Agency

Question 1

Define “agency relationship.”

Answer 1

Legally binding arrangement in which one party (agent) acts on behalf of another (principal).

Question 2

What elements are not necessary for an agency relationship to exist?

Answer 2

Capacity and Consideration.

Question 3

Define agent.

Answer 3

One who acts on behalf of another (the principal)

Question 4

Define principal.

Answer 4

One who appoints an agent to act on his or her behalf.

Question 5

Define “general agent.”

Answer 5

Agent who is given general authority for the principal, i.e., not limited to specific transactions.

Question 6

List the requirements for creation of an agency relationship.

Answer 6

Principal with capacity and, if agent’s contracts must be evidenced by a record, a record of creation.

Question 7

Define independent contractor.

Answer 7

One who is doing work for another but whose actions and schedule are not directly controlled by that party. Example: a lawyer handling one case for a client.

Question 8

Define “special agent.”

Answer 8

Agent who is limited in time and/or scope of agency; could be agency for a specific task.

Question 9

Define “power of attorney.”

Answer 9

A name for a written document that creates an agency relationship.

Question 10

What acts by the operation of law can lead to the termination of an agency relationship?

Answer 10

Death or insanity of principal or agent;
Bankruptcy (of the agent if it impairs his duties, of the principal if the agent no longer desires the relationship);
Change of law;
Loss or destruction of subject matter.

Question 11

What actions by a party can lead to the termination of an agency relationship?

Answer 11

Fulfillment of purpose;
Lapse of time;
Occurrence of a specified event;
Mutual agreement;
Act of one party (exception: agency coupled with an interest).

Question 12

What is the basis of an agency relationship?

Answer 12

Consent of the Parties.

Question 13

What terminates actual authority?

Answer 13

When an agent is fired; when an agent quits, when an agent breaches his or her fiduciary duty

Question 14

List the requirements for creation of an agency relationship.

Answer 14

Principal with capacity and, if agent’s contracts must be evidenced by a record, a record of creation.

Question 15

List the duties of a principal to an agent.

Answer 15

To comply with the agency agreement;
To reimburse reasonable expenses;
To indemnify;
To compensate for physical injury.

Question 16

List the agent’s duties of loyalty.

Answer 16

No competition;
No conflict of interest;
No appropriation of business opportunities;
No disclosure of confidential information.

Question 17

What types of authority are terminated by operation of law, i.e, death or bankruptcy?

Answer 17

Express, Implied (Actual), and Apparent Authority

Question 18

List the duties of an agent to a principal.

Answer 18

Obedience;
Reasonable Care;
Accounting;
Notification;
Loyalty.

Question 19

What types of authority are terminated by unilateral act, “You’re fired” or “I quit”?

Answer 19

Express and Implied or Actual Authority

Question 20

List the three types of authority through which agency power can arise.

Answer 20

Express;
Implied (Customary, Incidental, Emergency);
Apparent.

Question 21

Define “apparent authority.”

Answer 21

Authority that comes through the way an agent appears to third parties; Principal holds agent out with authority.

Question 22

List the two types of actual authority.

Answer 22

Express and implied authority.

Question 23

Define “lingering apparent authority.”

Answer 23

Authority of terminated agent to continue binding the principal through the principals failure to terminate agent through proper actual and constructive notice.

Question 24

Define “apparent agency/ostensible agency.”

Answer 24

An agency relationship that exists by appearance to third parties that an agency relationship exists.

Question 25

Define “undisclosed principal.”

Answer 25

Contract situation in which third party only knows and believes contract is with the agent; is unaware of existence or identity of principal.

Question 26

Define “disclosed principal.”

Answer 26

Contract situation in which third party is aware of the existence and identity of a principal.

Question 27

Define “partially disclosed principal.”

Answer 27

Contract situation in which third party is aware of the existence of a principal but not the principal’s identity.

Question 28

List the elements of apparent authority.

Answer 28

Principal holds agent out;
Agent acts within scope of apparent authority;
Third party reasonably relies.

Question 29

Define “vicarious liability.”

Answer 29

Liability of principal for torts of agent in master/servant relationship when torts are committed by agent with authorization of scope of employment.

Question 30

Describe the concept of respondeat superior.

Answer 30

“Let the master answer;” doctrine that holds principal liable, in certain circumstances, for the torts of the agent.

Question 31

Define “frolic and detour.”

Answer 31

Acts and conduct by the agent outside the scope of employment that are done while the agent is supposed to be working for the principal.

Question 32

Define “independent contractor.”

Answer 32

Agent who acts on behalf of a principal but who retains control over schedule and is not controlled daily by principal.

Question 33

List the situations in which the principal has liability for the torts of his or her agent.

Answer 33

Directs the tort;
Failure to properly supervise;
Negligent hiring and/or retention.

Question 34

Define “scope of employment.”

Answer 34

Measure for determining when a principal is held liable for the torts of an agent.

Question 35

List the forms of the principal-agent relationship

Answer 35

Master-servant (principal usually liable for agent’s torts);

Employer-independent contractor (principal usually not liable).

Question 36

Describe the master/servant relationship.

Answer 36

Type of relationship in which principal controls the activities of the agent; principal has liability for agent’s torts in this relationship.

Question 37

Who is liable for the agent’s torts if the principal is at fault?

Answer 37

Liability of a principal.

Question 38

Does a principal have the right to control the method and manner of an agent’s work?

Answer 38

Yes, if a master-servant relationship exists.

No, if an independent contractor relationship exists.

Question 39

Describe vicarious (respondeat superior) liability.

Answer 39

Principals may be liable though blameless if:
Master-servant relationship exists; and
Agent acts within scope of employment.