5.1 AUTHORITY OF AGENTS AND PRINCIPALS

Question 1

WHAT IS ACTUAL AUTHORITY?

Answer 1

(I.E., EXPLICIT AUTHORITY)

ACTUAL AUTHORITY INCLUDES,
A) EXPRESS AUTHORITY: WRITTEN OR ORAL AGREEMENT THAT IS EXPLICIT
B) IMPLIED AUTHORITY: AN AGENTS POWER TO ACT ON BEHALF OF A PRINCIPAL, THE PRINCIPAL WOULD HAVE NOT GIVEN THE ASSIGNMENT TO THE AGENT HAD HE NOT HAVE ACTUAL AUTHORITY

Question 2

HOW IS AN AGENCY CREATED THROUGH APPARENT AUTHORITY?

Answer 2

THE PRINCIPAL TAKES ACTION OR INACTION THAT CREATES THE APPEARANCE TO THIRD PARTIES THAT THE AGENT HAS CERTAIN AUTHORITY

Question 3

HOW IS AN AGENCY CREATED THROUGH RATIFICATION?

Answer 3

WHEN THE AGENT DOES NOT HAVE EXPRESS, IMPLIED, OR APPARENT AUTHORITY, BUT STILL ENTERS INTO A CONTRACT ON BEHALF OF A PRINCIPAL. THE PRINCIPAL IS NOT BOUND BUT CAN USE THE PROCESS OF RATIFICATION TO RETROACTIVELY APPROVE THE TRANSACTION.

Question 4

THOUGHT PROCESS WITH AGENCY AND PRINCIPAL QUESTIONS

Answer 4

1) DETERMINE IF THEIR IS AN AGENCY RELATIONSHIP, WHETHER THEIR IS ACTUAL, APPARENT, OR NO AUTHORITY
2) DETERMINE IF THE PRINCIPAL IS DISCLOSED, PARTIALLY DISCLOSED OR UNDISCLOSED

IF AN AGENT EXCEEDS THEIR ACTUAL AUTHORITY, THE AGENT WILL BE IN BREACH OF THE AGENCY AGREEMENT AND WILL BE SUBJECT TO REIMBURSE THE PRINCIPAL

Question 5

WHAT ARE THE REQUIREMENTS FOR CREATING AN EXPRESS AGENCY?

Answer 5

SEE SCREENSHOT

Question 6

WHEN MUST AN AGENCY RELATIONSHIP BE IN WRITING?

Answer 6

ONLY IF THE STATUTE IF FRAUDS APPLIES

Question 7

WHAT IS THE DIFFERENCE BETWEEN AN INDEPENDENT CONTRACTOR AND AN AGENT?

Answer 7

AGENTS ARE AUTHORIZED TO DEAL WITH THIRD PARTIES ON BEHALF OF THE PRINCIPAL,

I/C DO NOT