Agency

Question 1

What is a power of attorney?

Answer 1

An authorization giving a person control over another person’s affairs. In writing (only signed by principal).
Agent need not be an attorney.

Question 2

In creating the agency relationship what is key?

Answer 2

Consent is the key

Question 3

Is consideration and capacity required?

Answer 3

No consideration required-gratuitous agency

Capacity is not required for the agent.

Question 4

When is a written contract required?

Answer 4

Contracts that cannot be performed within 1 year and contracts for the purchase of real estate.

Question 5

Can contracts be implied?

Answer 5

Yes, implied by conduct for the parties.

Question 6

What are the duties of the agent to the principal?

Answer 6

The agent is a fiduciary of the principal.
Loyalty-benefit of the principal
Obedience with care and skill
Notification- of any info relevant to the principal’s business.
Accounting- agent must keep accurate records of all transactions involved on behalf of the principal.

Question 7

What are the principal’s duties to the agent?

Answer 7

Principal is NOT a fiduciary of the agent.
Compensation-except if a gratuitous agent.
Indemnity/reimbursement
Protection from harm
Any disclosure of risks, safe working environment
Contractual duties as specified in the employment contract.

Question 8

What is actual authority?

Answer 8

Power that the principal gives to the agent.

Question 9

what are the 2 types of actual authority?

Answer 9

Express authority: the agents power that arises from the explicit words of the principal.
Implied authority: the power that arises from express authority, but is not explicitly given by the principal.

Question 10

What is apparent authority?

Answer 10

The principal’s words, conduct, or lack of words, or lack of conduct allows a reasonable third party to believe that the agent has authority to act even though the principal did not intent to grant such authority.

Question 11

What is a secret limitation?

Answer 11

Principal only tells agent and not third parties of agent’s restrictions.

Question 12

What is ratification?

Answer 12

Where principal chooses to be bound by the terms of the unauthorized contract.

Question 13

Ratification is only valid where:

Answer 13

3rd party entered into the contract believing a principal exists.
Principal has knowledge of all the material facts of the contract
Third party has not withdrawn from contract prior to ratification.

Question 14

Disclosure of the principal. A principal may be:

Answer 14

Disclosed: 3rd party knows who the principal is and that the agent is acting on behalf of that principal.
Partially Disclosed: 3rd party knows of the existence of the principal, but not the identity.
Undisclosed: 3rd party does not know that a principal exists.

Question 15

What is the liability to 3rd parties if principal is disclosed?

Answer 15

In actual and apparent authority: Principal is liable

In no authority: Principal only liable if contract is ratified.

Question 16

What is the liability to 3rd parties if principal is partially disclosed?

Answer 16

In actual and apparent authority: Principal and agent liable

In no authority: Principal only liable if contract is ratified.

Question 17

When is the principal liable for agent’s torts?

Answer 17

Principal is liable if the agent’s conduct occurred within the scope of employment.

Question 18

True or False: if the principal didn’t authorize or the activity was forbidden, the principal would not be held liable.

Answer 18

FALSE: Has little to do with whether the principal authorized or has forbidden the activity, rather the focus is what is the nature of the job.

Question 19

When are individuals liable for their torts?

Answer 19

Individuals are always responsible for their own tortious acts.

Question 20

What does joint and several liability mean?

Answer 20

If the agent’s tort is committed in the scope of employment, the injured party may collect damages from either the agent or the principal (several liability) or from both the agent and the principal (joint liability).

Question 21

Automatic termination by Operation of Law consists of:

Answer 21

Death of either party
Insanity of either party
Bankruptcy of the principal
Subsequent illegal activity
Change in business conditions
Destruction of subject matter

Question 22

What kind of notice of termination should be given to third parties?

Answer 22

Actual notice must be given to parties that have had dealings with the agent.
Notice by publication for 3rd parties who knew of the relationship but had no dealings.

Question 23

When is notice of termination not required?

Answer 23

When termination occurs due to operation of law.

Question 24

If the agent is authorized to appoint a subagent, the subagent is an agent of both:
Binds the principal as if_____________
Owes a _____________ duty to _____________________

Answer 24

If the agent is authorized to appoint a subagent, the subagent (1) is an agent of both the principal and the agent, (2) binds the principal as if (s)he is the agent, and (3) owes a fiduciary duty to both the principal and the agent.