Agency_Law Flashcards
What is Agency Law?
Agency Law deals with someone’s ability to bind you to a contract with a third party
What is required for Agency to exist?
- Both parties must consent to the relationship and intend for an Agency relationship to exist
- Agent owes Principal fiduciary duty (loyalty, obedience, due care)
- Principal doesn’t owe Agent fiduciary duty
- A contract, consideration are NOT required and an Agency agreement is not based on Contract Law; Exception - If duties cannot be performed within a year; a signed writing is required - GROSS
What is Actual Authority in an agency?
Actual Authority is what is expressly granted or is implied by the duties you expect the Agent to perform and is necessary to carry them out
What is Implied Authority in an agency?
- When authority is expressly granted; it is implied that the agent has the authority to carry out the duties
- Does not include authority to sell or alter a business
What is Apparent (Ostensible) Authority in an agency?
Apparent Authority is based on the third party’s perspective - they believe that the Agent has the authority to enter into a contract based on:
- Prior dealings with agent
- Agent’s title leads the third party to believe they can enter into a contract
How is an Agency terminated?
- Both Agent and Principal agree to terminate
- Unilateral - Principal fires Agent - Agent fires Principal - breach of contract
- Operation of the law - death or incapacity of the principal, subject of agreement become illegal or impossible, principal is bankrupt - no notice required
How do you terminate Apparent Authority?
- Notice to the public - Let the public know
- Personal notice - Let the people or entities that the Agent previously interacted with know
- Operation of law - In cases of death; or Principal is otherwise not competent to contract; ALL authority is revoked
What is an Agency Coupled with an Interest?
- Agent acquires an ownership interest in the Agency
- the agent must have either a property interest or a security interest in the subject matter of the agency relationship
- Can only be terminated early (before the interest expiration date) by the Agent Unless the Agency has a specific time limit spelled out in a contract;
- the Agent’s authority is irrevocable by the Principal
When is an employee an Agent; and when does this make the employer liable?
- Employees are agents while acting within the scope of their duties.
- For employees who injure third parties while acting within the scope of their duties; both Employee and Employer are liable
- employer is not responsible for the crime of the employee unless the employer aided or permitted the illegal activity
When are Agents liable for torts (civil wrongs) they commit?
Agents are liable for torts (civil wrongs) committed whether they had authority or not
Are Agents who act outside of their authority liable?
- Agents who act outside of their authority will be liable for the act
- Exception - Principal ratifies the contract which relieves Agent of liability
- In order to ratify; Principal must know all of the facts and must ratify before third party cancels agreement
- If Principal keeps the benefits of the contract; ratification is implied
- Contract must be 100% ratified or there is no contract
What is an Agent’s liability when acting for an undisclosed principle?
- Agent liable to third party even if acting within authority
- Third party can sue both Principal and Agent if Principal becomes disclosed
- Agent can then sue Principal
What are the requirements for a Power of Attorney (POA)?
- Must be in writing
- Must be signed by person granting the POA
- Ends upon death of Principal
- General POA - Agent authorized to handle all affairs
- Special POA - Agent authorized to handle only specific affairs
Ratification
- Ratification is the approval after the fact of an unauthorized act done by an agent or of an act done by someone who is not yet an agent
- Undisclosed principals cannot ratify unauthorized acts of the agent
- To ratify, the principal must have been fully/partially discolsed, understand the contract made on their behalf by the agent, and act to rafify before the 1/3 party discovered that the agent acted without authority
