Bus. Law: Agency

Question 1

When does an agency coupled w/interest occur?

Answer 1

Only when the agent has been granted a lien or security interest in property.

Question 2

Does an agreement to pay a commission count as an agency coupled w/interest?

Answer 2

1. No, because no property w/a lien exists in this case.

2. Therefore, the agency can be terminated at any time.

Question 3

A written agency agreement is required any time:

Answer 3

the agent will be acquiring land on behalf of the principal.

Question 4

How does firing an employee affect the employee’s authority on behalf of the employer?

Answer 4

1. All express actual authority to bind the corporation, but the fired employee may have a residual of apparent authority to bind the corporation when the 3rd party has not been notified of the employee’s termination.
2. The firing, however, does not eliminate the apparent authority.

Question 5

When is apparent authority of employees created?

Answer 5

When an employee is afforded a position.

Question 6

Can a principal-agent relationship exist w/out written agreement?

Answer 6

Yes, unless the agent will be acquiring land on behalf of the principal.

Question 7

When is a principal liable for negligent acts of its agents?

Answer 7

1. as long as the negligence was committed while the agent was acting in furtherance of company business.
2. This is true even if the agent failed to obey instructions from the principal that would have prevented the injury, and even if the principal itself was not negligent.
3. The injured party can hold the principal and the agent liable, but is only entitled to one recovery.

Question 8

Can principals be held liable for the actions of agents if his/her/its identity is not disclosed?

Answer 8

Yes, b/c the agents have actual authority to act for the principal.

Question 9

Partners A and B have an oral partnership agreement. B buys a car for the business w/out A’s permission. Is A liable for the car?

Answer 9

If A uses the car for business, A will be personally liable on the note for the car.

Question 10

Principal’s duties to agents

Answer 10

1. Duty to act in good faith.
2. Duties of compensation and reimbursement for expenses
3. Duty not to interfere with the agent’s activities,
4. AND, a duty to indemnify agents for damages when the agent is acting at the principal’s direction.

Question 11

When an agent enters into contracts w/3rd party on behalf of disclosed principal, is the principal or agent responsible?

Answer 11

Same w/undisclosed principal- principal is responsible.

Question 12

Agent’s duties to principal

Answer 12

Fiduciary duty, regardless of whether the contract is oral or written.

Question 13

Is the principal responsible for the negligent act of an agent when the agent is outside his/her assigned sales territory?

Answer 13

Yes, both the principal and agent can be sued.

Question 14

When are both the principal and agent liable for an agent’s criminal conduct?

Answer 14

1. When the conduct is reasonably foreseeable and within the scope of employment.
2. The plaintiff, however, is only entitled to one recovery.

Question 15

enforceability of oral contracts

Answer 15

1. An oral contract for the sale of goods in excess of $500 is only enforceable to the extent that goods are “received and accepted.
2. An exception of this rule exists for specially mfg. goods. In this case, the contract is enforceable.

Question 16

power of attorney

Answer 16

1. Grants a party to act w/the authority of grantor.
2. The grantee does not need to be an attorney, just given agent powers.
3. Power of attorney can be general, or limited to a particular transaction.
4. Only the grantor of power of attorney can grant it.
5. The grantee cannot finalize a transaction for the grantor upon the grantor’s death b/c the grantor’s death immediately terminates the transaction in question.