[REG]Agency relationship

Creation of Agency relationship

- writing is generally not required to create an agency relationship

- consideration is not required to form an agency relationship,

   * but consideration is required for a legally enforceable agreement

Principal: Hires the agent to act on their behalf - cannot be a minor - cannot be mentally incompetent Agent: Negotiates with third parties on behalf of the principal

 

writing is required under the following circumstances

1) Marriage

2) A writing must evidence agency agreement of more than a Year

3) to buy or sell an interest in Land for the principal

4) contracts by Executors to pay estate debts out of personal funds

5) sale of goods for $500 or more

6) contract to act as surety

 

 

Power of attorney

- written authorization of an agency(attorney in fact)

- need not be a lawyer. the agent has the power to act on behalf of the principal

- principal is required to sign the power of attorney

- may limit the agency's authority to specific trasactions

 

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Duties of an Agent to the Principal

 Key Fiduciary Duties: the agent has whatever duties that are expressly stated in the contract

1) Duty of Loyalty     - no self-dealing, no competing, no kickbacks 2) Duty of Obedience    - agent must obey all reasonable directions of the principal whether oral or written 3) Duty of Reasonable care 4) Duty to Account    - an agent cannot blend the principal's property with the agent's property

 

- Hiring a subagent

    subagent owes a duty of care to both the agent and the principal

 

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Principal's remedies

 

Tort Damages: sue and recover damages from the agent for committing the wrongful act

* An employer may be liable for a tort committed by an EE within the scope of empolyment

 

Contract Damages

	sue for tort damages	sue for contract damages
agent is receiving compensation	yes	yes
agent is not receiving compensation * still has duty to indemnify(실비정산) unless parties have agreed otherwise	yes	no

 

 

Recovery of secret profits(commission form third party or kickbacks)

 

Withhold compensation

 

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Duties of principal to agent_Imjplied by law

Compensation

Reimbursement/Indemnification

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Remedies of the Agent

 

When the principal breaches his or her duties

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Power to terminate relationship vs Right to terminate relationship

the agency relationship is consensual, either party generally has the power to terminate the relationship at any time

but not have right to terminate at any time

 

 

Agency coupled with an int, principal does not have the power or the right to terminate the agency, only the agent can

* Death, incapacity, bankruptcy of the principal will not end an agency coupled with an interest

 

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Actual Authority

 

agent's power to contractually bind principal

1) actual authority: agent has the power and the right to bind the principal to contracts with third parities      ex) O, hire/fire employees, purchase inventory, pay business debts            X, sell mortage business fixture, other property of the principal, borrow money on the principal's behalf         2) apparent authority or estoppel: agent has power but not the right 3) Ratification: Agent has no power or right, but the principal chooses to be bound by an unauthorized act

 

Termination of actual authority

  - Agent quits or gets fired

  - Accomplishment of objective or expiration of a stated period

  - Automatic termination of actual authority(by operation of law)

   1) Bankruptcy of the principal

   2) Incapacity of the principal

   3) Death of either the principal or the agent

   4) Failure to acquire a necessary license

   5) Subsequent illegality

   6) Destruction of the subject matter of the agency

 

Apparent Authority

Apparent authority 3rd party's reasonable belief that the agent has the power to bind the principal

Actual Authority agent's reasonable belief that the  agent has the power to bind the principal

 

General agent series of transactions involving a continuity of service ex) store manager, president, CEO

special agent perform one or more transactions not involving continuity of service ex) realtor

- the agent will continue to have apparent authority until the principal notifies third parties

- actual notice must be given to terminate apparent authority to old or current customers

- constructive notice( ad in the newspaper or trade magazine)

 

Ratification

allows a principal to choose to become bound by a previously unauthorized act of his or her agent

- agent cannot give themselves apparent authority

- principal must ratify the entire transaction, there can be no partial ratification

- ratification does not require consideration and the principal need not notify the third party of the ratification

- only the purported/disclosed principal may ratify

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Contractual Liability

 

Principal liable if the agent had authority or the principal ratified

actual authority apparent authority ratified the transaction

principal's liability does not depend on whether the principal's existence or identity was disclosed

 

 

Agent's liability to 3rd parties for the contract duties

Disclosed principal

agent discloses the existence and identity of the principal, the 3d party cannot hold an authorized agent liable for the contract

Unidentified and undisclosed principal(agent liable)

- agent is liable on the contact with the third party - 3rd party can hold either the principal or the agent(not both) liable - no apparent authority with an undisclosed principal - principal cannot ratify contracts unless they are disclosed

 

- The principal is bound if the agent has authority (actual or apparent). it is irrelevant whether the principal was disclosed, unidentified, or undisclosed. it the agent did not have authority, the principal is bound only if the agent did not have authority, the principal is bound only if he ratifies

 

- An agent is always liable to a third party for damages if the agent lies to the third party

 

 

3rd party's Liability to perform contract duties

- principal can hold the 3rd party liable on a contract, even if the principal's existence or identity were not disclosed

 

 

Tort liability

- general rule, a principal is not liable for the torts committed by his or her agent- only the agent is liable

- ER can be liable for an ee's torts committed within the scope of employment

 

Employer-Employee Relationship

EE - works full-time for the employer - uses the employer's facilities or tools - is compensated on a time basis - is subject to the supervision of the employer

Independent contractor - has own business - own facilities and tools - hired for a particular job - paid a given amount for that job - follows own discretion in carrying out the job - responsible for his own torts

 

 

Scope of Employment

ER liable- injury occurred within the scope of the employment, EE's negligence, * torts is authorized/ use of force is authorized (doctrine of respondeat superior)

- small detours from an employer's directions fall within the scope of the employment