Agency Flashcards
Agency – Generally
A fiduciary relationship that arises when on person appoints another to act on the principal’s behalf and the agent consents to act.
Capacity needed for Agency
Principal must have contractual capacity – Agent needs only minimal capacity.
Created by Act of Parties
By agreement - actual authority.
By holding out by the principal – apparent authority.
Or by ratification.
Formalities of Agency Relationship
(1) Capacity, (2) Consent by both parties, (3) writing if required by SoF.
Consideration NOT required.
Agency by Operation of Law
Estoppel – requires third-party reliance on principal’s communication.
Statute – usually designed for limited purpose.
Agent’s Duties to Principal
(1) Duty of Care – sliding scale depending on special skills.
(2) Duty of loyalty – think about fairness, cannot transact with self, must put principal’s interests 1st
(3) Duty of Obedience – must obey all reasonable directions of principal
Principal’s Duties to Agents
(1) Compensation, (2) Cooperation, (3) Indemnity/reimbursement, (4) express contractual duties
Actual Authority
Authority agent reasonably believes they possess based on the principal’s dealings with them
Implied Actual Authority
Principal’s words or conduct would lead a reasonable person in the agent’s position to believe that the agent has authority to act on the principal’s behalf.
- incidental to express authority, arising out of custom known to agent, resulting from prior acquiescence, emergency measures, to delegate authority where circumstances require or performance is impossible without, pay for and accept goods, give general warranties and collect payment/deliver, to manage investments.
Termination of Actual Authority
- event specified in the agreement
- lapse of reasonable time
- change in circumstances
- breach of fiduciary duty
- either party’s unilateral termination
-Operation of law – death or loss of capacity of either party.
Irrevocable Agency
If couple with an interest or power given as security cannot be terminated by principal if given to protect agent’s or third party’s rights.
Apparent Authority
When the principal “holds out” another as possessing authority and based on this holding out, a third party is reasonably led to beleive that authority exists.
Types of Apparent Authority
(1) Agent exceeds actual authority
– prior act or power of position/title
(2) No Actual Authority
– not just agent representations, must be based on principal’s actions
– negligently permits to be in a position appearing to have authority
– notice to parties who have previously dealt with agent may be required
(3) Inherent Authority
– respondeat superior
– conduct similar to that authorized
(4) Improper disposition of goods
Ratification
Agent had no authority at the time of entering into a contract, but principal ratifies later – either expressly or impliedly, affirms contract or accepts benefits of, also silence
Requirements for Ratification
Principal must:
(1) Have knowledge (or reason to know) of all material facts regarding the contract
(2) accept the entire transaction
(3) have capacity
No consideration is required.
