Creation of Agency Relationship

Question 1

Requirements for creating agency relationship

Answer 1

Principal must manifest an intent to grant authority to Agent to act (1) on Principal’s behalf and (2) subject to Principal’s control

Agent must consent to Principal’s grant of authority (i.e., act on Principal’s behalf and subject to her control)

Question 2

Capacity element for agency formation

Answer 2

Principal’s requisite capacity = Contractual capacity (capacity to enter transactions, control one’s business affairs)

Agent’s requisite capacity to consent = Minimum mental capacity

Question 3

Ways to manifest intent to form agency

Answer 3

Principal and Agent can manifest intent and consent expressly (written or spoken words) or impliedly (by conduct)

Creating Powers of Attorney: additionally requires a signed writing

Question 4

Agency by ratification definition

Answer 4

Retroactive creation of an agency relationship

Question 5

Purpose of agency by ratification

Answer 5

Allows Principal to grant retroactive authority for Agent’s earlier unauthorized actions

Question 6

Requirements for agency by ratification

Answer 6

At the time of ratification, Principal must have:
* requisite contractual capacity to authorize Agent’s actions, and
* knowledge of all material facts concerning the transaction

Question 7

How to ratify agency relationship

Answer 7

Principal ratifies by either:
* manifesting assent that the act will affect Principal’s legal relations, or
* by conduct that is justifiable only on the assumption that Principal consents to be bound