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Agent
A person who acts on the behalf of another based upon instructions of another.
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Principal
A person who allows an agent to act on his behalf subject to his control and instruction.
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A husband and wife relationship
Does not establish an agency relationship unless the spouse knowingly accepts benefits (ratifies) the unauthorized acts of the other spouse.
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Creation of Agency Relationship.
- Agency relationship can be created by (1) appointment, (2) implication, (3) misinterpretation or (4) ratification.
- Principal has to manifest his assent/agreement to be in an agency relationship- either expressly or through implication.
- Agent must agree and consent to act on behalf of the principal, subject to the principals control.
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Formation of Agency relationship - Principal
- (1) legal capacity to enter into an agreement
- (2) right to control the agents actions.
- Courts consider the following factors in determining an agency relationship:
- (1) Principal's exercise control over work;
- (2) Principal's supply of tools;
- (3) Payment on structured pay period;
- (4) Specialization of skills of employer; and
- (5) Direction of work to completion.
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Formation of Agency relationship - Agent
- The agent must assent to act on the principals behalf and subject to the principals control.
- No consideration required.
- No writing required.
- Minimal competency.
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General agent.
A person with broad grant of authority by the principal.
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Special agent.
A person with a special or unique authority to bind the principal to a specific task.
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Sub-agent.
- A person that the agent has appointed to perform tasks that the person has agreed to perform.
- Owes duties and is liable to both A&P
- Will bind the A&P in tort or contract.
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Independent contractor.
- A person who does work for another but is not subject to their control is called an independent contractor.
- An independent contractor is not considered an agent of the person.
- Designation not dispositive.
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Burden of proof of agency.
The party seeking to prove agency relationship.
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Equal dignities rule.
- When a statute requires a principals authorization to be in writing, the agent must provide written proof of the agency relationship as well.
- MD courts have neither adopted nor rejected the rule.
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Power of Attorney.
- (1) in writing
- (2) signed by the principal and then
- (3) notarized and
- (4) attested to by two adult witnesses.
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Power to Bind under Contract Law
To bind the principal, the agent must generally act with authority.
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Actual Authority.
Actual authority is what the agent reasonably believes the principal has instructed him to do.
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Express actual authority.
- An agent has express actual authority when the agent has a clear, express instruction about what the principal wants him to do.
- Must be both objective and subjective belief.
- Generally, must be communicated directly with the agent.
- Third party notice irrelevant.
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Implied actual authority.
Actual implied authority allows the agent to take whatever actions are necessary to carry out the principals express instructions.
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CAPE - implied authority factors
- Custom in industry.
- Acquiescence by the agent/failure to object.
- Position provides power for duties.
- Emergency situations gives the agent to take reasonable actions necessary.
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Apparent Authority.
- When the principal acts in a manner that causes a 3rd party to reasonably believe that the agent had the authority to act.
- Reasonable belief can arise through:
- (1) position,
- (2) past dealings
- (3) custom
- (4) industry standards and
- (5) principal statements.
- However, if novel/unique without benefit to the principal, then a court may find that the apparent authority does not bind the principal.
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Imposters authority.
If a third party reasonably believes that the principal has given the imposter authority to act, then the imposters actions can bind the principal.
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Termination of Authority - actual
To terminate actual authority, there must be some communication between P&A.
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Termination of Authority - apparent
To terminate apparent authority, the principal must communicate to the third party that the relationship or authority is terminated.
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What can terminate agency relationship.
- Termination can occur through:
- (1) revocation,
- (2) agreement,
- (3) changed circumstances,
- (4) passage of time,
- (5) a termination after a reasonable period of time,
- (6) death of the principal when the agent has knowledge the death,
- (7) death of the agent,
- (8) principals loss of capacity, and
- (9) agents breach of duty.
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Durable power of attorney.
- (1) Written statement
- (2) While competent and living
- (3) Granting authority to another to act on his behalf
- (4) Upon occurrence of a named condition.
- Acts taken by agent under POA will bind principal or estate.
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Statutory termination - banks
A bank may cash a decedent's checks for up to 10 days after the decedents death despite actual knowledge of his death.
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Ratification.
A principal may elect to ratify an act of an agent despite no actual or apparent authority for the action.
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Requirements for ratification
- Manifestation of consent by principal which is:
- (1) Capacity
- (2) Timely
- (3) In the entirety
- (4) With knowledge of all material facts.
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Estoppel.
Principal is estopped from denying existence of an agency relationship when 3P has been induced to detrimentally change her position on reliance of a reasonable belief that A is acting for P's benefit.
- Respondeat Superior.
- Vicarious liability which holds an employer strictly liable for the tortious actions of his employees, despite absence of wrongdoing.
- Focuses on control of employee and scope of employment.
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Respodeat Superior - Control.
Employee and not an independent contractor.
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Respondeat Superior - Scope of Employment.
- Acts within actual authority granted to A, or within apparent authority to 3P.
- When outside the express or implied instructions, the employer may still be responsible for detours.
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Detour
- A personal errand or slight deviation which is relatively minor or for the benefit of the employer is considered a detour.
- Employer liable.
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Frolic
- A significant deviation while running an errand or acting independently and not for the benefit of the employer is considered a frolic.
- Employer not liable.
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Principal's Liability for Torts
- Strict liability for acts of employees with actual or apparent authority.
- Strict liability when delegation of a non-delegable duty.
- Negligence in selecting, supervising or controlling the agent.
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Agents Liability - Disclosed Principal.
A who discloses existence and identity of P is not party to K and not liable under K.
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Agents Liability - Partially Disclosed Principal.
A who discloses the existence but not identity of P is party to K and may be held liable on the K.
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Agents Liability - Undisclosed Principal.
When a third party discovers the existence of an undisclosed agent can choose whether to hold the principal or the agent liable under the election of remedies doctrine.
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Agents Liability - Torts.
An agent is always liable for their own torts.
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Agent's Breach of Warranty - implied
- In dealing with 3P, an agent's representation to a 3P create an implied warranty.
- If agent acts without actual authority, he has breached his implied warranty of agency.
- Only if disclosed or partially disclosed principal.
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Agent's Breach of Warranty - express
- Agent may give an express warranty of agency to induce a 3P to deal with him.
- Lack of actual authority is a breach of an express warranty.
- Only if disclosed or partially disclosed principal.
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