05.01 Authority of Agents and Principals Flashcards
What is an agency relationship?
An agency relationship is one in which a party (principal) gives authority to another party (agency) to act on behalf of that principal.
What are the types of agents?
Special agent; general agent; power of attorney; independent contractor; subagent; agency coupled with an interest.
What is a special agent?
An agent authorized to conduct a single transaction or series of related transactions on the principal’s behalf.
What is a general agent?
One agent authorized to conduct all necessary personal or business transactions for the principal.
What does power of attorney mean?
A common form of agency is a power of attorney, which is a written authorization for the agent to act on behalf of the principal for a specific or indefinite time.
What are the two general categories of a power of attorney?
General POA - allows an agent to act on behalf of the principal on all matters affecting them
Limited POA - gives the agent the authority to act only in certain matters on behalf of the principal.
What is an independent contractor?
An independent contractor is someone who acts on behalf of a principal, but that principal does not control the agent’s day-to-day activities, and the scope of the independent contractor is limited.
What is a subagent?
A subagent is an agent hired by another agent on behalf of the principal.
What is an agency coupled with an interest?
An agency in which the agent holds a property right in the subject matter of the agency.
What is a creation of agency authority?
Creation of agency authority includes the actual authority in agency relationships and the requirements for creating an express agreement. The principal is the party in an agency relationship who gives the agent the actual authority to act on behalf of the principal.
What does actual authority include?
Express authority - authority that is in a written or oral agreement that outlines the responsibilities and authority of the agent
Implied authority - authority granted to an agent in the creation of an agency relationship as incidental and customary authority that is necessary for the agent to perform the outlined work and effort.
What are the requirements for creating an express agency?
Consent - both parties must consent to the agency relationship.
Legal capacity - the principal must have legal capacity to contract, but the agent does not.
Writing or record - the agency agreement itself need not be evidenced by a writing or record except under circumstances when the Statute of Frauds applies.
True or False: Consideration is a requirement for an agency relationship to exist.
False.
Consideration is not a requirement for an agency relationship to exist. Known as gratuitous agencies, agency relationships in which the agent is not compensated are common.
What is apparent authority?
Apparent authority comes through agents acting as if they are agents of the principal and the principal permits that appearance of authority to occur.
What two types of notice is a principal required to give when an agency relationship ends?
Actual notice - direct notice to third parties who have dealt with the departing agent
Constructive notice - published notice to the business world. (e.g. business publications)
