Agency

Question 1

Creation

Answer 1

An agent is a person or entity that acts on behalf of a principal. Agency exists if there is: 1) assent (agreement between principal and agent); 2) benefit (agent’s conduct primarily benefits the principal); and 3) control (principal has control of agent).

Question 2

Actual Authority

Answer 2

An agent can bind a principal to contracts if the agent has actual authority. It may be express or implied.

Question 3

Express Authority

Answer 3

Occurs when the principal has explicitly told the agent that they are entitled to act on the principal’s behalf.

Question 4

Implied Authority

Answer 4

Exists when the agent believes the action taken is required by their duties, they have acted the same previously, or if it would be customary for agents to take such action.

Question 5

Ratification

Answer 5

A principal is liable for contracts entered into by an agent without authority when they have knowledge of all material facts/terms; and manifest assent to the agent’s actions through words or conduct.

Question 6

Termination of Agent Authority

Answer 6

Terminated by breach of agent’s duty or lapse of state, or reasonable time.

Question 7

Equal Dignity Rule

Answer 7

If the Agent signs a contract that requires a writing, the agency agreement must also be in writing. Look for an agent transferring a deed without written authority.