BUL 3310 Final Exam Study Guide Agency Law CH 20 Agency a fiduciary relationship that results from the manifestation of consent by one person to another that the other shall act in his behalf and subject to his control and consent by the other so to act Restatement of Agency 2d Agent agrees to represent act for the other party Principal person who has the right to control the agents conduct in matters entrusted to the agent Fiduciary Relationship relationship between the agent and principal one founded on trust and confidence reposed by one party in integrity and fidelity of the other o o o Example real estate contract It s the agent s job to do what s best for the principal and not for the agent Real estate agents are incentivized to get the highest price possible in order to get commission but because of the fidu ciary relationship they must act on the principal s best interest which is the lowest price possible o Types of Relationships Employee Employer Independent Contractor Employer Would care for tax purposes TORTS employer liability Big deal for agency Agency is not necessarily responsible for independent contractor situation FICA social security taxes As an EE employee you pay 6 2 out of your paycheck As an ER employer you pay an additional 6 2 FICM medicare o Total 12 4 EE 1 45 unlimited ER additional 1 45 Total 2 9 o 15 3 employees wage goes to social security and Medicare as an employee you only pay half 7 65 But as an independent contractor you pay the full 15 3 o o Income cost of goods sold gross margin We can form an agency by Gross margin expenses EBIT earning before income taxes net income Agreement any type of formal contract Hire an attorney to represent you Hire a realtor to represent you Scope of Authority Ratification you have an agency relationship by your actions Operation of Law where the court would step in and pay someone for any type of re lationship where someone will represent someone else Actual most common comes in two varieties Expressed if you did a durable party of attorney Example gave your spouse rights to your finances if you were inca pacitated Can make it broad and narrow scope Equal Dignity Rule if the contract being executed is in writing then the agent s authority must be in writing Implied by custom by position or is reasonably necessary to carry out your express authority Example get a job offer from the human resources person how do you know they have the authority to give you the job That s the job of human resources Apparent occurs when action by the principal causes a third party to reasonably be lieve the agent had authority to act Example reclusive millionaires where you dealt business with someone you didn t know in account for the millionaire when the money started being o o o o o o o Ratification occurs when a principal affirms an agent s unauthorized act moved around you knew they were actually acting on the behalf of the mil lionaire Example if you were here at school and your mom dad called and told you they deposited something to your bank account because they saw a state ment in the mail Liability for Contracts of agents You didn t authorize it but you approved it afterwards Liability for Torts o o o Authorized Situation if the agent is authorized then the principal can be held liable and they have to reimburse the agent Example if you are traveling for business and they require you to get travel authorizations to take the liability off the employee and off the employer Unauthorized Situation agent is liable however the principal can choose at its option to reimburse the agent if it chooses to Doctrine of Respondeat Superior form of vicarious liability A form of vicarious liability in which an employer can be held responsible for the unauthorized tortuous conduct of its employees Dram shop laws hold server establishment responsible for a drunk driver Indirect legal liability the liability of an employer for the acts of an employee or a principal for those torts and contracts of an agent Doesn t apply to contractors Examples bouncers security Background of Agency Relationship o Types of Principals Termination of Agency o Termination by Act of the Parties Disclosed a principal whose identity is known by the third party when the contract is made Undisclosed a principal whose identity is totally unknown by the third party who also does not know that the agent is acting in an agency capacity at the time of the contract Partially Disclosed a principal whose identity is not known by the third party but the third party knows the agent is or may be acting for a principal when the contract is made Lapse of Time an agency agreement may specify the time period during which the agency relationship will exist If so the agency ends when that time expires If no definite time is stated an agency continues for a reasonable time and can be terminated at will by either party Purpose Achieved an agent can be employed to accomplish a particular ob jective If so the agency automatically ends when the objective is accom plished Mutual Agreement parties can cancel their agency by mutually agreeing to do so Termination by One Party both parties have the power to terminate an agency but they may not have the right and may therefore be liable for breach of contract Termination by Operation of Law Termination by Death or Insanity death or insanity of either party automati cally and immediately ends an agency Impossibility when the specific subject matter of an agency is destroyed or lost the agency terminates Knowledge of the death is not required cause of a change in the law the agency terminates When it is impossible for the agent to perform the agency lawfully be Changed Circumstances when an event occurs that has such an unusual ef fect on the subject matter of the agency that the agent can reasonably infer that the principal will not want the agency to continue the agency terminates 1 2 3 4 Bankruptcy bankruptcy of the principal or the agent usually terminates an agency In some circumstances as when the agent s financial status is irrele vant to the purpose of the agency War when the principal s country and the agent s country are at war with each other the agency is terminated Respondeat Superior Rule in many circumstances an employer is responsible for the actions of employees performed within the course of their employment General Rules of Tort Liability Agents employees and independent contractors are personally responsible for their own
View Full Document
Unlocking...