Agency

Question 1

Agency

Answer 1

Agency is a fiduciary relationship between agent and 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

Actual authority occurs when the principle cause the agent to believe that they have the authority to act. Actual authority is created expressly through words to the agent or impliedly through conduct by the principle that reasonable let the agent to believe they have authority.

Question 3

Apparent Authority

Answer 3

Apparent authority occurs when the principle causes a third party to believe that the agent has authority to act on the behalf of the principles behalf. The third party reasonable relies because of the principals actions.

Question 4

Inherent Authority

Answer 4

Inherent authority occurs when the agent is given the power to bind the principal to dealings with its third parties solely from the agency relationship. The agency arises by virtue of a particular relationship.

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

Forms of Authority

Answer 6

A principle is liable on the behalf of agent so long as agent had authority. Three types of authority. Actual / Apparent / inherent.