Badm 300 Exam 3 Study Guide

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AGENCY LAW: PRINCIPAL-AGENT RELATIONSHIP
1. Agency
a. Principal tells an agent what to do, they create an agreement b. Created by a contract – manifestation of consent c. Why care about agency law? Lawyer - agent and employer - principal d. There’s a liability on the employer on the actions of its employee e. If you’re an employee, and you run into a pedestrian who gets injured – pedestrian will sue the company not employee (deep pockets) torts f. Contract – guy work for trucking company signs contract to transport good, if contract is breached will be the responsibility of principal 2. Parties Involved

g. Principal contracts with Agent to perform some service i. E.g. Principal, homeowner, hires Agent, landscaping company, to landscape his yard h. In a lot of cases, there is also a third party involved ii. E.g. Landscaper’s mower goes out of control, into neighbor’s yard * Neighbor becomes 3rd party

3. Fiduciary Obligations
i. Fiduciary - One who is entrusted with duties on behalf of another. The law requires the highest level of good faith, loyalty and diligence of a fiduciary, higher than the common duty of care that we all owe one another. iii. Principal manifests ascent to an agent to make decision iv. Restatement – document/book that adds additional commentary to laws, definitions) j. The Agent has Fiduciary Obligations to the Principal; they must act in the Principal’s best interest k. Duties that fall under this category

v. Duty of Loyalty – Agent must act solely for the benefit of Principal regarding matters within the scope of the agency * The Agent must not compete with the Principal vi. Duty of Service – The Agency must render service to Principal vii. Duty of Obedience – The obligation to obey all reasonable orders of the Principal. * An act of insubordination is a violation of this duty. viii. Duty to disclose pertinent information – Agent must share all important & relevant information with principal l. Duties Principal owes Agent

ix. Principal needs to use reasonable care
x. Compensation and reimbursement during agency
xi. Principal DOES NOT have a duty of loyalty
4. What ends this relationship?
m. Completion of the task on which it was based
xii. E.g. when the landscapers are done, there no longer is a fiduciary obligation n. If terms of contract say when it ends
o. Specific Event
xiii. E.g. one person dies, that is the end of the relationship

Liability: CoNTRACTS
If an agent enters into a contract on behalf of the principal – it depends if it is legal/enforceable
have to determine if the agent is authorized to enter into it 1. Agent is liable unless…
a. They are AUTHORIZED
i. Actual Authority - He is (actually) authorized to make that contract * What makes them authorized to make a contract (and how much)? (i) Express Authority – principal manifest agent to enter into a contract (the end goal) “I want you to buy a house for me” (ii) Implied Authority – NOT apparent authority – able to do anything that is reasonable to get the job done; take the steps necessary to complete the end goal; ex: negotiate with people, drive around to find house (iii) General Agent – high level of authority, autonomy 1. E.g. manager, you have actual authority to do a lot (iv) Specific Agent – assigned specific tasks; not much freedom/authority 2. E.g. cash register – very specific. No authority to buy/sell/etc. (v) Agent By Estoppels – it’s not fair; no actual authority to make...
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