Agency: Authority and Liability: every key term you need (+ practice quiz)
25 flashcard terms for Business Associations Topic 1, written to match the course framework. Study them here, then drill them as interactive flashcards, or test yourself with the 15-question quiz — free, no account needed.
A fiduciary relationship arising when a principal manifests assent that an agent act on the principal's behalf and subject to the principal's control, and the agent assents to so act.
Actual express authority
Authority created by the principal's words to the agent, written or spoken, that reasonably lead the agent to believe the principal wishes the agent to take the specified action.
Actual implied authority
Authority the agent reasonably infers from the principal's conduct, past dealings, custom in the trade, or the necessity of acts incidental to carrying out an express instruction.
Apparent authority
Power arising from the principal's manifestations to a third party that reasonably cause that party to believe the agent is authorized; it binds the principal even where actual authority was never granted.
Inherent agency power
A residual doctrine imposing liability on a principal for an agent's acts usual for that kind of agent, protecting third parties who deal with a general agent unaware of secret limits on authority.
Ratification
A principal's later affirmance of an unauthorized act, made with knowledge of the material facts and before the third party withdraws, which relates back and binds the principal as if authority had existed.
Agency by estoppel
A principal who carelessly causes or knowingly fails to correct a third party's belief in an agent's authority is barred from denying it where the third party detrimentally changed position.
Disclosed principal
A principal whose existence and identity the third party knows at the time of contracting; ordinarily only the principal, not the agent, is a party to and liable on the contract.
Partially disclosed principal
Also called an unidentified principal: the third party knows an agent acts for someone but not who; both the principal and the agent are liable on the resulting contract.
Undisclosed principal
A principal whose existence is unknown to the third party; the agent is liable on the contract, and the principal may generally sue and be sued once the relationship surfaces.
Respondeat superior
An employer is vicariously liable for torts committed by an employee acting within the scope of employment, without regard to the employer's own fault, because the enterprise bears its typical costs.
Scope of employment
Conduct of the kind the employee is hired to perform, occurring substantially within authorized time and space limits, and motivated at least in part by a purpose to serve the employer.
Frolic and detour
A frolic is a substantial personal deviation that suspends vicarious liability; a detour is a minor departure that remains within the scope of employment and keeps the employer on the hook.
Independent contractor
One who performs work for another but is not subject to control over the manner and means of performance; the hiring party is generally not vicariously liable for such a worker's torts.
Non-delegable duty
An exception under which a hiring party stays liable despite using an independent contractor, typically for inherently dangerous activity or duties imposed by statute, franchise, or public safety.
Borrowed servant
A worker lent by a general employer to a special employer; liability follows whichever employer had the right to control the details of the work at the moment the tort occurred.
Employee intentional torts
Ordinarily outside the scope of employment unless force is inherent in the job, the tort is triggered by a dispute over the employer's business, or the employer authorized or ratified it.
Agent duty of loyalty
An agent must act solely for the principal's benefit in matters connected with the agency: no self-dealing, no competing, no usurping the principal's opportunities, no using confidential information.
Agent duty of care
An agent must act with the care, competence, and diligence normally exercised by agents in similar circumstances, and must obey the principal's reasonable and lawful instructions.
Secret profit
An unauthorized gain an agent derives from the agency, such as a supplier kickback; the principal may recover it through disgorgement or a constructive trust even without proving loss.
Termination of actual authority
Actual authority ends on the agreed time or event, revocation by the principal, renunciation by the agent, or in most states the principal's death or incapacity once the agent has notice.
Lingering apparent authority
After actual authority ends, a former agent may still bind the principal as to third parties who dealt with the agent before and have received no notice of the termination.
Agent liability on the contract
An agent who signs without disclosing the principal, who lacks authority, or who agrees to be bound personally may be sued on the contract or for breach of the implied warranty of authority.
Subagent
A person appointed by an agent to perform functions the agent has consented to perform for the principal; the appointing agent remains answerable to the principal for the subagent's conduct.
Equal dignities rule
Where the underlying contract must be in writing under the statute of frauds, the agent's authority to sign it must generally also be evidenced in writing.