After reading this chapter, you will be able to answer the following questions: What is agency law? How is an agency relationship created? What are the different types of agency? What are the different types of agency relationships? What are the duties of the agent and principal? What are the rights and remedies of the agent and principal?
Chapter 33 Agency Formation and Duties Copyright © 2015 McGrawHill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGrawHill Education Introduction to Agency Law Agency: Relationship between principal and agent Agent: One authorized to act for/on behalf of principal Principal: One who hires agent to represent him/her Fiduciary: One with duty to act primarily for another person’s benefit 332 Creation of Agency Relationship Expressed Agency: Agency formed by making written/oral agreement Power of Attorney: Document giving agent authority to sign legal documents on behalf of principal Durable Power of Attorney: Power of attorney intended to continue to be effective/take effect after principal incapacitated Agency By Implied Authority: Agency formed by implication, through conduct of parties Agency 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 act 333 Requirements for “Agency By Ratification” Individual must misrepresent himself/herself as agent for another party Principal accepts/ratifies unauthorized act Principal has complete knowledge of all material facts regarding contract Principal must ratify entirety of agent’s act 334 Agency Relationships Agency Relationship: Fiduciary relationship (relationship of trust) in which agent acts on behalf of principal PrincipalAgent Relationship: Employer hires employee to enter into contracts on behalf of employer; parties have agreed that agent will have power to bind principal in contract EmployerEmployee Relationship: Employer hires employee to perform certain tasks; employer has right to control conduct of employees EmployerIndependent Contractor Relationship: Employer hires persons (other than employee) to conduct some sort of task; employer has no control over details of conduct of independent contractor 335 Exhibit 334: 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? 336 Principal’s Duties To Agent Compensation Reimbursement and Indemnification Cooperation Safe Working Conditions 337 Agent’s Duties To Principal Loyalty Notification Performance Obedience Accounting 338 Principal’s Rights and Remedies Against Agent Constructive Trust Avoidance Indemnification 339 Agent’s Rights and Remedies Against Principal Tort and Contract Remedies Demand For An Accounting Specific Performance 3310 ...Introduction to Agency Law Agency: Relationship between principal and agent Agent: One authorized to act for/on behalf of principal... effective/take effect after principal incapacitated Agency By Implied Authority: Agency formed by implication, through conduct of parties Agency By Estoppel: Agency formed when principal leads third party to ... Is worker a regular part of the employer’s business? How is worker paid? 336 Principal’s Duties To Agent Compensation Reimbursement and Indemnification Cooperation Safe Working Conditions 337 Agent’s Duties To Principal