AGENCY AND PRINCIPAL.1

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AGENCY AND PRINCIPAL.1

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  1. Agency & Principal

    Slide 1 - Agency & Principal

  2. From a legal perspective, what is an AGENCY?

    Slide 2 - From a legal perspective, what is an AGENCY?

  3. DEFINITION

    Slide 3 - DEFINITION

    • A FIDUCUARY relationship that arises when one person (the PRINCIPAL) manifests an intention that another person (the AGENT) shall act on his behalf…
  4.   What is required in order for there to be an AGENCY relationship?

    Slide 4 - What is required in order for there to be an AGENCY relationship?

  5. CREATION OF AN AGENCY

    Slide 5 - CREATION OF AN AGENCY

    • CAPACITY
    • FORMALITIES
    • METHODS OF CREATION
  6. CAPACITY

    Slide 6 - CAPACITY

    • CONTRACTUAL CAPACITY (Principal)
    • 1. Must be of age (18)
    • 2. Can’t be nuts….
    • 3. Must have authority to contract
    • AGENT NEEDS ONLY MINIMAL CAPACITY
    • 1. Minors and incompetents may be
    • appointed as agents
    • 2. Minimal mental capacity usually required
  7. DISQUALIFICATION OF AGENTS

    Slide 7 - DISQUALIFICATION OF AGENTS

    • REPRESENTS BOTH PARTIES (unless both
    • parties are fully advised and agree)
    • SELF-DEALING
    • NOT LICENSED (if law requires):
    • 1. Brokers
    • 2. Insurance Agents
  8. FORMALITIES

    Slide 8 - FORMALITIES

    • Consent of both principal and agent
    • No consideration required
    • Writing generally not required
  9. EQUAL DIGNITY RULE

    Slide 9 - EQUAL DIGNITY RULE

  10.  If the contract being executed is

    Slide 10 - If the contract being executed is

    • or must be in writing, then the
    • AGENT’s authority must be in
    • writing….
  11. Slide 11

    • Statute of Frauds
    • ?
  12. METHODS OF CREATION

    Slide 12 - METHODS OF CREATION

    • By act of the parties (CONTRACT)
    • By appearance (Estoppel)
    • By necessity
    • By ratification
    • By Operation of Law
  13. ESTOPPEL(Example)

    Slide 13 - ESTOPPEL(Example)

    • When the principal causes a third person to
    • believe that another person is his agent, and
    • the third person acts to his detriment in
    • reasonable reliance on that belief, the
    • principal is “estopped to deny” the agency
    • relationship…
  14. TYPES OF AUTHORITY

    Slide 14 - TYPES OF AUTHORITY

  15. TYPES OF AUTHORITY*

    Slide 15 - TYPES OF AUTHORITY*

    • ACTUAL (REAL):
    • 1. EXPRESS (oral or written)
    • 2. IMPLIED (conduct/position)
    • APPARENT
    • INHERENT
    • RATIFIED
    • * Silence can manifest authority
  16. IMPLIED AUTHORITY

    Slide 16 - IMPLIED AUTHORITY

    • Based on words or conduct whereby
    • there is “reasonable belief” by a third
    • party that agent had authority
    • Implied from:
    • 1. Custom and Usage
    • 2. Course of Performance
    • 3. Course of Dealing
    • 4. Necessity (exigent situations)
    • 5. Acquiescence (failure to object)
  17. APPARENT AUTHORITY

    Slide 17 - APPARENT AUTHORITY

    • Principal holds out (to a third party) that another has authority and the third party believes…..
  18. INHERENT AUTHORITY

    Slide 18 - INHERENT AUTHORITY

    • Agent exceeds actual authority but the act performed is similar to the act authorized
    • 1. Foreseeable
    • 2. Incidental
    • 3. Respondeat Superior
  19. RATIFIED AUTHORITY

    Slide 19 - RATIFIED AUTHORITY

    • METHODS (express or implied)
    • Principal agrees to be bound by previous
    • unauthorized act of agent
    • PRE-REQUISITES:
    • 1. Principal must know material facts
    • 2. Principal must accept entire
    • transaction
    • 3. Principal must have contractual
    • capacity
    • 4. No consideration required
  20. DUTIES OF THE

    Slide 20 - DUTIES OF THE

    • PRINCIPAL
    • (TO THE AGENT)
  21. DUTIES OF THE PRINCIPAL

    Slide 21 - DUTIES OF THE PRINCIPAL

    • COMPENSATION
    • SAFE WORKING CONDITIONS
    • CONTRACTUAL (compliance)
    • COOPERATION
    • REIMBURSEMENT (repay)
    • INDEMNIFICATION (payment)
    • ACCOUNTING
  22. REMEDIES OF AGENT

    Slide 22 - REMEDIES OF AGENT

    • BREACH OF CONTRACT (duty to mitigate)
    • AGENT’S LIEN (e.g. Possessory Lien - claim against property of principal that agent holds)
  23. DUTIES OF THE

    Slide 23 - DUTIES OF THE

    • AGENT
    • (TO THE PRINCIPAL)
  24. DUTIES OF THE AGENT

    Slide 24 - DUTIES OF THE AGENT

    • OBEDIENCE
    • LOYALTY
    • ACCOUNTING
    • COMMUNICATION (Duty to notify)
    • REASONABLE CARE/PERFORMANCE
    • 1. Compensated
    • 2. Gratuitous
  25. REMEDIES OF PRINCIPAL

    Slide 25 - REMEDIES OF PRINCIPAL

    • ACTION FOR DAMAGES:
    • 1. Breach of contract
    • 2. Tort remedies
    • ACCOUNTING
    • WITHHOLDING OF COMPENSATION
    • CONTRUCTIVE TRUST
    • AVOIDANCE OF CONTRACT BY
    • PRINCIPAL
  26. DUTIES OF SUB-AGENT TO PRINCIPAL AND AGENT

    Slide 26 - DUTIES OF SUB-AGENT TO PRINCIPAL AND AGENT

  27. DUTIES OF SUB-AGENT

    Slide 27 - DUTIES OF SUB-AGENT

    • AGENT LIABLE FOR SUB-AGENT BREACH
    • SUB-AGENT LIABLE TO AGENT
    • UNAUTHORIZED SUB-AGENT = NO DUTY
    • TO PRINCIPAL
  28. TERMINATION OF THE PRINCIPAL-AGENT RELATIONSHIP

    Slide 28 - TERMINATION OF THE PRINCIPAL-AGENT RELATIONSHIP

  29. TERMINATION

    Slide 29 - TERMINATION

    • Fulfillment of purpose
    • Lapse of time
    • Occurrence of specific event
    • Mutual agreement
    • Revocation of authority
    • Renunciation by AGENT (contract breach)
    • or unilateral act by one party
    • Subsequent destruction or illegality
    • Operation of Law
  30. OPERATION OF LAW

    Slide 30 - OPERATION OF LAW

    • Death and insanity (loss of capacity)*
    • Impossibility
    • Changed circumstances (dissolution)
    • Bankruptcy
    • War
    • * Exception may be a durable power of attorney
  31. SCOPE OF EMPLOYMENT

    Slide 31 - SCOPE OF EMPLOYMENT

  32. SCOPE OF EMPLOYMENT

    Slide 32 - SCOPE OF EMPLOYMENT

    • Whether the conduct was of the same general
    • nature as, or incident to, that which the
    • employee was employed to perform
    • Whether the conduct was substantially removed
    • from the authorized time and space limitations
    • of employment; and
    • Whether the conduct was actual, at least in part,
    • by a purpose to serve the employer
  33. LIABILITIES OF

    Slide 33 - LIABILITIES OF

    • AN AGENT
  34. AGENT LIABILITIES

    Slide 34 - AGENT LIABILITIES

    • WITHIN SCOPE OF AUTHORITY = None
    • OUTSIDE SCOPE OF AUTHORITY:
    • 1. FROLICK
    • 2. DETOUR
  35. TORT LIABILTY

    Slide 35 - TORT LIABILTY

  36. TORT LIABILITY

    Slide 36 - TORT LIABILITY

    • Generally, an AGENT is liable for his own
    • torts but a PRINCIPAL may be liable as a
    • result of:
    • Principals own tortious conduct
    • Principal’s authorization of the tortious
    • conduct
    • Condoning/authorizing an Agent’s tortious
    • misrepresentation
  37. RESPONDEAT SUPERIOR

    Slide 37 - RESPONDEAT SUPERIOR

  38. RESPONDEAT SUPERIOR

    Slide 38 - RESPONDEAT SUPERIOR

    • A principal may be liable to third parties
    • provided that:
    • 1. Employer-Employee relationship exists
    • 2. Conduct within scope of employment
  39. TORT LIABILITY

    Slide 39 - TORT LIABILITY

    • REIMBURSEMENT/CONTRIBUTION FROM
    • PRINCIPAL (AGENT)
    • GENERALLY, PRINCIPAL IS LIABLE IF
    • WITHIN SCOPE OF AGENCY OR
    • EMPLOYMENT (vicarious liability)
  40. VICARIOUS LIABILITY

    Slide 40 - VICARIOUS LIABILITY

  41. Liability without regard to the personal fault of the employer for torts committed by an employee in the scope of employment

    Slide 41 - Liability without regard to the personal fault of the employer for torts committed by an employee in the scope of employment

  42. INTENTIONAL TORTS

    Slide 42 - INTENTIONAL TORTS

  43. INTENTIONAL TORTS

    Slide 43 - INTENTIONAL TORTS

    • Employer usually not liable (scope)
    • If employee hired to commit an
    • intentional tort, employer could be
    • held liable…
  44. LIABLITY TO THIRD PARTIES

    Slide 44 - LIABLITY TO THIRD PARTIES

  45. THIRD PARTY LIABILITY

    Slide 45 - THIRD PARTY LIABILITY

    • DISCLOSED PRINCIPAL
    • UNDISCLOSED PRINCIPAL
    • PARTIALLY DISCLOSED PRINCIPAL
    • ACT WITHOUT AUTHORITY
    • AGREES TO LIABILITY
  46. CRIMINAL LIABILITY

    Slide 46 - CRIMINAL LIABILITY

  47. GENERAL RULE

    Slide 47 - GENERAL RULE

    • Neither PRINCIPAL (or employer)
    • is liable for the criminal acts of the
    • AGENT (or employee)…
  48. Questions

    Slide 48 - Questions