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What is the two-part test for whether a principal will be vicariously liable for the torts of an agent?
- There is an agency relationship
- The tort was committed by the agent within the scope of that relationship
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What is required to form a principal-agent relationship?
- Assent - an informal agreement between a principal who has capacity and an agent
- Benefit - the agent's conduct must be for the principal's benefit
- Control - the principal must have the right to control the agent by having the power to supervise the manner of the agent's performance
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Can a principal be held vicariously liable for the torts of a sub-agent?
No.
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Can a principal be held vicairously liable for the torts of borrowed agents?
No.
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Can a principal be held vicariously liable for the torts of independent contractors?
No.
- EXCEPTIONS:
- 1) Ultra hazardous activities
- 2) Estoppel
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How can you tell whether an agent's tort was within the scope of the principal-agent relationship?
- Was the conduct "of the kind" the agent was hired to perform?
- Did the tort occur on the job? (Frolic v. Detour)
- Did the agent intend to benefit the principal?
- Intentional Torts - genreally outside the scope of agency
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Frolic
A new and independent journey, no vicarious liability
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Detour
A mere departure from an assigned task, still within the scope of agency
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When are intentional torts not outside the scope of agency?
- Tort authorized by the principal
- Tort natural to the nature of the employment
- Tort motivated by desire to benefit the principal
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When is a principal liable for contracts entered into by its agent?
Test: Principal is liable for contracts entered into by its agent if the principal authorized the agent to enter the contract.
General Rule: The principal is liable on its authorized contracts, and therefore as a rule: an authorized agent is generally not liable on its authorized contracts
Exception: If the principal is partially disclosed or undisclosed, authorized agent may nonetheless be liable at the election of the third party
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Is an authorized agent liable on its authorized contracts?
Generally, no.
EXCEPTION: If the principal is partially disclosed or undisclosed, authorized agent may nonetheless be liable at the election of the third party.
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Actual express authority
Principal used words to express authority to agent. Actual express authority can be oral and private, but it is narrowly construed.
EXCEPTION: If the contract itself must be in writing, then so too must the express authority.
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What revokes express authority?
- 1) Unilateral act of either the principal or the agent, or
- 2) Death or incapacity of the principal
EXCEPTION: The agent has a durable power of attorney.
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Can the unilateral act of either the principal or the agent revoke express authority?
Yes.
But the agent has a durable power of attorney.
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Does the death or incapacity of the principal revoke express authority?
Yes.
But the agent has a durable power of attorney.
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Actual implied authority
Authority which the principal gives the agent through conduct or circumstance (necessity/custom/prior dealings)
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Actual implied authority by necessity
There is implied authority to do all tasks which are necessary to accomplish an expressly authorized task.
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Actual implied authority by custom
There is implied authority to do all tasks which are customarily performed by persons with the agent's title or position.
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Actual implied authority by prior dealings between the principal and the agent
There is implied authority to do all tasks which the agent believes to be authorized to do from prior acquiescence by the principal.
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Apparant authority
- Principal "cloaked" agent with the appearance of authority, and
- Third party reasonably relies on the appearance of authority
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Ratification
When authority is granted after the contract has been entered into.
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When can a contract be ratified, il.e., when can authority be granted after the contract has been entered into?
- Principal has knowledge of all material facts regarding the contract, and
- Principal accepts its benefits
- EXCEPTION: Ratification cannot alter the terms of the contract
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Can ratification alter the terms of a contract?
No.
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What duties are owed to the principal?
- Duty of care
- Duty to obey instructions that are reasonable
- Duty of loyalty (no self-dealing, usurpation, or secret profits)
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What violates the duty of loyalty?
- Self-dealing: Agent cannot receive a benefit to the detriment of the principal
- Usurping the principal's opportunity
- Secret profits: making a profit at the principal's expense without disclosure
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What are the remedies for breach of the duty of care, duty to obey, or duty of loyalty?
- Recover damages
- Force agent to disgorge profits
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