Chapter 14 Flashcards

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1
Q

How many parties are involved in an Agency Relationship?

A

3 - Agent, Principal, 3rd Person

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2
Q

Authorized to negotiate contracts on behalf of a Principal with a 3rd person.

A

Agent

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3
Q

Gives authority to Agent to make contracts on its behalf with a 3rd Person. One of the parties to a contracts.

A

Principal

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4
Q

Negotiates a contract with the agent. One of the parties to the contract.

A

3rd Person

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5
Q

Classifications of Agents:

A

(1) Universal Agent
(2) General Agent
(3) Special Agent

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6
Q

Performs all acts authorized by the Principal. (Ex: Durable Power of Attorney).

A

Universal Agent

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7
Q

Authorized to perform all transactions connected with a certain business (Ex: Hotel Manager).

A

General Agent

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8
Q

Authorized to perform only specified acts by a Principal (Ex: Realtor selling a house).

A

Special Agent

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9
Q

No formal procedure is necessary to establish an agency relationship. However, authorization is always required from a Principal to the Agent to get the relationship launched.

A

Acts for the Principal

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10
Q

Types of Actual Authority:

A

(1) Express Authority

(2) Implied Authority

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11
Q

Principal authorizes Agent to perform a certain act. (Ex: “List my house on the market and sell it”).

A

Express Authority

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12
Q

Often, when an Agent receives express authority, he is also given implied authority to do what is reasonable to carry on the agency purpose (Ex: What might be implied actions of authority when selling a house?)

A

Implied Authority

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13
Q

Principal “cloaks” agent with the appearance of having authority. Leads a 3rd Person to reasonably believe that the agent has authority to act on behalf of Principal. If proven, Principal will be bound by contracts negotiated between the Agent and 3rd person.
Note: 3rd Person has a duty to reasonably inquire about the status of an Agent’s authority.

A

Apparent Authority

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14
Q

3 Models of Disclosure of a Principal

A

Liability for Contracts

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15
Q

3 Models of Disclosure of a Principal:

A

(1) Disclosed Principal
(2) Partially Disclosed Principal
(3) Undisclosed Principal

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16
Q

3rd party knows who the Principal is.

A

Disclosed Principal

17
Q

Agent lets 3rd party know they are working for a Principal, but doesn’t disclose Principal’s actual identity.

A

Partially Disclosed Principal

18
Q

Agent does not disclose the existence of Principal to the 3rd party.

A

Undisclosed Principal

19
Q

True or False: For Partially and Undisclosed Principals, they are liable to the extent their identity is discovered by the 3rd person. You can’t sue a “John Doe”.

A

True

20
Q

Authorized to negotiate contracts on behalf of the Principal (who may or may not be their employer).

A

Agent

21
Q

Not all employees have the power to negotiate contracts for the employers. An agent may be an employee, but not all employees are agents.

A

Employee

22
Q

Bounded by a contract to produce certain results, but the actual work is controlled by the independent contractor. In contrast, an agent is controlled by the principal in the negotiation of their contracts. The more control the “employer” has, the less likely a worker can be characterized as an independent contractor.

A

Independent Contractor