Chapter 17 Business Law – Flashcards

Express Authority- Express Authority- Granted by words or conduct that, reasonably interpreted, cause the agent to believe the principal desires her to act. In ambiguity about the principal's intent, the courts look at the principal's Objective manifestation not his subjective intent. Ex-In other words the principal asks the agent to do something and the agent does it. Craig call his stockbroker Alice, and asker her to buy 100 shares of Banshee Corp, for his account. She has express authority to carry out this transaction.

2. Implied Authority-- Unless otherwise agreed, authority to conduct a transaction includes authority to do acts that are reasonably necessary to accomplish it. The agent has authority to perform acts that are reasonably necessary to accomplish an authorized transactions, even if the principal does not specify them. Implied actual authority is authority an agent has by virtue of being reasonably necessary to carry out his or her express authority. As such, it can be inferred by virtue of a position held by an agent. An insurance agents implied authority would suggest an agent can accept premium payments on behalf of the principal (i.e. the insurer). For example, if you are at a restaurant and your waitress tells you that she can give you a free beverage if you pay for an entree, she has made a contract with you on behalf of the business by which she is employed. It is implied that she is given the authority to do so by the fact that she is the sole employee of the business who has been designated to complete a transaction with you. The law assumes that the agent has authority to do anything that is reasonably necessary to accomplish her task. ---•Unless otherwise agreed, authority to conduct a transaction includes authority to do acts that are reasonably necessary to accomplish it.

3. Apparent Authority- a principal has done done something to make an innocent third party believe that an agent is acting with the principals authority, even though the agent is not authorized. -An agent with actual authority may perform an act beyond the scope of that authority. If the action appears to the third party to be within the scope of the authority, the principal will be bound. Example 1- Two stockbrokers sold fradulent stock out of their officers at legitimate brokerage house and made presneation to investors in the company rooms to sell stock they did not have authority to sell/ Example 2-The condition that arises if a third party believes that an agent has the authority to act for another person or company (called the principal) when that authority has not in reality been granted. If an agent acts with apparent authority, the agent's acts legally bind the principal. For example, a customer may believe that an employee who presents a contract on company stationery is authorized to sign that contract on behalf of the company. Even if the employee does not have the authority to enter into contracts, the company will be legally bound by the signed agreement. -- -belevie someone has authority

1.-Fully Disclosed Principal- An agent is not liable for any contracts. An agent is not liable for any contracts she makes on behalf of a fully disclosed principal. A principal is fully disclosed if the third party knows of his existence and his identity. - Disclosed principal refers to a principal whose identity is revealed to a third party by an agent. A disclosed principal is always liable on the third party contract. However, the agent is not liable generally Example- Augustas acts as a agent for Parker when he buys traceys prize winning show horse. TRACY DOES NOT KNOW PARKER BUT SHE FIGURES ANY FREIND OF AGUSTA BUT BE OKAY. SHE IS WRONG AND FIND OUT Agent is anASSHOLE. tracy wants to get money back Tracy Knew he was a fully disclosed principal- Tracy knew of his existence and identity- Principal is not liable because Tracey knew who the principal was and could of investigated.

2. Unidentified Principal- Unidentified Principal-Third party can recover from either the agent or the principal. *** Principal is unidentified if the third party knew of his existence BUT NOT IDENTITY. Example-Suppose Augusta said I have a friend who is interested in buying your champion. Parker is an undentified principal because Tracey knows only that he exists not who he is. - SHe cannot investigate because she does not know his name. - Tracey relies soley on what she is able to learn from the agent Augusta.

3. Undisclosed Principal- Third party can recover from either the agent or the principal. - Principal is undiclosed if the third party did not know of his existence. Example- Agusta simply asks to buy the horse herself, without mentioning that she is purchasing it for parker. In this case Parker is undisclosed principal because Tracey does not know that Augusta is acting for someone else. -Both parker and Augusta are jointly and severally liable, but the agent is not unless the principal identity is a mystery. - Is it fair for third party to liable on a contract if she does not even know the identity of the principal identity is a mystery.?

(Principals Liability For Torts)- A principal may be liable for the torts of a servant but generally is not liable for the torts of an independent contractor. The general rule of tort liability is this: An employer is liable for phsycial tort committed by an employee acting within the scope of employment and nonphysical tort of an employee acting with authority

-A master (principal) is liable for physical harm caused by the negligent conduct of servants (agent) within the scope of employment.

Negligent Hiring: The principal is liable for the (physical torts of an independent) contractor only if the principal has been negligent in hiring or supervising. Ex- Would the car service Uber be liable if one of its drivers (independent contractor) assaulted a passenger? Only if Uber had been negligent in hiring or supervising the driver.

- Scope of employment- Principals are only liable for torts that a servant commits within the scope of employment. - Takes place during hours that the employee is generally employed. - Is part of the principal business - Is similar to the one the principal authorized - Is oen for which the principal supplied the tool - Is not seriously criminal ** if an employee leaves a pool of water on the floor of a store and a customer slips and falls, the employer is liable/ But if the same employee leaves water on his own kitchne floor and a friend falls, the employer is not liable because the employee is not acting within the scope of employment.

a. Authorization-An act is within the scope of employment,even if expressly forbidden, if it is of the same general nature as that authorized or if it is incidental to the conduct authorized Ex- Although Jane has often told Hank not to speed when driving the delivery van, Hank ignores her instuctions and plows into Bernadette. Hanks was authorized to drive the van but not to speed. - However his speeding was of the same general nature authoized act.. so JANE IS LIABLE TO BERNADETT

Abandonment- The principal is liable for the actions of the employee that occur while the employee is at work, but not for actions that occur after the employee has abandoned the principal's business. Ex- Employer is labile if the employee is on a detour from company's business- driver takes a detour on the job

(IntentionalTorts)- The master is liable if the servant commits a negligent tort that causes physical harm to a person or property. A master is not liable for the intentional torts of the servant unless the servant was motivated, at least in part, by the desire to serve the master, or the conduct was reasonably foreseeable. - Example- a catholic priest engaged in a sexual reltionship with one of his students. In his responce the bishop in charge transferred the priest to a parish church. At new job the priest sexually abused a child ( Court sued Church for intentional tort/ church is liable for the negligence of the bishop.

NonphysicalTorts- A nonphysical tort is one that harms only reputation, feelings, or wallet. -Nonphysical torts (whether intentional or unintentional) are treated like a contract claim:The principal is liable only if the employee acted with express, implied, or apparent authority. Example- suppose that dwayne buys a house insurance policy from Andy, who is an agent of the Balls of Fire Insurance Company. Andy throws awawy Dwayanes policy and pockets his preminums. When Dwayne House burns down.. balls of fire is liable because Andy was acting with apparent authority..

Agent'sLiability For Torts- Agents are always liable for their own torts, even if the principal is also liable. -Agents and principals are jointly and severally liable, which means that the injured party may sue either one or both, as she chooses. -The injured party may not recover twice,but may recover partially from both parties. -The principal can sue the agent, if the injured party recovers from the principal. Example- if agent was not liable he would have little incentive to be careful. Imagine Hank driving his delivery van for Jane... if he thought that he was not personally liable he would rive faster throught red lights and just say it would be Jane Problem. - Agents may have fewer assets than principal/ but personel assets are at risk in the event of their negiligent behavior.. ( If agent and principal are both liable, does the injured third party sue?. Principal and the agent are jointly and severally liable.. injured third party can sue either one or both.

(Employee or. Independent Contractor) •Yes"responses to these questions may indicate a servant, or employee, relationship: •Does the principal control details of the work? •Does the principal supply tools and place of work? •Doesthe agent work full-time for the principal? •Isthe agent paid by time, rather than by job? •Isthe work part of the regular business of the principal? •Dothe parties believe they have an employee-employer relationship?