Agency

Question 1

Capacity Requirements for Agency Relationship

Answer 1

Principal: contractual capacity
Agent: minimal capacity

Question 2

Formalities of Creating an Agency Relationship

Answer 2

1) Capacity
2) Consent
3) Writing **

Not:
Consideration
** Writing (unless under SOF)

Question 3

Methods of Creating an Agency Relationship

Answer 3

Act of Parties
   - Agreement
   - Holding out by principal (apparent authority)
   - Ratification
Operation of Law
   - Estoppel
   - Statute

Question 4

Agent’s Duties

Answer 4

Express duties, fiduciary duties of loyalty, obedience to lawful instructions, and reasonable care

Question 5

Principal’s Remedies Against Agent

Answer 5

Contract actions, tort actions, actions for secret profits, equitable actions, and withholding of compensation for intentional torts or intentional breach of duties

Question 6

Principal’s Duties

Answer 6

Duties imposed by contract, reasonable compensation, and reimbursement for expenses

Question 7

Agent’s Remedies

Answer 7

Contract remedies with a duty to mitigate

Possessory lien for any money due

Question 8

Actual Authority

Answer 8

Authority that agent reasonably believes he possesses based on principal’s dealings with her

Express: contained in four corners of agreement
Implied: agent’s reasonable belief as result of principal’s actions

Question 9

Termination of Actual Authority

Answer 9

Lapse of specified or reasonable time
The happening of specific event
A change in circumstance
Agent's breach of fiduciary duty 
Either party's unilateral termination
Operation of law

Question 10

Irrevocable Agencies

Answer 10

An agency coupled with an interest may not be unilaterally terminated

Question 11

Apparent Authority

Answer 11

Arises from reasonable belief of third party where principal directly or indirectly holds out another as possessing certain authority

Question 12

Types of Apparent Authority

Answer 12

When Agent Has No Actual Authority 
   - Imposter
   - Lingering Apparent Authority (should provide notice)
When Agent Exceeds Actual Authority 
   - Prior Act 
   - Position

Question 13

Inherent Authority

Answer 13

When court wishes to protect third parties

• Respondeat superior
• Conduct similar to that authorized

Question 14

Ratification

Answer 14

agency relationship is created when “agent” purports to act on behalf of “principal” without authority, but principal later validates the act and becomes bound retroactively

Question 15

Prerequisites for Ratification

Answer 15

• Principal must know or have reason to know material facts
• Accept the entire transaction
• Have capacity

Question 16

Methods of Ratification

Answer 16

• acceptance of transaction’s benefits
• silence if there is a duty to disaffirm
• suing on transaction

Question 17

What May Be Ratified

Answer 17

Anything unless:

• performance was illegal
• third party has withdrawn
• material change in circumstances

Question 18

Liability of the Parties: Third Party vs. Principal

Answer 18

Principal will be liable to the third party on a contract entered into by her agent if the agent had valid authority to act (actual, apparent, by ratification)

Question 19

Liability of the Parties: Third Party vs. Agent

Answer 19

Disclosed Principal (existence and identity known to third party)
- A disclosed principal is always liable on the contract and the agent is generally not liable (except if agent was intended to be liable or implied warranty)

Undisclosed Principal
- Liability for both the principal and agent

Question 20

Liability of the Parties: Third Party Liability

Answer 20

Disclosed Principal
- Only principal may enforce

Unidentified/Undisclosed Principal
- Either agent or principal may enforce

Principal may not enforce if there has been affirmative fraudulent misrepresentation of principal’s identity