Agency

Question 1

Agency

Answer 1

fiduciary relationship where a person acts on behalf of another

Question 2

Elements of agency

Answer 2

assent: formal or informal agreement
benefit: conduct benefits principal
control: principal has right to control the agent’s conduct

Question 3

Duties owed by agent

Answer 3

duty of care, duty of loyalty, and duty of obedience

Question 4

Duty of care

Answer 4

duty to use reasonable care when performing agent’s duties

Question 5

duty of loyalty

Answer 5

duty to act solely and loyal for principal’s benefit

Question 6

duty of obedience

Answer 6

to obey all reasonable directions of principal

Question 7

Principal’s remedy for agent’s breach of duty

Answer 7

hold liable for damages suffered by principal as result of breach; recover profits held by agent; withhold compensation; and termination of agency

Question 8

duty owed by principal

Answer 8

compensation; reimbursement; cooperate and not interfere; others imposed by contract

Question 9

liability to a third party when identity of principal is known by third party

Answer 9

disclosed principal is liable and agent is generally not liable

Question 10

liability to a third party when identity of principal or existence of principal is not known

Answer 10

unidentified/undisclosed principal and agent are liable

Question 11

Actual authority

Answer 11

Express: authority expressly given to agent
implied: authority that can be implied to carry out the agency

Question 12

apparent authority

Answer 12

principal holds out another as having certain authority and it is believed the “another” is an agent

Question 13

ratification

Answer 13

principal accepts an individual’s act as if there was authority to bind the principal; requires (1) material facts are known (2) entire transaction accepted (3) principal has capacity (4) no consideration needed; principal will be bound after ratifying