal's knowledge and acquiescence.

Apparent Authority

• Definition: Authority that arises when a principal, by their words or conduct, leads a third party to believe that an agent has authority to act on their behalf, even if the agent does not have actual authority.

• Lundberg v. Church Farms: An example where the court recognized apparent authority based on the principal's past practices and the agent's actions.

Emergency Powers

• Definition: An agent may have the authority to act in emergencies to protect or preserve the principal's interests when immediate action is required, and the principal cannot be reached.

Ratification

• Definition: The act of approving or affirming an act done by an agent without prior authority after the fact.

• Ratification Requirements:

  • Principle Identified: The principal must be identified as the one ratifying the act.

  • Principle Knows Agent's Work: The principal must be aware of the agent's unauthorized act.

  • Principle Affirms Agent's Work: The principal must express or imply approval of the act.

  • Principle and Third Party Must Have Capacity: Both the principal and the third party must have the legal capacity to enter into the contract.

  • Principle Knows All Material Facts: The principal must know all significant details related to the transaction.

  • Principle Affirms Before Third Party Cancels: Ratification must occur before the third party withdraws from the transaction.

Liability for Contracts

• Disclosed Principal: The agent acts on behalf of a known principal, and only the principal is liable on the contract.

• Partially Disclosed Principal: The agent discloses they are acting for someone else but not the identity, making both the principal and the agent liable.

• Undisclosed Principal: The agent does not reveal they are acting as an agent, making both the principal and agent liable to third parties.

Unauthorized Acts

• Agent Without Authority: If an agent acts without authority, the principal is generally not liable unless the act is later ratified.

• If Third Party Knew Agent May Not Have Authority: The third party cannot hold the principal liable if they knew or should have known that the agent lacked authority.

Actions by E-Agents

• Define E-Agent: An e-agent is an automated system or software that performs tasks or makes decisions on behalf of a principal, typically in electronic transactions.

• Where Used: E-agents are commonly used in e-commerce, online services, and automated business processes.

• UETA: The Uniform Electronic Transactions Act provides a legal framework for electronic agents, ensuring their actions are legally recognized.

Liability for Torts and Crimes

Agents Misrepresentation

• Apparent Authority: If an agent commits a misrepresentation while appearing to have authority, the principal can be liable.

• Innocent Misrepresentation: The principal can be liable for misrepresentations made by the agent, even if the agent did not intend to deceive.

Negligence

Respondent Superior

• Basis: Under the doctrine of respondent superior, an employer (principal) can be liable for the torts committed by their employee (agent) in the course of employment.

• Employer's Control: The basis for this liability is the control the employer has over the employee's actions.

Detour and Frolic

• Define Detour: A minor deviation from the scope of employment where the principal remains liable.

• Define Frolic: A significant departure from the scope of employment where the principal is typically not liable.

• Travel Time: Travel time can be considered within the scope of employment if the travel is for the principal's business.

• Notice of Dangerous Conditions: Employers are liable if they fail to warn employees of known dangers.

Intentional Torts

• Respondent Superior: The principal can be liable for intentional torts committed by the agent if they were committed within the scope of employment or if the principal had prior knowledge of the agent's propensity for such acts.

Independent Contractor

• Agent's Crimes: Principals are generally not liable for the crimes of independent contractors.

• Exceptions: However, there are exceptions where the principal can be held liable, such as if the contractor's work is inherently dangerous, if the principal retains control over the manner of the work, or if the contractor is engaged in a non-delegable duty.

Termination of Agency

Two Methods

• Acts of Parties: The agency can be terminated by the actions of the principal or agent.

• Operation of Law: Events like death, insanity, bankruptcy, or the destruction of the subject matter can terminate the agency.

Leaving Agent in Position

• Apparent Authority: If the principal does not notify third parties of the termination, the agent might still have apparent authority, potentially making the principal liable for the agent's actions.

Acts of Parties

• Lapse of Time: An agency can terminate when the agreed-upon time period expires.

• Purpose Achieved: Once the purpose of the agency is fulfilled, the relationship ends.

• Occurrence of an Event: Certain events specified in the agency agreement can trigger termination.

• Mutual Agreement: Both parties can agree to end the relationship.

• Termination by One Party: Either the principal or agent can terminate the agency with or without notice, depending on the agreement.

• Notice of Termination: Proper notice must be given to third parties to avoid liability due to apparent authority.