Agency

Question 1

What is Agency?

Answer 1

A legal relationship between an agent and a principal.

The agent agrees to perform something on behalf of the principal (mutual consent), under the control of the principal, thereby creating a fiduciary relationship.

Question 2

What is required to create an agency relationship?

Answer 2

Consent of both parties

Principal must have capacity

Question 3

Are agency relationships created in writing?

Answer 3

Not necessarily. Can be oral too

Question 4

List 3 types of authority in connection with the agency relationship.

Answer 4

Actual Authority
Apparent Authority
Implied Authority

Question 5

What is Actual Authority?

Answer 5

Actual Authority

The principal’s words or actions cause the AGENT to REASONABLY believe that he/she has been authorized to act.

Question 6

What is Apparent Authority?

Answer 6

The Principal’s words or actions would lead a THIRD PARTY (reasonable person) to believe that the agent has the authority to act on behalf of the principal.

Question 7

There are 2 types of Actual Authority. What are they?

Answer 7

Express Authority

Implied Authority

Question 8

What is Express Authority?

Answer 8

A principal has expressly told the agent they may act on their behalf.

It is a type of Actual Authority

Question 9

What is Implied Authority?

Answer 9

That authority that is reasonably necessary to Cary out Express Authority.

It is a form of Express Authority

Question 10

What is Agency by Estoppel?

Answer 10

It is Apparent Authority, whereby the principal will be “estopped” from withdrawing grant of authority to an agent if the third parties have changed their positions to their detriment in relying on the representations made.

Question 11

Agency Liability

If the agency relationship isn’t quite clear to a third party, who is liable to the third party?

Answer 11

Both agent an principal

Question 12

If the Agent doesn’t have Actual, Apparent, or Implied Authority, are they liable to a third party?

Answer 12

Yes

Question 13

List a situation where the agent is NOT liable to a third party.

Answer 13

If the agent has Actual or Apparent Authority and the principal has been disclosed

Question 14

Define Indemnify

Answer 14

To compensate someone for harm or loss.

Question 15

An agent has Actual authority to act within the scope of their agency relationship. They step outside of that scope but based on their actual authority (the actions of the Principal), the agent gives the impression of Apparent Authority to the third party.

Is the Principal bound by the agent’s actions?

Can the principal seek damages from the agent?

Answer 15

Yes

Yes

Question 16

What 4 duties does an Agent owe to a Principal?

Answer 16

Fiduciary (trust and confidence)
Reasonable Care (not negligent)
Obedience (follow instructions)
Loyalty (don’t compete)

Question 17

What is a tort?

Answer 17

Wrongful act that results in injury to another person.

Question 18

Are torts civil or criminal claims?

Answer 18

Civil

Question 19

An employee commits a tort. Can the Principal (employer) be liable for the tort?

Answer 19

Yes.

In some cases the Principal and Agent can be liable - amounts depending on how much control an employer has over a worker.

Question 20

Are Employers liable for torts committed by independent contractors?

Answer 20

No

Question 21

Name some situations in which an employer is not held liable for an Agent’s torts.

Answer 21

Intentional Tort
Criminal Acts (not authorized by employer)

Question 22

Does a Principal owe a fiduciary duty to their Agent?

How about to third parties with whom the agent deals?

Answer 22

No

No