Agency

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CHAPTER 5 Agency
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Formation of an Agency Relationship

• Two parties consensually agree to form a
  contract relationship in which one party agrees
  to act on behalf of the other party.
• Implied By Conduct.
• Agency by Ratification of Principal.
• Agency By Estoppel.

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Law of Agency
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Distinguishing Between Agents and Independent
Contractors

• Employers control over details of work.
• Distinction between occupation of independent
  contractor and employer.
• Level of supervision.
• Degree of skill required.
• Provision of tools and work space.
• Length of time worker is engaged.
• Method of payment.

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Fiduciary Duty

• Agent Owes Fiduciary Duty to Principal the agent
  agrees to act on behalf of the principal.
•  Duty of Loyalty an agent has a duty to act
  solely for the benefit of his or her principal in
  all matters directly related with the agency
  undertaking.
• Case 5.1 Feddeman Co. v. Langan Associates
  (2000).
• Case 5.2 Green v. H R Block (1999).

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Duties of Agents and Principals to Each Other
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Agents Ability To Bind The Principal To
Contracts Entered Into By The Agent.

• Actual Authority principal gives consent for the
  agent to act for and bind the principal. Cconsent
  is express or implied.
• Apparent Authority when a third party reasonably
  believes the agent has authority to act for and
  bind the principal.
• Case 5.3 Powell v. MVE Holdings, Inc. (2001).

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Agents Ability To Bind The Principal To
Contracts Entered Into By The Agent.

• Ratification principal is bound to an agents
  unauthorized acts by affirmation of the prior
  acts. Express or implied.
• Undisclosed Principal if a third party does not
  know the agent is acting for a principal, the
  principal will nonetheless be bound by any
  contract the agent enters into with actual
  authority.

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Liability for Torts of Agents

• Scope of Employment (Respondeat Superior).
  Employer may be vicariously liable under
  respondeat superior if Employee committed tort
  within the course and scope of employment.
• Case 5.4 Riley v. Standard Oil Co. of New York
  (1921).
• Did Employee have Employers authorization to
  act?
• To what extent were the Employers interests
  advanced?

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Employers Liability For Employees Torts
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Liability for Torts of Agents

• Scope of Employment (Respondeat Superior).
• Did the Employer provide the instrumentality that
  caused the injury?
• Did the Employer have knowledge that the Employee
  would perform the act?
• Liability for Torts Outside the Scope of
  Employment.
• Case 5.5 Pennsylvania State Police v. Suders
  (2004).

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Liability of the Principal for Violations of Law
by the Agent

• Vicarious Liability.
• Company can be liable for illegal acts of an
  employee, even if the employee was told not to
  violate the law.
• Case 5.6 Del Amora v. Metro Ford Sales
  Service (2002).
• Note Cases 5.5 and 5.6 place a heavy burden on
  employers to (1) hire wisely and (2) carry
  adequate insurance for unexpected actions of
  employees.