AGENCY

Question 1

Agency agreement and parties involved

Answer 1

one party designates another to act on its behalf

principal - the party who hires the agent
agent - the party who acts on behalf of the principal

Question 2

Requirements to create an express agency relationship?

Answer 2

Based on perception of third parties

In writing is NOT required unless falls under statute of frauds or if cannot be done within one year

Must be competent - terminates if adjudicated incompetent

Principal must have capacity (not a minor); agent does not

Does not require consideration

Question 3

Ratificaton

Answer 3

If agent is acting on behalf of principal without express or implied authority, principal must ratify contract before it is binding

agent must have indicated acting on their behalf, all material facts are disclosed to the principal and principal must ratify the ENTIRE transaction

Question 4

What is apparent authority?

Answer 4

How agent is view by third parties and principal does nothing to correct the appearance of authority

ALWAYS disclose principal for this. Only principal will be held liable.

Question 5

What happens when a principal’s relationship to the agent is not disclosed?

Answer 5

The principal does NOT have to ratify the contract to be held liable

If it is breached, the third party can hold BOTH the agent and the principal liable

Question 6

Implied authority vs Express authority

Answer 6

Implied - business manager can run day to day business operations
Express - making out of the ordinary transactions

Question 7

When does the agency relationship terminate?

Answer 7

1. Fulfillment
2. Lapse of time
3. Specified event
4. Mutual agreement
5. Unilateral (I quit, you’re fired)
6. Operation of law - death, insanity, bankruptcy, destruction of subject matter

Question 8

What makes a principal liable for an agent in tort liability?

Answer 8

1. if agent performed as instructed
2. if hires an agent who is underqualified
3. did not supervise properly
4. failed to screen agent

Question 9

In the absence of a contractual provision relating to the duration of the agency, who has the right to terminate the agency before the interest has expired?

Answer 9

The agent only

If there is not specified time period the agent may terminate at any time without liability