Chapter 5 (Agency)

Question 1

What is an agency and who is the agent/principal

Answer 1

relationship where one party acts as agent for another e.g. estate/travel agent
o Agents act on behalf of Principal
o Customer is third party

partner within partnership is agent and director is too.

Question 2

Agency can be created by…? (List 4)

Answer 2

Consent (express or implied)

Estoppel (acts like they have authority and you don’t correct)

Necessity (emergency, not possible for agent to communicate with principal, acting in good faith in best interest of principal)

Ratification (giving consent to agent)

Question 3

What is expressed/implied

Answer 3

Express- principle appoints agent (written or oral). Usual for commercial transactions to be in writing so duties are clear of agent

Implied- not agreed but implied through conduct or relationship

Question 4

What is the effect of a breach of duty by agent

Answer 4

Liable for loss, dismissal, recovery of profit made

Question 5

Duties of agent by law

Answer 5

Accountability, conflict of interest, performance, obedience

Question 6

Rights of agent

Answer 6

Indemnity- reimbursed for expenses
Remuneration
Lien- right to hold onto principle property till paid

Question 7

What is actual express authority

Answer 7

When someone explicitly gives another person the power to act on their behalf. Written agreement give clear proof and verbal requires more evidence

Question 8

What is actual implied authority

Answer 8

when someone’s actions or position reasonably suggest they have the power to act on another’s behalf, even without explicit permission.

Question 9

What is apparent authority

Answer 9

when a person appears to have the power to act on behalf of another, even if they haven’t been explicitly granted that power, leading a third party to reasonably believe it to be true.

Question 10

What is a disclosed/undisclosed principal

Answer 10

Outcome of contract made by agent depends on if principal is disclosed or undisclosed. Does third party know there is a principal?

Disclosed= agents not liable but become liable if personally guarantee contract or lie

Undisclosed= third party can choose who to hold liable after discovering existence of principal.

Question 11

What happens if agent has no authority

Answer 11

contract invalid unless ratified

Agent can be held liable for losses suffered by 3rd party, esp if they lied