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Business Associations > Agency/Mandate > Flashcards

Agency/Mandate Flashcards

1
Q

What is agency?

A

A fiduciary relationship when one person (principal) manifests assent to another person (agent) that the agent shall act on the principal’s behalf and subject to the principal’s control––and the agent manifests or consents to the act.

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2
Q

What is the difference between agency and procuration

A

Procuration (power of attorney is a unilateral judicial act that confers authority on another person to represent the principal in Legal Relations

Mandate is a bilateral contract where the agent represents the principal in one or more affairs.

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3
Q

Mandate

A

A contract by which a person (principal) confers authority on another person (mandatary) to transact one or more affairs for the principal.

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4
Q

Elements of mandate

A

(1) Contract
(2) Control
(3) Action on behalf of another

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5
Q

Types of mandate contract

A

Can be either onerous or gratuitous.

There is a presumption of gratuity, however in the business context this relationship is typically onerous (for money).

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6
Q

Form of mandate contract

A

Generally there are no form requirements for a mandate contract, but when the law prescribes a certain form for an act, a mandate authorizing the act must be in that form.

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7
Q

Equal Dignities Rule

A

if a contract must be in writing, then the contract or mandate must also be in writing (purchase of immovable property).

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8
Q

Principal-Agent relationship
- PAT Triangle

A

The principal is bound to the mandatary to perform obligations the mandatary contracted within the limits of his limits of his authority.

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9
Q

Describe Principal-third party relationship
- PAT Triangle

A

the principal is bound to perform the contract that the mandatary––acting within the limits of his authority––makes with a third person.

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10
Q

Describe Agent-third party relationship
- PAT Triangle

A

If the agent contracts:
(1) in the name of the principal
(2) within the limits of authority
then he DOES NOT BIND himself personally for performance

EXCEPTION: if the agent expressly promises the performance of the contract, then he binds himself for the performance even if he contracted in the name of principal.

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11
Q

General Rule-Agent Disclosure

A

Agent should disclose principal’s identity/existence to avoid personal liability.

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12
Q

Describe Third party to Principal relationship
-PAT Triangle

A

A third person with whom an agent contracts with in the name of the principal OR in his own name as mandatary, is bound to THE PRINCIPAL for performance of the contract.

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13
Q

Reimbursement (Principal to Agent)

A

Principal is bound to reimburse Agent and pay Agent even if the purpose of the mandate was not accomplished––as long as it was not due to Agent’s fault.

EX: If Agent purchased equipment and used personal gas to go pick up equipment, Principal would have to reimburse Agent for the expense

EX: then, if Agent drove far away to buy the equipment but was not able to make the purchase once he got there, THROUGH NO FAULT OF AGENT, then Principal must still reimburse.

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14
Q

Actual Authority

A

What can the agent do within the bounds of his authority

If an agent lacks actual authority for act, Agent may be personally bound to third party.

Can be Express or Implied

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15
Q

Express Authority

A

Written or Oral

Required when:
- dealing with the purchase or sale of property
- contracting a loan, acknowledging remission of debt
- draw or endorse promissory note
- entering into a compromise or arbitration

Don’t forget equal dignities rule

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16
Q

Implied Authority

A

Highly Contextual
- based off past practices or industry customs
- Incidental and General authority encompass this idea

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17
Q

Incidental Authority

A

authority to perform acts incidental to or necessary for performance of a mandate

18
Q

General Authority

A

the principal may confer on the mandatary general authority to do whatever is appropriate under the circumstances.
- General Manager

19
Q

Agent Acting Outside of Actual Authority: Agent and Third Persons

A

Agent becomes personally bound to the third person with whom he contracts

Exceptions:
(1) the third person knew at the time the contract was made that the agent had exceeded authority
(2) the principal ratifies the contract

If Agent made an implied warranty of authority with the third party, he is at least liable fo damages arising from breach of implied warranty of authority

20
Q

Agent Acting Outside of Actual Authority: Agent and Principal

A

Agent is answerable to the principal for a resulting loss that the Principal sustains

Principal is NOT answerable to Agent for any loss that the mandatary sustains because of acts that exceeded authority.

EXCEPTION:
principal is liable if he ratifies those acts

21
Q

Apparent Authority (agent is acting outside of actual authority)

A

One who causes a third person to believe that another person is his agent is bound to the third person who in GOOD FAITH contracts with the putative mandatary.

22
Q

Elements of apparent authority

A

(1) Manifestation by Principal
- Express
- Pattern of Conduct
- Position
- Acquiescing in an agent’s conduct
- Intermediary
(2) Reasonable Reliance on the Manifestation by 3rd party
- Burden of proving reasonable belief rests on 3rd party

23
Q

Undisclosed Agency

A
  • NEVER apparent authority
  • Agent who contracts in his own name without disclosing agent status BINDS HIMSELF PERSONALLY
  • Agent has burden of proving disclosure if in dispute
24
Q

Partially disclosed agency

A
  • An agent who enters into a contract and discloses stats as agent but not his principal––BINDS HIMSELF PERSONALLY FOR THE PERFORMANCE OF THE CONTRACT
  • Agent ceases to be bound when the principal is disclosed
  • Duty to disclose rests with Agent - Agent must bring 3rd party to ACTUAL KNOWLEDGE (Atlantic Salmon v. Curran).
  • 3rd persons are still bound to the principal UNLESS the obligation is strictly personal or the right is un assignable––regardless of undisclosed or partially undisclosed
  • Principal is bound to perform the contract and Agent makes with 3rd persons––so long as A had actual Authority
25
Q

Undisclosed Agent acting outside of authority–Principal is liable if:

A

(1) Principal knew of agent’s conduct

(2) Principal did not take reasonable steps to notify the third party of the facts

(3) Third party was justifiably indued to make a detrimental change in position

26
Q

Ratification

A
  • Authority after the fact
  • a declaration whereby a person gives his consent to an obligation incurred on his behalf by another without authority.
27
Q

Elements of Ratification

A

(1) Principal must know or have reason to know the material facts relating to the transaction at the time of ratification

(2) Clear and absolute intent to ratify

(3) Express or Tacit

28
Q

Express Ratification

A

Express Ratification must evidence intention to be bound by ratified obligation
- Courts look for an action or inaction that when viewed OBJECTIVELY would indicate a choice to treat the act as if it had been authorized

29
Q

Tacit Ratification

A

results when a person:
- With knowledge of an obligation incurred on his behalf
- accepts the benefits of that obligation––no intent

  • Requires knowledge + benefits
  • must occur at a time when it is possible to decline the benefits
30
Q

Acquiescence v.Ratification

A

acquiescence refers to future agent conduct
ratification refers to prior agent conduct

31
Q

A ratification MUST:

A

precede the occurrence of circumstances that would cause the ratification to have adverse and inequitable effects on the rights of third parties.

32
Q

Agency by Estoppel

A

Agent did not have actual or apparent authority––but principal is estopped from raising the defense of lack of authority.

Elements:
(1) Reliance on principal’s conduct
(2) Change in position because of Principal’s conduct to the point it would be unfair to deny agency relationship.

33
Q

Fiduciary Duties of an Agent

A

An agent is supposed to put the principal first rather than their own interests or interests of third parties.

(1) Duty of Loyalty = good faith + honesty
- Agent forbidden from receiving other compensation unless principal agrees to that- must be knowing and voluntary.
––kickbacks
––bribes
––gratuities
-Agent forbidden from making profits by secretly transacting with the principal
-Agent forbidden from using their position to make a profit from third party
(2) Duty of Care

34
Q

Duties Owed by Principal to agent

A

(1) Duty to Compensate
(2) Duty to Reimburse
(3) Duty to indemnify
(4) Duty of Cooperation

35
Q

Elements of Various Liability

A

(1) Master Servant Relationship
(2) Act within the course and scope of employment

36
Q

Elements of master servant relationship

A

(1) Employed to perform services in affairs of another
(2) Element of control over physical conduct of employee

37
Q

Termination of Agency Relationship - Termination of Mandate

A
  • Death of Either party
  • Interdiction of Mandatary
  • Interdiction of Principal after qualification of curator
38
Q

Termination of Agency Relationship - By Principal

A
  • Principal can terminate at anytime
  • Irrevocable if if object is ongoing or if the parties agreed it was irrevocable
39
Q

Termination of Agency Relationship - By Mandatary

A
  • Effective when mandatary provides notice––Two way street
40
Q

Termination of Agency Relationship - Effect on 3rd party

A

If a principal agent relationship no long exists, the principal must notify third parties with whom the agent was authorized to contract
- if not, the principal is still liable for acts of agent

Business Associations (1 decks)

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