actual and apparent authority Flashcards
what are the five theories in which the p can be held liable for the a’s actions
- actual authority
- apparent authority
3.undisclosed /unidentified principal theory - estoppel
- ratification
what is actual authority
created by the principal through their manifestations to the agent; P acting in a way that gives A reasonable belief that they can do certain things
how can P’s manifestations to A be express in actual authority
“you are authorized to sell my car for any price over 20k”
how can P’s manifestation be implied in actual authority
ie the agent doing collateral acts that accompany the other instructions given by the P or that are reasonably necessary to accomplish the acts the p has expressly authorized
in terms of the princpal being bound to third parties via actual authority, how does that work
A principal is bound to third parties by anything the agent does that is in accordance with the PRINCIPLES MANIFESTATION TO THE AGENT.
with actual authority, how do we determine the princpla’s manfiestations
determined by the AGENT’S REASONABLE INTERPRETATION IN LIGHT OF ALL THE CIRCUMSTANCES
whose actions need to be reasonable when assessing if the agent had actual authority?
the agent! its based on the AGENT’S REASONABLE INTERPRETATION IN LIGHT OF ALL THE CIRCUMSTANCES
what is apparent authority?
stems from a THIRD PARTY’S BELIEF THAT IS TRACEABLE TO THE PRINCIPAL’S MANIFESTATION/CONDUCT, that the agent (or even a non agent) is authorized to act for the principal
Who’s reasonble beleif is at issue when determining if agent has apparent authority
the third party! must be reasonble for the third party to beleive that the agent has authority
logic behind apparent authority?
The principal should be giving clear instructions or hire someone who knows what to do
The principal is the person to can prevent confusion
Udall takeaway – case where the agent accdiently started the bidding price 100k lower than what the P gave them actual authoirty – did A have appartent auhtoirty to sell at that price
Based on P’s representations, third party could reasonably believe that P or its authorized agent would conduct the sale
how does power of position play into implied actual authority (ie when a P is a bussiness, how is the VP of sales seen)
that appointment may carry with it a great deal of implied actual authority
can a principal business be bound by what their VP of sales does via apparent authority
yes, if they are within the scope of what a third party reasonably believed a VP was authorized to do
take away from the CSX case (the case where the alleged agent had the companies domain name)
no apparent authority if the third party beleif traceable to principal action/manifestation is not REASONABLE
can an agent create their own apparent auhotirty?
no; apparent authority cant come from their own statement – the rule requires that the authority is TRACEABLE to manifestation of PRINCIPAL
when is a principal liable in contract for an agents action
if the agent acted with actual or apparent authority
what is the theory of the unidentfied princple
a p is liable in k for a’s action where the third party knows only that the agent is acting on behalf of a principal but does not know who the principal is
what is the theory of undisclosed principle
The principal is liable for an agent’s ACTUALLY authorized actions even where the third party had no knowledge that the agent was acting on behalf of any principal
what is the theory of estoppel (ie when a P who has neither authorized or apparently authorized an agent’s action is liable to third parties who have changed their position IN RELIANCE on their belief that the action was authorized IF:)
The principal caused (intentionally or carelessly) the belief OR
If the principal, knowing of the belief, did nothing to notify the third parties of the facts
when does estoppel come into play
Estoppel only comes into play where the agent’s actions was not actually authorized
what is estoppel based on
Based on P’s acts or omissions
what is ratification
No agent authority; but if principal ratifies, the law says that its authorized from the beginning
three elements of ratification
- Action on behalf or purportedly on behalf of principal
- P knowledge of material facts
- Intent to ratify
in ratification, what is intent to ratify
Enough for P to say ‘great, thanks”
Silent acceptance is enough too
