Agency

Question 1

Agency generally

Answer 1

An agency relationship arises where there is (a) mutual assent (b) the agent acts for the principal’s benefit and (c) the agent will be subject to the principal’s control.

An agent has the power to bind the principal to a contract when the agent acts with actual or apparent authority.

Question 2

Actual authority

Answer 2

Can be express or implied:

1. Actual authority exists when the principal makes a manifestation that causes the agent to reasonably believe that the agent is authorized to act on the principal’s behalf.

Question 3

Partially disclosed principal

Answer 3

A principal is a partially disclosed principal if the third party has notice of the principal’s existence but not the principal’s identity.

Unless the agent and the third party agree otherwise, an agent who enters into a contract on behalf of a partially disclosed principal becomes a party to the contract.

Question 4

Ratification

Answer 4

a principal can ratify an act that was done on the principal’s behalf.

There are four requirements for ratification: (i) the principal must ratify the entire contract; (ii) the principal and the third party must have legal capacity to enter into the contract; (iii) the ratification must occur before the third party withdraws from the contract; and (iv) the principal must know the material facts of the transaction.