Agency Flashcards
This is anyone authorized to act on the behalf of another
Agency
T/F
Minors can be agents
TRUE
Give 3 common examples of agents
1) Partners
2) Corporate Officers
3) Employees
Agency requires an ______ but not ______
Agreement (meeting of minds)
Consideration
What two types of agencies require a writing?
1) Buying Land
2) Those impossible to perform in 1 year
T/F
Most agencies are terminable at will
TRUE
If an agency is wrongly terminated (breach of contract) what remedies are there?
Payment of damages
Cannot force specific performance (you can’t force an agent to work for you)
What 4 instances terminate an agency immediately
1) Death/Insanity of either party
2) Bankruptcy of Principal
3) Loss/Destruction of an essential subject to the agency
4) Failure to have or loss of a required license
If the agent is terminated, what must the principal do?
1) Give actual notice to old customers
2) Give published notice to new customers
T/F
An agent can bind a principal even after the agent is terminated if the agent still has apparent authority, meaning the Principal did not properly notify parties of the termination of the relationship
TRUE
This is when the principal tells the agent that they are to do something
Express Authority
This is when the principal allows the agent necessary authority to do whatever they must to accomplish their assigned tasks
Implied Authority
The principal can only be liable for an unathorized contract made by the agent on the principal’s behalf if the principal does what?
Ratifies the contract
T/F
A principal can imply that they ratify a deal
TRUE
If the principal accepts the benefits of the deal, they ratify the contract even if they don’t expressly say anything
Who is liable for authorized contracts made by the agent on the principal’s behalf? Is there an exception?
The Principal is liable, NOT the Agent
Exception is if Agent was acting for an undisclosed principal, in which case they are liable for an authorized contract in addition to the principal being liable
Who is liable for unauthorized contracts made by the agent on the principal’s behalf?
The principal is NOT liable, the agent IS
T/F
If the agent acts outside the grant of actual authority (makes an unauthorized deal) and the Principal is undisclosed, the Principal is not liable to 3rd parties
TRUE
If an agent makes a contract in his own name, while really acting for a secret principal, the agent has what authority?
The same actual authority as an agent for a disclosed principal
If an agent makes a contract in his own name, while really acting for a secret principal, the agent cannot have what authority?
Apparent Authority, because the 3rd party thinks the Agent is the Principal
T/F
There is no ratification when an agent makes a deal with an undisclosed principal
TRUE
Because the third party believes the Agent is the Principal
If there is a breach of a contract where the agent made a deal with an undisclosed principal, who is liable?
BOTH the Principal and the Agent
Generally a Principal is liable for authorized contracts made by the agent on the principal’s behalf. Exception is if Agent was acting for an undisclosed principal, in which case they are liable for an authorized contract in addition to the principal being liable
T/F
If a 3rd party finds out that the individual they were working with is an agent, not a principal, and that the principal was undisclosed, the 3rd party can get out of the deal
FALSE
They can’t get out of the deal because of an undisclosed principal, because in general the 3rd party still agreed to the deal
What is Respondeat Superior?
This means “Liability for Torts”
When is the principal liable for the agent’s torts?
for all torts committed by the agent while acting in the scope of the agency, even if the agent’s tort was a flagrant disregard of instructions
When is the agent liable for torts?
For all of their own torts, even if the tort was committed at the principal’s direction/order
Is the principal liable for the torts of independent contractors?
NO
T/F
An employee cannot collect worker’s comp if they were injured in the scope of employment due to their own personal negligence
FALSE
They can still collect, even if they were negligent
What duties does the principal owe to the agent? (ICE)
I - duty to Indemnify the agent for losses incurred while acting for the principal
C - duty to Compensate the agent
E - duty to reimburse the agent for Expenses
For the agent to receive compensation or reimbursement from the principal, what must they do?
The agent must keep adequate records of their expenses
What duties does the agent owe to the principal? (DIAL-O)
D - duty of Due care, no negligence
I - duty to Inform the principal of all relevant facts
A - duty to Account for money received or spent
L - fiduciary duty of Loyalty, must act solely in the principal’s best interest
O - duty of Obedience, must follow principal’s reasonable instructions
T/F
A fully disclosed principal may ratify a contract that was agreed to by his/her agent without authority from the principal
TRUE
T/F
A partially disclosed principal may ratify a contract that was agreed to by his/her agent without authority from the principal
TRUE
T/F
An undisclosed principal may ratify a contract that was agreed to by his/her agent without authority from the principal
FALSE
Since a third party would not know of the existence of an undisclosed principal, ratification is not possible in this circumstance
T/F
An agent will be liable under a contract made with a third party when the agent is acting on behalf of a disclosed principal
FALSE
If the principal is fully disclosed, the agent is not liable
T/F
An agent will be liable under a contract made with a third party when the agent is acting on behalf of an undisclosed principal
TRUE
An agent is liable to a third party on a contract when the principal is undisclosed or partially disclosed
T/F
When an agency relationship is terminated by operation of law (for example, the principal is deemed incompetent), the agent’s authority to enter into a binding agreement on behalf of the principal does not cease until all parties have been notified
FALSE
There is no requirement that notice be given to third parties when the agency relationship is terminated by operation of law. The agent’s authority on behalf of the principal immediately ceases.
T/F
A contract is needed to have an agency relationship
FALSE
T/F
The agent owes a fiduciary duty to the principal
TRUE
T/F
The principal owes a fiduciary duty to the agent
FALSE
An employer ____ (is/is not) responsible for the crimes of the employee ____ (even if/unless) the employer ____ (did/did not) aid or permit the illegal activity and even if the activity _____ (was/was not) within the scope of employment
Is Not
Unless
Did
Was
T/F
When a valid contract is entered into by an agent on the non-disclosed principal’s behalf, the principal may be held liable once disclosed
TRUE
Unless the third party discovers the existence and identity of the principal and chooses to hold the principal to the contract instead of the agent, the agent will be personally liable.
T/F
When a valid contract is entered into by an agent on the non-disclosed principal’s behalf, the principal must ratify the contract to be held liable
FALSE
Undisclosed principals cannot ratify
