Agency Flashcards
What must a principle have in order to ratify a contract that was entered into without authority by an agent
- The principle must be aware of all material facts before ratifying it
What id you have a agent who is employed for only 6 months - does it need to be in writing to be enforceable
No because it is less than 1 year - it does not fall under the statute of frauds
If you are an agent of a company what duty do you have
An agent has a fiduciary duty to actin the best interest of the principle in matters involving the agency
What is an agency coupled with an interest
This is when the agent has an interest in the property or activity of the principle. This would be if you are a collection agent and get a piece of what you collect
This is NOT when you earn sales commission
Ingeneral must an agency relationship be in writing
Not in general. However is an agent is acting on a principles behalf in a situation where they would be subject to the Stature of Frauds:
G - goods over $500 R - real estate O - Over 1 year S - purity ship S - statement of consideration of marriage
What is ratification
This is a principles affirmation of an agent’s unauthorized act
When must a principle notify third parties of the termination of an agency’s existence
– if you achieve the agencies purpose - though this would sent the agency relationship this would not adequately inform any third parties that the relationship has ended so notice is still required
– If the principle terminate the relationship - this is not enough to let third parties know - so notice is still required
- mutual agreement - still must notify third parties
Destruction of the subject matter of the agency
This is when an offer terminate automatically if the good or property is destroyed prior to acceptance.
If this happens that you do NOT have to give notice of the termination of an agency’s existence
Can there be any apparent authority when the principle is undisclosed
No there can be no apparent authority when the principle is undisclosed
The principle has given the agent actually authority and therefore the principle is bound by the contract , not the agent .
If you are the principle have an agent buy real estate for you in your name
- The principle is bound by contract entered into on there behalf
- This is actual authority , not apparent authority
- principle is Not responsible for all torts of the independent contractor (like if they were an employee)
What is a agent contracts in their own name without informing the third party of the existence of a principle
The agent is accepting personal liability on the contract - this is because the third party is not informed that the broker is working on behalf of the agent.
Does an agency relationship require consideration
It does not
What is express authority
this is authority given expressly by the principle
What is apparent authority
This is when the action of the principle cause a third party to believe that the agent has authority on behalf of the principal
What is a fiduciary duty
This is the highest standard of care - it s what an agent has to the principal
The agent must make known to to the principle any material facts to the principal in duties such as obedience, reasonable care , disclosure loyalty etc.
What happens when an agent fraudulently breaches a fiduciary duty
- the principle can terminate the relationship without penalty or liability
- the principle can get constructive trust - this is a legal remedy when one party gets an unjust enrichment at the expense of another
When is a principle liable for the torts of agents
agent are individuals and liable for there own torts.
a principle is always liable for the torts of there agents if in the scope of employment
If the agent is an independent contractor - then the principle is less likely to be held accountable
Principle is liable for their agents torts if :
- principle is negligent in hiring the agent
- neglegent is supervising
- ignored a pattern of behavior
What if the principle violated the duty owed the agent
- the agent can get monetary damages for past services and future damages
- they can withhold future performances
What is an operation of law
This is when the agency is terminated based one:
- death of eater principle or agent
- insanity of principle
What is a change in the law
This is when the law changes and the subject matter of the agreement illegal - the agency is terminated
What if there is a bankruptcy
Then the bankruptcy compromises the ability to fulfill the contract and terminates the agreement
What happens if your agent executes their actual authority, but still has apparent authority - what is the principle liable for
If the principle is fully disclosed - then they are yes liable for the agents actions when if they exceed actual authority because there is apparent authority to contact
The agent is not liable to third parties for contracts made
What if the the agent is a partially disclosed agent
This is when the agent acts on behalf of the principle which is known to the third party, but the actual identity is not disclosed
In this case BOTh the agent and the principle are each jointly and severally liable
To whom dies a sub agent have fiduciary duty
to both the principle and the agent
What is a gratuitous agent
A gratuitous agent is a person who is not paid by a principal for the work s/he does.
A person who acts as a gratuitous agent can never be forced to work as an agent.
However, a person acting as a gratuitous agent has to follow a principle of good faith.
What is an employer responsible for
an employer is generally liable for the torts committed by an employee ( agent
What is a tort
a tort is a negligent or intentional act that injures others
example - failure to report a dangerous condition
What is actual authority
This is the power specifically granted to the agent by the principle
- it is not effected by the knowledge or lack of the agency relationship by third parties - fully disclosed, partially disclosed, undisclosed
What must a principle and agent relationship require
Both parties must consent to the creation of an agency and have a common understanding of the nature of the agreement.
What if the property was destroyed
The agency is destroyed as well and the principle owes nothing to the agent
Unless - the agent had property interest in the destroyed assets
If you are a business manager - what kind of authority do you have
you have implied authority so you can do ordinary things in a business like pay ordinary business expenses like insurance
When an agent acts for an undisclosed principal, the principal will not be liable to third parties if the
When an agent is acting on behalf of an undisclosed principal, the third party is not aware of the agency relationship and believes the relationship is with the agent. As a result, the agent will be liable to the third party but will have recourse against the principal.
what do you need as a prerequisite in order to have an agency relationship
the principle must have capacity
no need for consideration
no need for a written contract
no need for the agent to have capacity
What is a the relationship for an agent to the principle when they are UNDISCLOSED
The agent t is working on behalf of the principle
They have actual authority ( not apparent)
Both the principle and agent are liable to the third party, but the principle will be liable to the agent
This is as long as the agent’s actions were authorized
When must a principle provide notice if a termination of agency
In cases of unilateral or agreed termination of actual authority, the principal is required to provide notice to third parties of the termination.
If authority is terminated by operation of law, such as in cases of illegality, insanity, or impossibility, no such notice is required.
What are the rules to giving notice of a termination of a relationship
Actual notice in the form of a letter to customers who have dealt with the agent is sufficient to prevent further liability to those parties. The principal, however, must also provide constructive notice, such as an ad in a newspaper, to inform those who have not dealt with the agent that the agent lacks authority. Bolt’s letter would not prevent liability to third parties who have not previously dealt with Ace.
