Agency Flashcards
What is a power of attorney?
An authorization giving a person control over another person’s affairs. In writing (only signed by principal).
Agent need not be an attorney.
In creating the agency relationship what is key?
Consent is the key
Is consideration and capacity required?
No consideration required-gratuitous agency
Capacity is not required for the agent.
When is a written contract required?
Contracts that cannot be performed within 1 year and contracts for the purchase of real estate.
Can contracts be implied?
Yes, implied by conduct for the parties.
What are the duties of the agent to the principal?
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.
What are the principal’s duties to the agent?
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.
What is actual authority?
Power that the principal gives to the agent.
what are the 2 types of actual authority?
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.
What is apparent authority?
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.
What is a secret limitation?
Principal only tells agent and not third parties of agent’s restrictions.
What is ratification?
Where principal chooses to be bound by the terms of the unauthorized contract.
Ratification is only valid where:
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Third party has not withdrawn from contract prior to ratification.
Disclosure of the principal. A principal may be:
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.
What is the liability to 3rd parties if principal is disclosed?
In actual and apparent authority: Principal is liable
In no authority: Principal only liable if contract is ratified.
What is the liability to 3rd parties if principal is partially disclosed?
In actual and apparent authority: Principal and agent liable
In no authority: Principal only liable if contract is ratified.
When is the principal liable for agent’s torts?
Principal is liable if the agent’s conduct occurred within the scope of employment.
True or False: if the principal didn’t authorize or the activity was forbidden, the principal would not be held liable.
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.
When are individuals liable for their torts?
Individuals are always responsible for their own tortious acts.
What does joint and several liability mean?
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).
Automatic termination by Operation of Law consists of:
Death of either party Insanity of either party Bankruptcy of the principal Subsequent illegal activity Change in business conditions Destruction of subject matter
What kind of notice of termination should be given to third parties?
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.
When is notice of termination not required?
When termination occurs due to operation of law.
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 _____________________
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.
