Agency - IMPORTANT RULES OF LAW

Question 1

AGENT’S DUTY to PRINCIPAL

Answer 1

An AGENT owes a DUTY OF LOYALTY to a PRINCIPAL

Question 2

A DUTY OF LOYALTY includes (CUSP):

Answer 2

• no COMPETING with the principal
• no USURPING OPPORTUNITIES
• no SELF-DEALING
• no SECRET PROFITS

Question 3

APPARENT AUTHORITY exists when:

Answer 3

a PRINCIPAL gives REASON TO BELIEVE (i.e., has HELD AGENT OUT to THIRD PARTIES as though) agent had ACTUAL AUTHORITY

Question 4

IMPLIED ACTUAL AUTHORITY is:

Answer 4

authority that AGENT REASONABLY BELIEVES he has as a RESULT of NPACT:

1. Necessity
2. Prior Acquiescence
3. Custom/Title

Question 5

When an agent BREACHES his Duty of Loyalty, the PRINCIPAL can either (Re(s)PECT):

Answer 5

1. RECOVER the PROFITS made by the agent while competing against principal, or
2. ENFORCE a CONSTRUCTIVE TRUST on those profits.