Agency

Question 1

Creation

Answer 1

Assent, Benefit, Control

i) A principal manifests assent to an agent and agent manifests assent /consents.
ii) The agent acts on the principal’s behalf for principle’s benefit;
iii) The agent’s actions are subject to the principal’s control

Question 2

Principle: Control?

Answer 2

i) The principal exercises significant control over the details of the worker’s day-to-day activities;
ii) The principal supplies the tools at the place of employment;
iii) The principal pays the worker on a structured pay period;
iv) The worker’s skill level is specialized; and
v) The principal directs the work to completion.

Question 3

Entrepreneur

Answer 3

Any business owner who has the legal capacity to contract with a person to represent him and conduct business on his behalf can be a principal.

Question 4

Corporation as Principle

Answer 4

A corporation must have legal existence to be considered a principal in an agency relationship.

Corporations that are yet to be formed (i.e., future incorporation pending) CANNOT be principals.

Question 5

Partnership as Principle

Answer 5

The partnership can be considered the principal in an agency relationship.
Partners, employees of the partnership, and other persons, such as attorneys, can all serve as agents of the partnership.

Question 6

To be an Agent

Answer 6

i) Have minimal capacity;
ii) Manifest assent and consent to act on the principal’s behalf; and
iii) Manifest assent to be subject to the principal’s control.

Question 7

Creating an Agency

Answer 7

i) An agent need not receive consideration (a gratuitous agent); and
ii) A principal’s appointment of an agent generally need not be in writing or comply with other formalities.

Question 8

Gratuitous agent

Answer 8

A gratuitous agent is an agent who does not receive compensation. This does NOT prevent the creation of an agency relationship but it generally DOES PREVENT the formation of an enforceable contract between an agent and a principal due to the lack of consideration.

Question 9

A trustee as an agent

Answer 9

A trustee is an agent and is subject to the control of the settlor of the trust or one or more of its beneficiaries. A trustee maintains a fiduciary relationship with and holds property for the benefit of the settlor.

Question 10

Subagents

Answer 10

A subagent is a person appointed by an agent to perform functions that the agent has agreed to perform on behalf of a principal. The agent is liable to the principal for the conduct of the subagent. When an appointing agent hires employees, those employees are presumed to be subagents of the appointing agent, acting on behalf of the appointing agent’s principal.
Ex: real estate – listing broker

Question 11

Duties Agent Owes

Answer 11

Reasonable Care
Obey Reasonable Instructions
Loyalty

Question 12

Ratification

Answer 12

authority granted by principle after K entered if (1) principle has knowledge of all MATERIAL FACTS re: K and (2) principle has ACCEPTED the benefits

Ratification must be complete – NO alterations of terms