Exam 30: Relationship With Third Parties

An agent who has either actual or apparent authority has the power to bind his principal.

Ordinarily, an agent may delegate his duties to an equally qualified subagent.

Saul is a sales representative for the Incman Corporation.Saul has a terrible driving record and has had his driver's license revoked, but nevertheless he continues to drive the company car for his job.One day he drives too fast for conditions, goes through a red light, and strikes a pedestrian.The accident happened despite the fact that Saul's supervisor at Incman had repeatedly reprimanded him and advised him to drive more cautiously.Incman:

Southern Furniture Co.hired Chuck to drive a company truck and deliver furniture.Chuck had a spotless driving record and did well on his driving test.Belinda ordered a chair from Southern Furniture Co.and arranged for its delivery on her lunch hour.Belinda was at home when Chuck delivered the chair.After delivering the chair, Chuck brutally raped Belinda, causing severe physical and psychological injuries.Chuck was convicted in the criminal courts.During the trial it was revealed that Chuck had been in a mental institution for the criminally insane for two years because he had brutally assaulted his mother and other women.He also had a lengthy criminal rap sheet involving theft crimes.Belinda sought compensation for her physical and psychological injuries from both Chuck and Southern Furniture Co.in civil court.Discuss the probable outcome of this case with regard to the issues of: (a) respondeat superior and (b) general tort liability of principals for the unauthorized acts of their agents.

The power of an agent is her ability to change the legal status of her principal.

The doctrine of __________ is the basis for an employer's liability for an unauthorized tort committed by his employee in the course of his employment.

Under the Third Restatement, if a principal becomes incapacitated, the agency relationship terminates and all authority, including apparent authority, automatically ceases.

MATCHING Part VI Matching Match each statement with the correct term below.a.The duty that requires an agent to act in the principal's affairs only as authorized by the principal and to obey all reasonable instructions.b.The requirement that an agent maintain and provide the principal with a true and complete account of money or other property that the agent receives or expends on behalf of the principal.c.A consensual relationship authorizing one party to act for and on behalf of another party.d.A person authorized to act on another's behalf.e.The requirement that an agent act with reasonable care and skill in performing the work for which she is employed.f.Written, formal appointment of an agent.g.The requirement that an agent use reasonable efforts to give the principal information that is relevant to the affairs entrusted to her.h.Person who agrees to do a particular job for another but who is not subject to the other's control.i.A form of liability without fault in which the principal is held vicariously liable for the agent's unauthorized tort.j.Authority that is either express or implied and that depends upon consent manifested by the principal to the agent.k.A principal of whom a third party has no knowledge, because he has no reason to believe the agent is acting for a principal.l.Corporation's act of confirming a contract that was made by a promoter before the corporation was formed.m.Power that is based upon acts or conduct of the principal which manifests to a third party that the agent has power and upon which the third party justifiably relies.n.A principal that a third party knows exists but does not know who it is.o.The confirmation or affirmance by one person of a prior unauthorized act performed by another who is, or purports to be, his agent.p.Power inferred from words or conduct that a principal manifests to an agent. -power of attorney

MATCHING Part VI Matching Match each statement with the correct term below.a.The duty that requires an agent to act in the principal's affairs only as authorized by the principal and to obey all reasonable instructions.b.The requirement that an agent maintain and provide the principal with a true and complete account of money or other property that the agent receives or expends on behalf of the principal.c.A consensual relationship authorizing one party to act for and on behalf of another party.d.A person authorized to act on another's behalf.e.The requirement that an agent act with reasonable care and skill in performing the work for which she is employed.f.Written, formal appointment of an agent.g.The requirement that an agent use reasonable efforts to give the principal information that is relevant to the affairs entrusted to her.h.Person who agrees to do a particular job for another but who is not subject to the other's control.i.A form of liability without fault in which the principal is held vicariously liable for the agent's unauthorized tort.j.Authority that is either express or implied and that depends upon consent manifested by the principal to the agent.k.A principal of whom a third party has no knowledge, because he has no reason to believe the agent is acting for a principal.l.Corporation's act of confirming a contract that was made by a promoter before the corporation was formed.m.Power that is based upon acts or conduct of the principal which manifests to a third party that the agent has power and upon which the third party justifiably relies.n.A principal that a third party knows exists but does not know who it is.o.The confirmation or affirmance by one person of a prior unauthorized act performed by another who is, or purports to be, his agent.p.Power inferred from words or conduct that a principal manifests to an agent. -duty of obedience

Upon the termination of an agency, the agent's actual authority ceases.The Second and Third Restatements differ about when apparent authority ceases.

An agent for a disclosed principal may agree to become liable on a contract between a principal and a third party in all but which of the following ways?

MATCHING Part VI Matching Match each statement with the correct term below.a.The duty that requires an agent to act in the principal's affairs only as authorized by the principal and to obey all reasonable instructions.b.The requirement that an agent maintain and provide the principal with a true and complete account of money or other property that the agent receives or expends on behalf of the principal.c.A consensual relationship authorizing one party to act for and on behalf of another party.d.A person authorized to act on another's behalf.e.The requirement that an agent act with reasonable care and skill in performing the work for which she is employed.f.Written, formal appointment of an agent.g.The requirement that an agent use reasonable efforts to give the principal information that is relevant to the affairs entrusted to her.h.Person who agrees to do a particular job for another but who is not subject to the other's control.i.A form of liability without fault in which the principal is held vicariously liable for the agent's unauthorized tort.j.Authority that is either express or implied and that depends upon consent manifested by the principal to the agent.k.A principal of whom a third party has no knowledge, because he has no reason to believe the agent is acting for a principal.l.Corporation's act of confirming a contract that was made by a promoter before the corporation was formed.m.Power that is based upon acts or conduct of the principal which manifests to a third party that the agent has power and upon which the third party justifiably relies.n.A principal that a third party knows exists but does not know who it is.o.The confirmation or affirmance by one person of a prior unauthorized act performed by another who is, or purports to be, his agent.p.Power inferred from words or conduct that a principal manifests to an agent. -respondeat superior

If an agent, at his principal's direction, fixes prices with the principal's competitors:

Gaines delivers a chair for Jasper Furniture and, before he goes back to the store, he goes 15 miles out of the way to visit a friend.On the way, he negligently runs a stop sign and hits Rick.Who can be held liable for the accident, and why?

An agent is not normally liable on a contract he makes with a third party on behalf of a(n):

Apparent authority can arise where there is an undisclosed principal as well as where the principal is disclosed.

An example of successful land purchases made by agents for an undisclosed principal took place in Florida for Walt Disney Productions.

A subagent is an agent of both the principal and the agent.

Implied authority may arise from customs or usages of the principal's business.

Apparent authority may arise by an agent's showing a third party a document from the principal authorizing the agent to enter into such a transaction.