Agency and Employment Relationships
Creating and Characterizing Agency
Understand that agency arises by express or implied agreement, ratification, or estoppel, and that it requires consent that the agent act on the principal's behalf and subject to control. Distinguish employee from independent contractor using the right-to-control test and the multi-factor economic realities test. Know that apparent authority arises from the principal's manifestations to a third party, not from the agent's own claims.
Duties and Liabilities
Master fiduciary duties: loyalty, obedience, care, accounting, and disclosure. Understand the principal's vicarious liability for torts committed by employees within the scope of employment, and the going-and-coming rule plus the detour versus frolic distinction. Know when a principal is bound by an agent's contract (actual, apparent, inherent authority) and when undisclosed principals may sue or be sued.
Termination
Study termination by act of parties, operation of law (death, incapacity, bankruptcy), and the effect of termination on actual versus apparent authority, including lingering apparent authority known to third parties.
Traps and Rule of Thumb
Common traps: treating an agent's self-dealing as permissible absent harm; confusing respondeat superior with direct negligence in hiring; assuming an independent contractor never creates liability (watch nondelegable duties and inherently dangerous activities). Rule of thumb: authority flows from the principal's words or conduct to the third party, never from the agent's own assertion.