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Questions and Answers
Which of the following defines Actual Authority in an agency relationship?
Which of the following defines Actual Authority in an agency relationship?
An independent contractor can never be considered an agent.
An independent contractor can never be considered an agent.
False
What is the term for when an employer is liable for the acts of an employee within the scope of employment?
What is the term for when an employer is liable for the acts of an employee within the scope of employment?
Respondeat Superior
The duty of ______ requires agents to act in good faith and exercise the care that a prudent person would.
The duty of ______ requires agents to act in good faith and exercise the care that a prudent person would.
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Which type of authority arises from a reasonable third-party perception of the agent?
Which type of authority arises from a reasonable third-party perception of the agent?
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Match the following duties to their descriptions:
Match the following duties to their descriptions:
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A principal can ratify an act performed by an agent even if that agent had no actual authority.
A principal can ratify an act performed by an agent even if that agent had no actual authority.
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What must a principal do if they want to grant power to an agent to act on their behalf?
What must a principal do if they want to grant power to an agent to act on their behalf?
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Study Notes
Agency
- Agency law governs the legal relationship between two people when one person acts as an agent for another.
- Common relationships include Principal/Agent, Master/Servant, and Employer/Employee.
Authority in Agency Relationships
- Agency relationships can be formed through several methods.
- Actual Authority: The principal explicitly grants authority to the agent.
- Apparent Authority (Agency by Estoppel): A third party reasonably believes the agent has authority, even if the principal didn't explicitly grant it.
- Ratification: The principal accepts an act performed by an agent that lacked actual authority.
Fiduciary Obligations
- Agents owe fiduciary duties to their principals.
- These duties include:
- Duty of Loyalty: Acting faithfully and putting the principal's interests ahead of their own.
- Duty of Care: Exercising reasonable care in performing duties, similar to ordinary prudence.
Duty of Loyalty
- Agents must act faithfully in their duties.
- Agents must maintain a higher standard of behavior, akin to that of a trustee.
- Agents must prioritize the business entity's interests over their personal interests.
Duty of Care
- Agents have a duty to exercise due care.
- This means acting in good faith and performing their duties with the same care as a prudent person in similar circumstances.
Respondeat Superior
- The principle of "let the master answer."
- An employer is liable for the acts of an employee within the scope of their employment.
- If an employee's actions are outside the scope of employment, or exceptionally egregious, the principle of respondeat superior might not apply.
- Agents are always liable for their own torts.
- Plaintiffs can sue both the employer and the employee.
Independent Contractors
- Independent contractors may be agents, but they are not employees.
- The principle of respondeat superior does not apply to independent contractors.
Independent Contractor or Employee?
- Factors to consider when differentiating between an independent contractor and an employee:
- Extent of Control
- Type of Work
- Skill Required
- Amount of Supervision
- Use of Employer's tools, equipment, etc.
- Payment method (by job, hour, etc.)
- Whether the work is part of the employer's regular business
- Whether parties perceive the relationship as employment and how long the relationship has lasted.
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Description
This quiz covers the principles of agency law, focusing on the relationships between principals and agents. It explores different types of authority in agency and discusses the fiduciary obligations that agents owe to their principals. Test your understanding of these vital legal concepts.
