BUSA2106 Lecture 20Outline of Last Lecture V. Defenses to Product Liability Outline of Current LectureI. Agency relationshipsII. Agency: liability for contracts and tortsCurrent Lecture - Agency relationships• Consensual relationship (contract)– Principal: delegates authority to agent to act on the principal’s behalf; agent subject to the principal’s control – Agent has fiduciary duty to act for principal’s benefit• Principal must have contractual capacity• Purpose of agency must be lawful• Examples of principal – agent relationships?- Creating an agency relationship• An agency relationship can be created– By an express agreement between the principal and the agent– By an implied agreement between the principal and the agent– By ratification by the principal– By estoppel– By operation of law• Express agreement – written or oral– Example: power of attorney - Agency by agreement- Agency by ratification arises when A person misrepresents himself or herself as another’s agent AND• The principal ratifies (accepts) the conduct of the agent.• Requirements:– Principal must affirm entire act by agent– Principal must know all material facts; if not, can rescind (take back) the ratification- Agency by operation of law• Agency relationship created by – Family relationship• Example: child purchases groceries and charges them to parent’s account– Emergency situation when agent’s failure to act outside scope of authority could cause loss to the principal• Example: train hits a motorist; railroad employee contracts for medical care on behalf of railroad- Agent’s authorityAn agency relationship exists… so what can the agent do? • Express authority– May be granted orally or in writing• Implied authority – Do what is reasonably necessary to carry out express authority and accomplish purpose of agency• Apparent authority– Principal’s words or conduct create the appearance of authority- Agency and liability• Someone breaches a contract or commits a tort – who is liable?– Principal alone?– Agent alone?– Both principal and agent?- Agency and liability• Contracts:– Principal is always liable under contracts negotiated on his/her behalf by agent– When is the agent himself/ herself also liable? Depends on disclosure• Principal fully disclosed: agent is not contractually liable• Principal undisclosed: both P and A can be contractually liable• Principal is partially disclosed: both P and A can be contractually liable• Why might a P want to remain undisclosed?- Agency and liability• Torts– Direct liability:• Principal is always liable for his or her own torts• Agent is always liable for his or her own torts– Vicarious or indirect liability• Principal and agent are both liable for agent’s torts under certain circumstances – Principal authorized the tort– Respondeatsuperior- Indirect/ vicarious liability• Respondeat superior: “Let the master answer”– Vicarious liability on P for A’s acts IF A was acting within the scope of the agency relationship (scope of employment)• Rationale for imposing vicarious liability? • Allocates risk of doing business to those who stand to profit from the undertaking- Defining the scope of agency/ employment• Did the employer authorize the employee’s act?• Where and when did the act occur? What was its purpose?• Did the employee’s act advance the employer’s interest or did it promote the private interests of the employee?• Did the employer furnish the means or instrumentality used by the employee to cause the injury?• Was the employee’s act foreseeable? Had the employee engaged in such conduct before?- Situations not within the scope of agency/ employment• Coming and going• Frolic and detour “Coming and Going” Rule• A principal is generally not liable for injuries caused by its agents and employees while they are on their way to or from work “Frolic and Detour” Rule• Agent does something during the course of employment to further own interests rather than the principal’s• Principal is generally relieved of liability unless agent’s “detour” is minor
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