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Principal-allows another to act on their behalf Agent- agrees to act on another’s behalf

Agency-relationship between the two

Required elements-consent,control,fiduciary(trusting)

Not required- written agreement unless it falls under statue of fraud (sale >500,prenup,real prop transfer, collateral
promise, 1 year rule) formal agreement, consideration (bargain 4 exchange)

Duties of agent- loyalty(must act for benefit of P) obey, care (do best job), provide info to P

If breached, 1. Sue for damages,for profits paid to agent, rescind K

Duties of P- Remember the A (reimburse if applicable), cooperate w/A

Termination of Agency- 1) agree by both P & A 2) Term expires 3) purpose achieved 4) agency at will (can term
w/o liability) 5) wrongful term (thru no fault of own)

Impossibility: Loss of qualifications, bankruptcy (w/P=automatic term. w/a, terms only if


agent can’t fulfill duty), death/incapacity, disloyalty of A

Change Circumstances: 1)supervening illegality – was legal when entered and later illegal-
law changed 2) destruction of subject matter

Principle Liability: If A has authority (actual-express or implied, apparent-pretend, then agency exist)
Estoppel: no agency=no authority, agency acts if there is an agency, P is aware, P does nothing, agency created
and can be retroactive. Ratification: no agency exisited, A acts w/o authority, P finds out, P agrees to agency and
can also be retroactive. Subagents- when A subcontracts and sub enters into K w/ 3rd party (ex. Seller (P), Remax
(A), realtor, mike (sub-agent), buyer (3rd party). K exist between P and 3rd party is agreed.

Agent Liability: Fully disclosed P- 3rd party knows of agency & ID of P =A not liable. Partially disclosed P- 3rd party
knows of agency, but not ID of P= A liable on K between P & 3rd party. Undisclosed P- 3rd party does not know
agency exist, A takes full liability & can take recourse w/P if needed.

P’s liability for torts- respondent superior “let the master answer”. 1099 is not a servant. The more the P acts
like 1099 is an employee then more the employee/employer relationship exist. Negligent hiring- P liable for
physical tort. Scope of employment- Authorization must exist, Abandonment- Frolic-not abandonment cuz do job
and then stop at home. Detour- stop at home, then deliver pizza. Negligent tort- physical harm, P liable. Intentional
tort- A motivated by P, P liable or if P should have forseen, P is liable.

Franchise- Benefits- 1)franchisor access to new markets & $ 2) franchisee has own biz with pop name&support 3)
consumer get assurance of quality

Types of Franchises- 1) Distributor- franchisor makes product and franchisee sells 2) Processing plant- formula sold
to franchisee then makes and sells products (coca cola) 3) Chain style- fast food-right 2 make & sale 4) Area- can
establish biz anywhere in location.

Disclosure protection- Federal Trade Commission and state law require franchisor to disclose &protect investors.
Franchise agreement- Quality control standards, training req’mts, non compete if not renew, Arbitration clause,
conditions of approval(location,hours of operation, record keeping) Franchise fees- license fee, royalty fee,
assessment fee(advertising), lease fees, cost of supplies. K and Tort liability of F’or and F’ee- F’or not liable for F’ee
acts unless they assumed a duty ex. Duty to provide security and failed=customer hurt. Also liable if F’ee is
apparent A for F’or.