Agency Law: Chapter XXI Morgan Spray, Michael Wilkinson, Connor Fazzini, Korey Hawkins Introduction ● Agency deals with situations in which one person -- the principal-- uses another person -- the agent-- to act on his behalf. ● Sometimes the acts of the agent are attributed legally to the principal, sometimes not. ● Delineating the conditions under which each is true are what make up the law of agency Brief Statement of Principles There are three broad classes of agent 1. Universal agents hold broad authority to act on behalf of the principal, e.g. they may hold a power of attorney (also known as a mandate in civil law jurisdictions) or have a professional relationship, say, as lawyer and client. 2. General agents hold a more limited authority to conduct a series of transactions over a continuous period of time; and 3. Special agents are authorized to conduct either only a single transaction or a specified series of transactions over a limited period of time. Scope of an Agent’s Authority Express grant of authority -Communicated directly -Oral or written -Power of Attorney (written) Implied grant of authority -Flows from express authority – gives power to what’s reasonably necessary to carry out agent’s duties -Emergency situations Agency Law Terms 1 ● Liquidated Damages ○ ● Compensatory Damages ○ ● Parties agree on the amount of damages that will be paid to the injured party. Provide a plaintiff with the monetary amount necessary to replace what was lost, and nothing more. Consequential Damages ○ May be limited or excluded entirely where the loss is. Parties to a contract can limit or exclude consequential damages, provided the limitation is not unconscionable ● Exclusive Remedies ○ If the parties state that a remedy is exclusive, then it is the sole remedy.When circumstances cause an exclusive remedy to fail in its essential purpose, however, it is no longer exclusive, and the buyer or lessee may pursue other remedies available under the UCC. Agency Law Terms 2 ● Conforming Goods ○ ● Goods that conform to the contract description in every way. Tender of delivery ○ Occurs when the seller or lessor makes conforming goods available to the buyer or lessee and gives the buyer or lessee whatever notification is reasonably necessary to enable the buyer or lessee to take delivery. ● Shipment contract ○ Requires or authorizes the seller to ship goods by a carrier. The contract does not require that the seller deliver the goods at a particular destination. ● Destination contract ○ The seller agrees to deliver conforming goods to the buyer at a particular destination. The goods must be tendered at a reasonable hour and held at the buyer's disposal for a reasonable length of time. Agency Law Terms 3 ● The Perfect Tender Rule ○ Under the common law, the seller was obligated to deliver goods that conformed with the terms of the contract in every detail. ● Exceptions to the Perfect Tender Rule ○ Exceptions to the per- fect tender rule may be established by agreement. Or, CURE - The UCC does not specifically define the term cure, but it refers to the right of the seller or lessor to repair, adjust, or replace defective or non- conforming goods ● Commercially Impracticable ○ A delay in delivery or nondelivery in whole or in part is not a breach if performance has been made impracticable "by the occurrence of a contingency the nonoccurrence of which was a basic assumption on which the contract was made." Agency Law Terms 4 ● Installment Contract ○ A single contract that requires or authorizes delivery in two or more separate lots to be accepted and paid for separately. Buyer or lessee can reject an installment only if the nonconformity substantially impairs the value of the installment and cannot be cured. ● Destruction of Identified Goods ○ Sometimes, an unexpected event, such as a fire, totally destroys goods through no fault of either party and before risk passes to the buyer or lessee. ● Assurance ○ ● One party has reason to believe the other party will fail to perform. The Right of Assurance ○ If one of the parties to a contract has "reasonable grounds" to believe that the other party will not perform as contracted, she or he may in writing "demand adequate assurance of due performance" from the other party. Agency Law Terms 5 ● The Duty of Cooperation ○ When cooperation is not forthcoming, the other party can suspend his or her own performance without liability and hold the uncooperative party in breach or proceed to perform the contract in any reasonable manner. ● Right of Inspection ○ The buyer or lessee has an absolute right to inspect the goods before mak- ing payment. This right allows the buyer or lessee to verify that the goods tendered or delivered conform to the contract. ● Acceptance ○ ● After inspection either indication of willingness to take goods or failure to reject. Rejection ○ Notify the seller and identify the defect causing the rejection. Agency Law Terms 6 ● Partial Acceptance ○ If some of the goods delivered do not conform to the contract and the seller or lessor has failed to cure, the buyer or lessee can make a partial acceptance. ● Commercial Unit ○ Any unit treated by commercial usage as a single whole. ○ A unit of goods that, by commercial usage, is viewed as a "single whole" for purposes of sale and that cannot be divided without materially impairing the character of the unit, its market value, or its use. ● Revoke ○ Undo the acceptance. Agency Law: Reloaded 243587657623895623478956347895634789563478956324895623948 06523890562348956234805632489576238956123890652389056892 35610356124056130956982364152347956023789056312890356128 90561238905614578057805780578013405617892530`67892610856 28906163289741263789461230895634986581279056897213462389 04623897461238957601825612890143891560238965555512389563 80271563018956210389563789242765028913562390586238905623 90856238905623908562389064780236478902340126347892634289 46237894659024815057126135789023614553474747478485684738 92764545347363424897561289562036589012659802634897568123 47561203478569138475638925623489756839245623478975610289 56390245723490857903485712378956879123468971236406230197 85709347828561234956389732649023185739475902456 Example of Agency Law Bob owned a high tech home theater business. One day the store, which had several suites where the prospective customers could preview the various screens and projectors, was especially busy. Bob’s sales people were busy, so he handled the customers himself. Bob recognized Jameel, a customer he had been working with for several days, pull up to the store. He knew in order to close a sale, he would have to deal with Jameel personally. Bob brought in Doris, a new employee to the store, to deal with the customers while he dealt with Jameel. While Bob was busy, Doris sold a theater system for half of it’s normal price. Since Bob had clothed Doris in apparent authority, he had to go through with the sale. What’s the Verdict? Jared was shopping for a new car. One morning, while admiring a new Thunderhawk sedan on a dealers lot, he was approached by Arnold, a salesperson from the dealership. After considerable negotiations, they arrived at an agreement for the sale of the car to Jared. However, Jared said that he wanted to think it overnight. Arnold then wrote down the terms of the deal that they had agreed upon, including a statement that the deal was good until 5 PM the next day. He signed the paper and gave it to Jared. When Jared returned to make the deal, he discovered Arnold had been fired for speeding in a dealership car. Is the dealership bound by the terms for the sale of the Thunderhawk? What’s the Verdict? (cont.) Yes, Arnold was acting within the scope of his authority, and he bound the dealership to the terms of sale through writing. This is an example of express authority.