Agency and Regulation Flashcards
WHAT action would require a corporations’ agent to have a written agency agreement?
Purchasing an interest in undeveloped land for a principal
WHEN would an Agent be contractually liable to a third party?
1) make a contract in their own name
2) co-making the contract with the principal; or
3) guaranteeing the principal’s performance
WHAT terms would best describe a relationship between a corporation and an hired CPA?
AN Employer and independent contractor relationship
WHO would a subagent (appointed by an Agent) owe a fiduciary duty to?
The Agent and the Principal
i.e. this subagent is essentially an agent of both the principal and the agent and owes a fiduciary duty to both
WHEN would a principal be held criminally liable for the crime of an agent?
WHEN the Agent violated a regulatory statute (i.e. imposes strict liability)
E.g. Law that prohibits sales of liquor to minors
WHEN would “apparent authority” of a general agent for a disclosed principal terminate, under (Second) Restatement of the Law of Agency?
WHEN the Principal or Agent dies
WHAT is a “key characteristic” of an employee?
THEIR physical conduct is controlled OR subject to the right of control by the employer
WHEN would a “disclosed principal” be held liable to third parties for its agent’s unauthorized misrepresentations?
WHEN the Agent is an:
(A) Employee; OR
(B) Independent Contractor
True or False.
A person who “ratifies” becomes legally bound on a contract that was entered into by another who, without authority, purported to act as the principal’s agent.
TRUE.
Note: To ratify a contract, the Principal must have full knowledge of the material facts.
WHAT is NOT considered wages, under the Federal Insurance Contributions Act (FICA)?
Reimbursed travel expenses
True or False.
If an Agent lacks authority, no contract exists between the third party and the principal.
TRUE
Note: Ratification would validate a contract assuming that the third party did not withdraw prior to ratification
HOW can an Agency relationship be created?
BY “Estoppel” i.e. implied as a matter of law
E.g. A person represents their self as an agent, the alleged Principal knows of the representation and does not deny it
True or False.
An agent of an undisclosed principal has no apparent authority.
TRUE
An agent of an undisclosed principal, by definition, has no apparent authority.
HOW is “Actual” authority conveyed by a principal?
BY giving express or implied consent to the agent to bind the principal to third parties
WHEN would agency be automatically terminated, under the Second Restatement?
WHEN the principal is declared incompetent in a judicial proceeding
i.e. the principal is not bound by their contract after they are declared “incompetent”
