Title: Agency Law Speaker: Title: What Scott is the Bergstedt title of this lecture? Speaker: Amit Dhingra Created by: (remove if same as speaker) online.wsu.edu
Chapter 10
It is easy to dodge our responsibilities, but we cannot dodge the consequences of dodging our responsibilities. --Sir Josiah Stamp 3
A fiduciary relationship which 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 Principal: The party who employs another person to act on his or her behalf Agent: The party who agrees to act on behalf of another 18-4
Principal agent relationship: A relationship formed when an employer hires an employee and gives that employee authority to act and enter into contracts on his or her behalf 18-5
18-6
Employer-employee relationship: A relationship that results when an employer hires an employee to perform some task or service but the employee has not been authorized to enter into contracts on behalf of the employer 18-7
Express agency: An agency that occurs when a principal and an agent expressly agree to enter into an agency agreement with each other Exclusive agency contract: A contract a principal and an agent enter into that says the principal cannot employ any agent other than the exclusive agent 18-8
An express agency agreement that is often used to give an agent the power to sign legal documents on behalf of the principal General power of attorney: A power of attorney in which a principal confers broad powers on the agent to act in any matters on the principal s behalf Special power of attorney: A power of attorney in which a principal confers powers on an agent to act in specified matters on the principal s behalf 18-9
Agent has implied power to do what is reasonably necessary to carry out express authority. Inferred or conferred by custom, or agent s position Test is whether agent reasonably believed she had authority to do the act. 10
Pattern of Conduct. Apparent authority usually comes into existence through a principal s pattern of conduct over a period of time. Apparent Authority and Estoppel. If 3rd party changes legal position by relying on principal s representations, principal is estopped (prevented) from denying agent had authority to contract. 11
Agency by ratification: Occurs when A person misrepresents himself or herself as another s agent when in fact he or she is not The purported principal ratifies (accepts) the unauthorized act 18-12
Duty of compensate: Owed by a principal to pay an agreed-upon amount to the agent either upon the completion of the agency or at some other mutually agreeable time Duty of reimbursement: Unless otherwise agreed, a duty a principal owes to reimburse an agent for expenses incurred by the agent if the expenses were: Authorized by the principal Within the scope of the agency Necessary to discharge the agent s duties in carrying out the agency 18-13
Duty to indemnify Duty to cooperate: Unless otherwise agreed, a principal s duty to cooperate with and assist an agent in the performance of the agent s duties and the accomplishment of the agency 18-14
Duty of perform: An agent s duty to a principal that includes Performing the lawful duties expressed in the contract Meeting the standards of reasonable care, skill, and diligence implicit in all contracts Duty of notify: An agent s duty to notify the principal of important information concerning the agency Imputed knowledge: Information that is learned by an agent that is attributed to the principal 18-15
Duty to account: A duty that an agent owes to maintain an accurate accounting of all transactions undertaken on the principal s behalf Duty of loyalty: A fiduciary duty owed by an agent not to act adversely to the interests of the principal 18-16
Fully disclosed agency: An agency in which a contracting third party knows That the agent is acting for a principal The identity of the principal Partially disclosed agency: An agency in which a contracting third party knows that the agent is acting for a principal but does not know the identity of the principal 18-17
Undisclosed agency: An agency in which a contracting third party does not know of either the existence of the agency or the principal s identity Agent exceeding scope of authority Implied warranty of authority: A warranty of an agent who enters into a contract on behalf of another party that he or she has the authority to do so Ratification of a contract: A situation in which a principal accepts an agent s unauthorized contract 18-18
Principal and agent are each liable for their own tortious conduct Three main sources of tort liability: Negligence: Respondeat superior: A rule that says an employer is liable for the tortious conduct of its employees or agents while they are acting within the scope of the employer s authority Vicarious liability: Liability without fault that occurs where a principal is liable for an agent s tortious conduct because of the employment contract between the principal and agent, not because the principal was personally at fault 18-19
Factors Was Employee s act authorized by Employer? The Time place and purpose of act (factually based) Was act commonly performed by Employees? Did act advance Employer s interests? Did Employer furnish instrumentality (tools)? Did Employer have reason to know Employee would do the act? Did the act involved a serious crime? Employer Liable Yes? Yes Yes Yes Yes No Employer NOT Liable No? No No No No No 20
Frolic and detour: A situation in which an agent does something during the course of his or her employment to further his or her own interests rather than the principal s Coming and going rule (going and coming rule): A rule that says a principal is generally not liable for injuries caused by its agents and employees while they are on their way to or from work Dual-purpose mission: A situation that occurs when a principal requests an employee or agent to run an errand or do another act for the principal while the agent is on his or her own personal business 18-21
Intentional torts include acts such as assault, battery, false imprisonment, and other intentional conduct that causes injury to another person Motivation test: A test that determines whether an agent s motivation in committing an intentional tort is to promote the principal s business; if so, the principal is liable for any injury caused by the tort Work-related test: A test that determines whether an agent committed an intentional tort within a work-related time or space; if so, the principal is liable for any injury caused by the agent s intentional tort Misrepresentation: A deceit in which an agent makes an untrue statement that he or she knows is not true Innocent misrepresentation 18-22
A person who contracts with another to do something for him who is not controlled by the other nor subject to the other s right to control with respect to his physical conduct in the performance of the undertaking Principal independent contractor relationship: A relationship between a principal and an independent contractor who is not an employee of the principal but has been employed by the principal to perform a certain task on behalf of the principal 18-23
The crucial factor in determining whether someone is an independent contractor or an employee is the degree of control that the principal has over that party Generally, a principal is not liable for the torts of its independent contractors Principals cannot avoid liability for inherently dangerous activities that they assign to independent contractors A principal can authorize an independent contractor to enter into contracts 18-24
Candid Camera: Trove of Videos Vexes Wal-Mart LENEXA, Kan. -- For nearly 30 years, Wal-Mart Stores Inc. employed a videoproduction company here to capture footage of its top executives, sometimes in unguarded moments. Two years ago, the retailing giant stopped using the tiny company. At first, the decision threw Flagler Productions Inc. into a panic. Now it's Wal-Mart that's squirming. In recent months, Flagler has opened its trove of some 15,000 Wal-Mart tapes to the outside world, with an eye toward selling clips. The material is proving irresistible to everyone from business historians and documentary filmmakers to plaintiffs lawyers and union organizers. The production company's founder and former owner, Mike Flagler, says he was hired on a handshake in the 1970s to help produce the events Wal-Mart holds each year for managers and shareholders, including entertainment portions of its annual meeting and important sales meetings. Flagler offered to sell the whole video archive to Wal-Mart for several million dollars, Ms. Villanueva says, although she won't disclose the exact price. Wal-Mart countered with an offer of $500,000, arguing the footage wouldn't be of interest elsewhere, the two owners say. 25
Uber Drivers Microsoft Contract employees 18-26
An agency contract is similar to other contracts in that it can be terminated by an act of the parties The mutual assent of the parties The passage of a stated time The achievement of a specified purpose The occurrence of a stated event 18-27
Notice of termination: If the principal fails to give the proper notice of termination to a third party, the agent still has apparent authority to bind the principal to contracts with these third parties Direct notice Constructive notice An agency terminates when there is an unusual change in circumstances that would lead the agent to believe that the principal s original instructions should no longer be valid 18-28
An agency relationship terminates if a situation arises that makes its fulfillment impossible The loss or destruction of the subject matter of the agency The loss of a required qualification A change in the law 18-29
Agency contracts can be terminated by operation of law The death of either the principal or the agent The insanity of either the principal or the agent The bankruptcy of the principal The outbreak of a war between the principal s country and the agent s country 18-30
Scott Bergstedt sbergstedt@wsu.edu 18-31