Agency

Question 1

What is apparent authority

Answer 1

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. Here, the owner told the basket manufacturer that her agent might be contacting them to purchase baskets.

Question 2

What is actual authority?

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

What happens if an agent acts without actual or apparent authority?

Answer 3

The principal will not be liable for contracts entered into by the “agent”

Question 4

When is a principal an undisclosed principal?

Answer 4

A principal is an undisclosed principal if the third party has no notice of the principal’s existence. An agent who enters into a contract on behalf of an undisclosed principal becomes a party to the contract. Thus, when an agent does not inform a third party of the identity or the existence of the principal, the agent becomes liable to the third party on the contract.

• The agent doesn’t tell the third party that they represent the principal and a contract only lists the agent. That makes the agent liable

Question 5

Is a partially disclosed principal or the principal’s agent liable?

Answer 5

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.

If the agent discloses the owner’s existence but not identity, then the agent is liable, not the principal