Agency and Contracts

Question 1

Apparent Authority

Answer 1

is created by manifestations from the principal to a third party

Question 2

actual authority

Answer 2

is created by manifestations from the principal to the agent

Question 3

agency

Answer 3

Restatement (Third) of the Law of Agency § 1.01:
Agency is the fiduciary relationship that arises when one person (a “principal”) manifests assent to another person (an “agent”) that the agent shall act on the principal’s behalf and b be subject to the principal’s control, and the agent manifests assent or otherwise consents so to act.

Question 4

Restatement (Third) of the Law of Agency § 1.01:

Answer 4

Agency is the fiduciary relationship that arises when one person (a “principal”) manifests assent to another person (an “agent”) that the agent shall act on the principal’s behalf and subject to the principal’s control, and the agent manifests assent or otherwise consents so to act.

Question 5

agency prima facie case

Answer 5

1. mutual assent
2. benefit of the principal
3. control

Question 6

authority

Answer 6

power to act on the principal’s behalf

Question 7

both actual and apparent authority can be the result of….

Answer 7

express and/or implied manifestations

Question 8

§ 6.01

Answer 8

Agent for Disclosed Principal
When an agent acting with actual or apparent authority makes a contract on behalf of a disclosed principal:
1. the principal and third party are parties to the contract
2. agent is not unless otherwise stated

Question 9

§ 6.02

Answer 9

Agent for Unidentified Principal
When an agent acting with actual or apparent authority makes a contract on behalf of an unidentified principal
1. the principal and the third party are parties to the contract
2. the agent is a party to the contract unless otherwise stated

Question 10

§ 6.03

Answer 10

Agent for Undisclosed Principal
when an agent with actual authority makes a contract on behalf of an undisclosed principal
1. unless excluded by the contract, the principal is a party to the contract
2. the agent and third party are parties to the contract

Question 11

a principal can ratify a contract by…

Answer 11

1. express affirmation
2. implied affirmation (silence or inaction)
3. implied affirmation (accepting and receiving benefits when it is possible to decline them)
4. implied affirmation (by bringing lawsuit to enforce)

Question 12

Agency by estoppel

Answer 12

detrimental reliance by third party where principal failed to protect, breached a duty, or otherwise acted carelessly

Question 13

§ 2.01 Actual Authority

Answer 13

An agent acts with actual authority when, at the time of taking action that has legal consequences for the principal, the agent reasonably believes, in accordance with the principal’s manifestations to the agent, that the principal wishes the agent so to act. [Note: Can be “Express” or “Implied”]

Question 14

§ 2.02 Scope of Actual Authority

Answer 14

An agent has actual authority to take action designated or implied in the principal’s manifestations to the agent and acts necessary or incidental to achieving the principal’s objectives, as the agent reasonably understands the principal’s manifestations and objectives when the agent determines how to act

Question 15

§ 2.03 Apparent Authority

Answer 15

Apparent authority is the power held by an agent or other actor to affect a principal’s legal relations with third parties when a third party reasonably believes the actor has authority to act on behalf of the principal and that belief is traceable to the principal’s manifestations.

Question 16

§ 3.03 Creation of Apparent Authority

Answer 16

Apparent authority, as defined in § 2.03, is created by a person’s manifestation that another has authority to act with legal consequences for the person who makes the manifestation, when a third party reasonably believes the actor to be authorized and the belief is traceable to the manifestation

Question 17

contracts entered into…

Answer 17

with authority bind the principal

Question 18

Ratification effective only when:

Answer 18

a. Ratifier had the capacity to be a party to the contract at the time of the underlying act
b. agent took action on Ratifier’s behalf
c. Ratifier had actual, subjective knowledge of all material facts
d. Ratification occurred before the third party withdrew the offer
e. ratification is fair