Agency

Question 1

Agency- Definition

Answer 1

Restatement 2nd of Agency Section 1:

(1) Agency is the fiduciary relation which results from the manifestation of consent by one person(P) to another(A) that the other(A) shall act on his(P) behalf and subject to his(P) control and consent by the other(A) to so act.
(2) The one for whom action is to be taken is the principal.
(3) The one who is to act is the agent.

Question 2

Agency- Principal & Agent

Answer 2

An agency relationship has two parties: a principal and an agent.

• The principal agrees to be represented by the agent.
• The agent agrees to act on behalf of the principal and to be subject to the principal’s control.

Question 3

Agency Requirements

Answer 3

• The P and A must have the legal status of a person (natural or juridical)
• The P and A must have sufficient legal capacity and power to act
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Question 4

Attorney In Fact vs. Attorney At Law

Answer 4

An attorney in fact is an agent, a person authorized to act on another’s behalf. The authority of an attorney in fact is usually derived from a written document, often referred to as a power of attorney. An attorney at law is licensed by the state to represent others in court and counsel them in the law.

Question 5

Capacity To Consent

Answer 5

Because agency is a consensual relationship, both the principal and the agent must have the legal capacity to consent to enter into the agency relationship.

The principal must have the capacity to consent to have the agent act on the principal’s behalf and subject to the principal’s control. The agent must have the capacity to consent to act on the principal’s behalf and subject to the principal’s control.

Question 6

Capacity- Power of P and A

Answer 6

A separate but related issue concerns the power of the principal to request an agent do the act in question and the power of the agent to do the requested act. Here the questions are different for determining whether each of the respective parties has the required power.

P- P must have the legal power to accomplish the requested act. (R2nd, Sec 20)

A- A no legal power needed, only needs the physical or mental ability to do the act in question. (R2nd, Sec 21)

Question 7

Fiduciary Relationship

Answer 7

The term fiduciary is derived from the Roman law and is used to refer to a relationship in which one person undertakes an obligation that imposes a duty to act primarily on behalf of and for the benefit of another person.

Thus one acting in a fiduciary capacity acts not for one’s own benefit, but for the benefit of another. In agency law, the fiduciary nature of the relationship imposes certain legal obligations on the agent.