Chapter 14 Flashcards
How many parties are involved in an Agency Relationship?
3 - Agent, Principal, 3rd Person
Authorized to negotiate contracts on behalf of a Principal with a 3rd person.
Agent
Gives authority to Agent to make contracts on its behalf with a 3rd Person. One of the parties to a contracts.
Principal
Negotiates a contract with the agent. One of the parties to the contract.
3rd Person
Classifications of Agents:
(1) Universal Agent
(2) General Agent
(3) Special Agent
Performs all acts authorized by the Principal. (Ex: Durable Power of Attorney).
Universal Agent
Authorized to perform all transactions connected with a certain business (Ex: Hotel Manager).
General Agent
Authorized to perform only specified acts by a Principal (Ex: Realtor selling a house).
Special Agent
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.
Acts for the Principal
Types of Actual Authority:
(1) Express Authority
(2) Implied Authority
Principal authorizes Agent to perform a certain act. (Ex: “List my house on the market and sell it”).
Express Authority
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?)
Implied Authority
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.
Apparent Authority
3 Models of Disclosure of a Principal
Liability for Contracts
3 Models of Disclosure of a Principal:
(1) Disclosed Principal
(2) Partially Disclosed Principal
(3) Undisclosed Principal