Agreement: Agency Flashcards
What is the definition of agency?
An authorized agent has the power to change the legal relations of another person (the principal). The legal relationship between the principal and agent is created by an agreement to which they alone are parties. This principle is illustrated in the case [Freeman & Lockyer v Buckhurst Park Properties (Mangal) Limited 1964].
What is actual authority in agency?
Actual authority refers to the express or implied authority that a principal gives to an agent to act on their behalf. This authority grants the agent the legal power to enter into contracts that bind the principal.
Scope: The scope of actual authority is determined by what has been communicated to the agent by the principal. For example, the principal might specify, “You can do this… but not this….”
Effect: The agent uses the powers granted by the agency relationship to create a contractual relationship between the principal and a contractor.
What is apparent authority in agency?
Apparent authority occurs when a third party reasonably believes that an agent has the authority to act on behalf of the principal. This belief arises due to the principal’s conduct, which leads the third party to think that the agent is authorized.
Scope: The scope of apparent authority is what an agent with actual authority would reasonably do.
Effect: The principal is bound by the contract made with the contractor. Apparent authority acts as an estoppel, preventing the principal from denying the agent’s authority, even if there was no actual authority.
What defines the principal-agent relationship?
The principal-agent relationship is defined by the agreement between the principal and the agent. This relationship creates a legal bond where the agent acts on behalf of the principal and can alter the principal’s legal relations.
What are the two main types of authority in agency law?
The two main types of authority are:
Actual Authority: This can be express or implied, granted directly by the principal to the agent.
Apparent Authority: This is authority that a third party perceives the agent to have based on the principal’s conduct.
What is express authority in agency?
Express authority is explicitly granted by the principal to the agent through direct communication. This can be in written or verbal form and clearly outlines the actions the agent is authorized to perform.
What is implied authority in agency?
Implied authority is not explicitly stated but is inferred from the principal’s actions or the circumstances of the agency relationship. It includes powers that are reasonably necessary to carry out the express authority.
How does estoppel relate to apparent authority?
Estoppel prevents the principal from denying the agent’s authority if the principal’s conduct led a third party to reasonably believe that the agent was authorized. This means the principal is bound by the actions of the agent, even if there was no actual authority.
What is an agency agreement?
An agency agreement is a contract between a principal and an agent that outlines the terms of their relationship. This agreement details the scope of authority and the responsibilities of each party.
How does actual authority affect binding contracts?
When an agent acts within the scope of actual authority, the contracts they enter into are binding on the principal. This means the principal is legally obligated to honor the terms of the contract.
