Agency

Question 1

When does an agent have the power to bind the principal to a contract?

Answer 1

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

Question 2

When does actual authority exist?

Answer 2

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

When does apparent authority exist?

Answer 3

Apparent authority exists when a third party reasonably relies on manifestations by the principal concerning the agent’s authority to act on the principal’s behalf.

Question 4

When is a principal considered to be undisclosed?

Answer 4

A principal is an undisclosed principal when the third party has no notice of the principal’s existence.

Question 5

Who is liable on a contract with an undisclosed or partially disclosed principal?

Answer 5

The agent is liable to the third party.

Question 6

When is a principal considered partially disclosed?

Answer 6

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

Question 7

When can a principal ratify an act done on the principal’s behalf?

Answer 7

(1) When P ratifies ALL of the contract, not part
(2) When P and the 3rd Party have capacity to enter into a contract
(3) P ratifies before the 3rd party withdraws
(4) The principal knows the material facts of the transaction