Agency - general creation

Question 1

An agency relationship is created when

Answer 1

a principal and an agent mutually agree that the agent will act on behalf of the principal and is subject to the principals control

Question 2

3 requirements of an agency relationship to exist:

Answer 2

1. There must be mutual agreement
2. The agent must be acting on behalf of the principal
3. the agent must act subject to the principal’s control

Question 3

Creaion of the agency relationship

not the elements

Answer 3

1. fiduciary relationship
2. manifestation (outward display of consent by another)
3. Agent manifests consent

Question 4

Because the agent acts on the principal’s behalf, the agent owes -what- to the principal?

Answer 4

fiduciary duties

Question 5

Because the agent is doing the principal’s business, the principal may be liable for

Answer 5

the agents actions in contract and tort

Question 6

Contracts and creation of an agency relationship

2 answers

Answer 6

The agreement that creates an agency relationship may, but need not, involve a contract

In some circumstances (ex. statute of frauds), the law requires a writing to create enforcable rights and obligations

Question 7

When a writing is required to make an agency relationship (ex. statute of frauds), the principal’s conferral of authority upon an agent is usually

Answer 7

required to be in writing as well

• This is known as the “equal dignity” rule

Question 8

Without a contract, the agreement that creates an agency relationship may be

Answer 8

informal

Question 9

As long as the requisite elements are present, it is irrelevant whether the parties

Answer 9

understood that they were creating an agency relationship, or desired to create such a relationship.

Question 10

The existance of the agency may be proved by circumstantial evidence that

Answer 10

shows a course of dealings between 2 parties

Gay Jensens Farms Co. v. Cargill

Question 11

When an agency relationship is to be proven by circumstantial evidence, the principal must be shown to have

Answer 11

consented to the agency

Gay Jensens Farms Co. v. Cargill

Question 12

A creditor who assumes control of debtors business may

Answer 12

become liable as principal for the acts of the debtor in connection with the business

Gay Jensens Farms Co. v. Cargill

Question 13

Factors indicating that one is a supplier, rather then an agent are:

3 answers

Answer 13

1. that he is to recieve a fixed price for the property irrespective of the price paid by him (most important)
2. that he acts in his own name and recieves the title to the property which he is thereafter is to transfer
3. that he has an independant business in buying and selling similar property

Gay Jensens Farms Co. v. Cargill

Question 14

The one who action is to be taken is

Answer 14

the principal

Question 15

The one who acts

Answer 15

the agent

Question 16

Control by the principal

Answer 16

A principal has the right to control the conduct of the agent with respect to matters entrusted to him

Question 17

Security holder becoming a principal

Answer 17

• A creditor who assumes control of his debtors business
• for the mutual benefit of himself and his debtor
• can become a principal with liability for the acts and transactions of the debtor in connection with the business

Question 18

Manifestation of Consent

Answer 18

• An Agency relationship exists only if there has been a manifestation
• By the principal to the agent
• that the agent may act on his account
• and consent by the agent so to act

Question 19

Parties labeling and popular usage

Answer 19

is not controlling
- call it what you want, if the elements are there it is still an agency relationship

Question 20

A person manifests assent or intention through

Answer 20

written or spoken words, or other conduct

Question 21

Gratuitous Agent

Answer 21

acts without right to compensation

Question 22

Escrow holder as an agent

Answer 22

is not an agent of the parties to the escrow contract bc the escrow holder is not under their control

Question 23

Insurance agent offering policies from multiple insurance companies as an agent

Answer 23

Is the agent of the insured not of the insurers.

Question 24

Receipt and installation of office equipment subject to a finance agreement and the payment of numerous installments over a 7 month period, pursuant to the finance agreement amounted to

Answer 24

ratification of the underlying contract

Question 25

"Coming and going" rule

Answer 25

an employee who has an accident traveling to or from work is not acting within the scope of his employment

Question 26

bailment

Answer 26

rightful possession of goods by one who is not the owner

Question 27

Gratuitious Bailment

Answer 27

the transfer or use of property without compensation

Question 28

For an agency relationship to be created you only need the factual elements, meaning that

Answer 28

it can be unwillingly or unknowingly created

Question 29

To find mutual consent, look at

Answer 29

words and conduct

Question 30

Not required to form an agency relationship ## Footnote 6 answers

Answer 30

1. consideration 2. subject to statutory requirement (statute of fraud), written agreement 3. knowledge that they are entering into an agency relationship 4. Intent to enter into an agency relationship 5. Positive Outcomes/ benefits for principal 6. Human principals

Question 31

A principal has the right to control the conduct of the agent with respect to matters entructed to him. That control can be

Answer 31

shown through instructions

Question 32

Principals do not have to ultilize all of their

Answer 32

control rights

Question 33

Compensation and agency relationships

Answer 33

not required

Question 34

Veto powers within limits does not equal

Answer 34

control

Question 35

Assuming ability to manage debtors business does equal

Answer 35

control | we care because they become liable

Question 36

# General Expressions and paricularized authorization unless otherwise agreed, general expressions used in authorizing an agent are limited in

Answer 36

application to acts done in connection with the act or business to which the authority primarily relates

Question 37

# General Expressions and paricularized authorization The specific authorization of particular acts tend to show

Answer 37

a more general authority is not intended

Question 38

# meaning of principals words words have ordinary/common meaning unless

Answer 38

- past dealings - agreement to modify meaning

Question 39

# meaning of principals words trade/industry meaning are not automatically implied. consider:

Answer 39

1. the background of the agreement 2. the purposes of the parties as known to eachother 3. whether the parties, or one of them, are in business

Question 40

# Factors for determining authorization An authorization is interpreted in light of all accompanying circumstances, including among other matters:

Answer 40

1. The soclution of the parties, their relations to one another, and the business in which they are engaged **(relationship/dealings)** 2. the general usage of business, the usages of trades or employment of the kind to which the authorization relates, and the business methods of the principal **(trade terms or methods)** 3. Facts of which the agent has notice respecting the objects which the principal desires to accomplish **(principals goals)** 4. the nature of the subject matter, the circumstance, under which the act is to be performed and the legality or illegality of the act **(assumption against certain actions)** 5. the formality or informalitym and the care, or lack of it, with which an instrument evidencing the authority is drawn **(more formality - more thought)**

Question 41

Just because the principal authorized does not mean that the agent

Answer 41

has to do it

Question 42

# Interpretation of authority and apparent authority applicability of rules for interpretation of agreements

Answer 42

except to the extent that the fiduciary relation between principal and agent requires special rules, the rules for the interpretation of contracts apply to the interpretation of authority

Question 43

# Interpretation of apparent authority compared with interp of authority The rules applicable to the interpretation of authority are applicable to the interpretation of apparent authority except that:

Answer 43

1. manifestations of the principal to the other party to the transaction are interpreted in light of what the other party knows or should know instead of what the agent knows or should know 2. If there is a latent ambiguity in the manifestations of the principal for which he is not at fault, the interpretation of apparent authority is based on facts known to the principal