Agency Formation and Duties

Chapter 33Agency Formation and DutiesCopyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.Introduction to Agency LawAgency: Relationship between principal and agentAgent: One authorized to act for/on behalf of principalPrincipal: One who hires agent to represent him/herFiduciary: One with duty to act primarily for another person’s benefitCreation of Agency RelationshipExpressed Agency: Agency formed by making written/oral agreementPower of Attorney: Document giving agent authority to sign legal documents on behalf of principalDurable Power of Attorney: Power of attorney intended to continue to be effective/take effect after principal incapacitatedAgency By Implied Authority: Agency formed by implication, through conduct of partiesAgency By Estoppel: Agency formed when principal leads third party to believe that another individual serves as his/her agent (although principal had actually made no agreement with purported agent)Agency By Ratification: Agency that exists when individual misrepresents himself/herself as agent for another party, and principal accepts/ratifies unauthorized actRequirements for “Agency By Ratification”Individual must misrepresent himself/herself as agent for another partyPrincipal accepts/ratifies unauthorized actPrincipal has complete knowledge of all material facts regarding contractPrincipal must ratify entirety of agent’s act Agency RelationshipsAgency Relationship: Fiduciary relationship (relationship of trust) in which agent acts on behalf of principalPrincipal-Agent Relationship: Employer hires employee to enter into contracts on behalf of employer; parties have agreed that agent will have power to bind principal in contractEmployer-Employee Relationship: Employer hires employee to perform certain tasks; employer has right to control conduct of employeesEmployer-Independent Contractor Relationship: Employer hires persons (other than employee) to conduct some sort of task; employer has no control over details of conduct of independent contractorExhibit 33-4: Independent Contractor or Employee?Does worker engage in distinct occupation/independently established business?Is work done under employer’s supervision, or does specialist without supervision complete the work?Does employer supply the tools?What skill is required for the occupation?What is the length of time for which worker employed?Is worker a regular part of the employer’s business?How is worker paid?Principal’s Duties To AgentCompensationReimbursement and IndemnificationCooperationSafe Working ConditionsAgent’s Duties To PrincipalLoyaltyNotificationPerformanceObedienceAccountingPrincipal’s Rights and Remedies Against AgentConstructive TrustAvoidanceIndemnificationAgent’s Rights and Remedies Against PrincipalTort and Contract RemediesDemand For An AccountingSpecific Performance