Authority

Question 1

Actual authority

Answer 1

1. Express
2. Implied

Question 2

Actual express authority

Answer 2

exists when the principal directs the agent to engage in the precise task in question

Question 3

Actual implied authority

Answer 3

exists when the agent believes, based on a reasonable interpretation of the principal’s word or conduct, that the principal wishes him (the agent) to act on the principal’s behalf
* incidental authority: the agent’s authority to conduct a transaction includes the authority to engage in actiosn that are incidental to it, usually accompany it, or are reasonably necessary to accomplish it

Question 4

Apparent Authority

Answer 4

(1) the principal holds the agent out as having authority to act on the principal’s behalf, AND
(2) the principal’s conduct, when reasonably interpreted, causes a third party to rely on the agent’s appearance of authroity when dealing with the agent.

Question 5

No Apparent Authority

Answer 5

Apparent authority does not exist if the third party has knowledge that the agent does not have actual authority.

Question 6

Ratification

Answer 6

Even if the agent did not have authority to enter into a transaction, the principal can ratify the acts (and thus become liable) by expressly or impliedly affirming or accepting the benefit of the acts, so long as the principal knew the material facts and had capacity.

Question 7

Agent liability

Answer 7

• the agent is bound to contract he enters if the agent had no actual or apparent authroity to enter into the contract and if the principal is undisclosed or if partially disclosed.
• liable if agent acts beyond his authority

Question 8

Inherent Agency Power

Answer 8

Pursuant to equitable considerations, courts can find principal liable for damages to third parties even when the principal’s agent acted without actual or apparent authority
(1) agency relationship exists and
(2) the totality of the circumstances weighs against forcing the third party to absorb all the damages