Agency

Question 1

When an agent acting with actual or apparent authority makes a contract on behalf of a disclosed principal, who is a party to the contract?

Answer 1

Principal and third party

Question 2

When an agent acting with actual or apparent authority makes a contract on behalf of an unidentified principal, who is a party to the contract?

Answer 2

Principal, third party, and agent (unless agent and third party agree otherwise)

Question 3

When an agent acting with actual authority makes a contract with an undisclosed principal, who is a party to the contract?

Answer 3

Agent, third party, and principal (unless excluded by the contract)

Question 4

If a person who is purportedly an agent on behalf of a principal makes a contract with a third party and knows or has reason to know that the purported principal does not exist or lack capacity to be a party to a contract, is the agent a party to the contract?

Answer 4

Yes

Question 5

7.01 An agent is subject to liability to a third party harmed by the agent’s _____ _____.

Answer 5

tortious conduct

Question 6

An agent acts with __________________ when at the time of taking action that has legal consequences for the principal, the agent reasonably believes, in accordance with the principal’s manifestations to the agent, that the principal wishes the agent so to act.

Answer 6

Actual authority

Question 7

An agent has actual authority to take action designated or implied in the principal’s manifestations to the agent and acts necessary or incidental to achieving the principal’s objectives…

Answer 7

As the agent reasonably understands the principal’s manifestations and objectives when the agent determines how to act

Question 8

________________________ grows out of words or conduct taken in the context of relations between the principal and the agent; ________________________ grows out of explicit words or conduct granting the agent power to bind the principal.

Answer 8

Actual implied authority; actual express authority

Question 9

Inherent agency authority:

Answer 9

Is based on the idea that principals are responsible for some acts of their agents which, while unauthorized, are close to or incidental to that which they agents are authorized to do

Question 10

How may a principal create apparent authority?

Answer 10

By written or spoken words, or any other conduct that, reasonably interpreted, causes a third person to believe that the principal has consented to the agent acting for him

Question 11

The affirmance of a prior act done by another, whereby the act is given effect as if done by an agent acting with actual authority is:

Answer 11

Ratification

Question 12

A person ratifies an act by:

Answer 12

Manifesting assent that the act shall affect the person’s legal relations
Conduct that justifies a reasonable assumption that the person so consents

Question 13

Recycling Corp., in the recycling business, hires A as a purchasing agent to buy recyclable material on its behalf. A is authorized by Recycling Corp. to buy on terms that commit Recycling Corp. to pay for the material when it arrives at Recycling Corp.’s recycling facility. A has purchased recyclables many times from Demolish Corp. which is in the business of building demolition. Recycling Corp. terminates A’s actual authority. Demolish Corp. has no notice of the termination. Two days later, A purchases recyclable material (“Load X”) from Demolish Corp. on terms comparable to those on which A has made prior purchases on Recycling Corp.’s behalf. Is someone liable and if so, who?

Answer 13

Recycling Corp. is required to pay for Load X when it arrives at Recycling Corp.’s recycling facility, because A’s apparent authority was not terminated when A made that purchase from Demolish Corp.

Question 14

Which of the following is not a basis for termination of an agent’s actual authority? 1. the agent’s death

2. the principal’s loss of capacity
3. a renunciation by the agent to a third party
4. a manifestation of revocation by the principal to the agent
5. the occurrence of circumstances on the basis of which the agent should reasonably conclude that the principal no longer would assent to the agent’s taking action on the principal’s behalf

Answer 14

a renunciation by the agent to a third party

Question 15

Agency 3 part test:

Answer 15

Principal manifests assent for the agent to act on their behalf and under their control and agent consents

Question 16

When a person borrows another person’s car, this automatically creates an ________.

Answer 16

agency relationship

Question 17

Agent owes to the principal:

Answer 17

1. Duties of care, loyalty, and obedience
2. Duty to obey all reasonable directions by principal (within scope of agent’s service)
3. Agent must always put interests of the principal above his own

Question 18

What type of authority does an agent have when the principal manifests consent to the agent to bind the principal?

Answer 18

actual authority

Question 19

What type of authority does the principal telling the agent to sign a contract on the principal’s behalf constitute?

Answer 19

actual authority

Question 20

Actual authority can be _____ or ______.

Answer 20

express; implied

Question 21

explicit actual authority

Answer 21

comes from explicit words or conduct granting the agent power to bind the principal

Question 22

implicit actual authority

Answer 22

comes from words or conduct taken in the context of the relations between the principal and the agent

Question 23

apparent authority

Answer 23

written or spoken words or any other conduct that reasonably interpreted, causes a third person to believe that the principal has consented to the agent acting for her

Question 24

Principal can become obligated to a third party by _______ the act of another, who at the time of the act, lacked the power to bind the principal.

Answer 24

ratifying

Question 25

Ratification can be inferred from the acts, words, or conduct of the principal showing ______ to ratify, and need not be made to the agent or even the other party

Answer 25

intent

Question 26

What is the definition of manifestation in the Restatement?

Answer 26

conduct by a person, observable by others, that expresses meaning

Question 27

co-agents

Answer 27

agents that share a common principal

Question 28

sub-agent

Answer 28

principal hires agent and agent hires another agent

Question 29

How does a person ratify an act?

Answer 29

by manifesting assent that the act shall affect the person’s legal relations or by conduct that justifies a reasonable assumption that the person so consents

Question 30

Ratification is not effective when:

Answer 30

1. it is obtained by misrepresentation, duress, etc.
2. The principal ratifies to avoid a loss
3. It diminishes the right of third parties that were acquired in the subject matter prior to the ratification

Question 31

An agent’s actual authority may be terminated by:

Answer 31

1. Agent’s death
2. principal’s death
3. principal’s loss of capacity
4. an agreement between agent and principal or circumstances on the basis of which agent should reasonably conclude principal no longer assents
5. revocation by principal to agent
6. statute

Question 32

When an agent knows or has reason to know that the purported principal doe snot exist or lacks capacity to be a party to a contract, the agent:

Answer 32

becomes a party to the contract