Agency Authority Flashcards
Types of Authority
- Actual Authority (Implied or Express)
- Apparent Authority
- Estoppel
- Ratification
Actual Express Authority
Can be created via
* Oral or written words
* Clear, direct, and definite language
* Specific detailed terms/instructions
3rd Party knowledge does not affect AEA
When is a Principal bound for contracts endtered into by Agent on behalf of Principal?
When
* principal authorized the agent to enter into the contract AND
* Agent acted with legal authority
Actual Express Authority - Requisite Intent
- Subjective Intent - Agent must believe that he is doing what Principal wants her to do AND
- Objective Intent - The believe must be subjectively reasonable
Implied Actual Authority
Act within the accepted business or general trade usage customs (unless instrutions to the contrary)
Look to communications between principal and agent
Implied Actual Authorty Factors
Agent is authorized to:
* Making payements for goods and services purchased
* Accept deliveries
* Collect funds
Principal
* Accepts agents acts as they occur
* Principal fails to object to unauthorized acts of the agent that lead the agent to believe those actions further the principal’s objective or support agent’s percieved authority
Factors to consider
Apparent Authority
(Doctrine of Ostensible Agency)
- Look to communication between principle and third-
- THe key is the principal’s behavior and the 3rd P’s perception of it
- Created by words, written or spoken, or conduct/behavior that causes 3rd P to reasonably believe the principal consents to agent acting on their behalf
Implied Authority due other circumstances
- Position - typically has certain authority
- Emergency - agents have implied authority to take all reasonably necessary measures in cases of emergency (unless specific instructions given)
- Delegate - in general, agent delegation is prohicited (unless hiring mechanical acts, specific by situation or law, custom or usages, or impossibility)
Actor/Imposter Agents
Apparent Authority
- Purporting to be an agent and isn’t
- Principal will be held liable if negligently allows an imposter to have appearance of actual authorty to act on their behalf
3rd Party’s Reasonable Belief Factors
Apparent Authority
Look to:
* Past dealings between P and A of which 3rd P is aware
* Trade customs regarding how similar transactions are normally accomplished
* Industry standards
* Principal’s written statements of authority
* Transactions that don’t benefit principal
* Extraordinary or novel circumstances for principal or similar types of principals
3rd P’s Knowledge of Agent’s Position
- If know is agent, but don’t know position, is insufficient to support belief in agents authority
- If known and specific position (ie vice president, treasurer, general manager) principal makes manifestation to public that agent has customary level of authority of person in that position
Estoppel
Agency Authority
Principal is prevent from denying authority if she failed to take reasonable steps/use ordinary care to inform 3rd Party of lack of authority OR intionally/carelessly caused the belief of authority
Ratification
Principal can ratify/confrim act by Agent, even if Agent had no autority to act if:
1. Ratify entire contract
2. Principal and 3rd Party have capacity to contract
3. Ratification is timely (ie before 3rd party withraws)
4. Prinicpal knows of material facts of transaction
