BUSINESS LAW Flashcards
Agency
What is Agency Law?
Agency Law deals with someone’s ability to bind you to a contract with a third party
Agency
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
Principal doesn’t owe Agent fiduciary duty
A contract is 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
Agency
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
Agency
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
Agency
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
- The Principal hires the Agent to carry out duties that normally carry with them the rights to enter into contracts
Agency
How is an Agency terminated?
- Both Agent and Principal agree to terminate
- Principal fires Agent
- Agent fires Principal
- Agent breaches their contract by doing something like violating their obligation to act as a fiduciary to Principal
Agency
How do you terminate Apparent Authority?
- Let the public know
- Let the people or entities that the Agent previously interacted with know
- In cases of death; or Principal is otherwise not competent to contract; ALL authority is revoked
Agency
What is an Agency Coupled with an Interest?
Agent acquires an ownership interest in the Agency
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
Agency
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
Agency
When are Agents liable for torts (civil wrongs) they commit?
Agents are liable for torts (civil wrongs) committed whether they had authority or not
Agency
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
Agency
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
Agency
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
