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I. The law of agency governs the fiduciary relationship created when one party is authorized to act on behalf of another. An agent is a party acting on behalf of or in place of another. A principal is the person for whom or in place of whom the agent acts.
the principal expressly or implicitly authorizes the agent to take actions with legal consequences for the principal. When the agent takes action, she must reasonably believe, based on the principal's words or conduct, that the principal has authorized her to do so.
When the principal specifically states orally or in writing, that the agent may take action.
reasonably inferred from the principal's conduct.
1. Termination of actual authority
b. Loss of capacity by principal
c. Revocation by either party
d. Agents reasonably believes principal no longer gives authority
authority that may reasonably inferred from the very nature of the particular agency relationship or the position the agent holds.
exists if, based on the principal's conduct and manifestations, a third party could reasonably believe that the agent had actual authority. This is the third part's belief...not the agent's conduct, manifestations and beliefs are irrelevant.
If one person manifests assent that another person's actions will bind her, provided the other person was acting or purporting to act on her behalf or as her agent.
Agency by estoppel
a purported principal may be bound by a purported agent's acts if, due to purported principal's failure to exercise reasonable care, a third party (1) reasonably believes that the purported agent is acting with actual authority and (2) foreseeably, reasonably, and detrimentally changes position in reliance on that authority.
Diff between apparent authority and estoppel
The key diff between the two is that apparent authority requires the third party's belief to be traceable to the purported principal's actions. Agency by estoppel does not. Agency by estoppel may arise if the purported principal merely negligently fails to correct a third party's misrepresentation, even if she does not actually contribute to it.
Contract liability of principal and agent
an agent, along with a principal, may be liable to third parties for any contracts the agent enters on the principal's behalf, depending on whether the principal is disclosed.
A principal is disclosed if a third party dealing with an agent knows or has reason to know (1) of the agency relationship and (2) the principal's ID. If an agent enters into a contract with actual or apparent authority, then the disclosed principal is liable, but the agent is not personally liable unless she agrees to be.
if a third party dealing with an agent knows or has reason to know that the agent is acting on the principal's behalf, but does not know the principal's ID. Both an unidentified principal and her agent are liable on a contract with the scope of the agent's acrtual or apparent authority. The third party is liable to both as both are deemed to be parties to the contract
both the principal and agent are liable for a contract within the scope of the agent's actual authority if the third party does not have notice of the fact that the agent is acting for the principal, meaning the third party believes that the agent is acting on her own behalf.
Duty of loyalty
i. if the agent's and the principal's interests ever conflict, and the conflict implicates the agency, then the agent must subordinate her own interests to the principal's.
1. Duty to avoid dealing with the principal as an adverse party
2. Duty to not compete with principal (until agency termination)
3. Duty to not acquire from third party a material benefit arising out of (1) any act or transaction for the principal's benefit, or (2) use of the agent's position, regardless of whether the principal is harmed as a result.
4. An agent must not use the principal's property for purposes personal to the agent or a third party.
5. An agent acting for more than one principal in a transaction has a duty to deal fairly and act in good faith with each principal. The agent must disclose to each principal: (1) the fact that the agent is acting for other principals, and (2) all other relevant material facts
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