Chapter 09: Agency Flashcards
AGENCY and PRINCIPAL and Examples of Agency Relationship?
AGENCY: a person who is employed to act on behalf of other person or to represnt other person in dealing with third party.
PRINCIPAL: the person for whom such act is doneor wo is so represented.
Examples of Agency Relationships:
> A person appointed to sell a property
> A person appointed to collect rent.
> Employees/Managers to manage his shop
Rule of Law: Acts of agent are considered acts of
Principal.
Who can be Agent or Principal?
> Any person can be Principal (except Minor/
Unsound Mind)
Any person can be agent. If minor –> he is not
liable if he negligence or exceeding authority.
Who can be Agent or Principal?
> Any person with age of majority and sound mind can be Principal (except Minor/
Unsound Mind)
Any person can be agent.however, If minor or person of unsound mind is agent–> he is not
liable if he negligence or exceeding authority.
List and Define Authority of Agent?
Express Authority:
which is expressively given by principal to his agent either orally or written
Implied Authority:
which is necesaary and usually done in ordinary coure of buisness to complete duties.it is inferred from circumstances or ordinary course of dealing.
Authority in Emergency:
an gaent has authority to do all acts to save principal from loss whhich person of ordinary preduence in similiar conditions,
Conditions to exercise authority in emergency:
1. Real emergency.
2. Unable to obtain instructions.
3. Acted in best interest of principal.
Ostensible/Apparent Agency: (in Agency by Estoppel)
A person (Principal) is liable for acts of other person (Agent) if:
> He made representation that other person is his Agent, and
third party contracted with agent
> principal is bound even if he not actually appoint agent
> ostensible authority arises if an agent terminated agent, but did not give public notice
Case Study Tip: Legal Position if Agent exceeds its Authority?
Case Study Tip: Legal Position if Agent exceeds its Authority:
If an agent exceeds his authority, Principal is liable for his acts if:
1. Principal ratifies it, or
2. It is a case of emergency, or
3. Third party did not know actual authority.
(Important for case studies. Same rule applies in Partnership act
