Chapter 5 Agency

Question 1

actual authority

Answer 1

The express or implied power of an agent to act for and bind a principal to agreements entered into by an agent.

Question 2

agency

Answer 2

A relationship in which one person (the agent) acts for or represents another person (the principal).

Question 3

agency by estoppel

Answer 3

When the principal leads a third party to believe that a person is his or her agent, the principal is estopped (prevented) from denying that the person is his or her agent.

Question 4

agency by ratification

Answer 4

An agency formed when a principal approves or accepts the benefits of the actions of an otherwise unauthorized agent.

Question 5

agent

Answer 5

A person who manages a task delegated by another (the principal) and exercises whatever discretion is given to the agent by the principal.

Question 6

aided-in-the-agency relation theory

Answer 6

An employee is aided in accomplishing a tort by the existence of the agency relationship.

Question 7

apparent authority

Answer 7

A principal, by words or actions, causes a third party to reasonably believe that an agent has authority to act for or bind the principal.

Question 8

click-wrap agreement

Answer 8

A prominent feature of electronic commerce whereby users assent by clicking on an acceptance box.

Question 9

customary authority

Answer 9

The authority that agents of that type would normally have.

Question 10

direct representation

Answer 10

Rules that apply for an agent acting in
the name of a principal pursuant to express, implied, or apparent authority, whether or not the principal’s identity is revealed at the time the agent acts or is to be revealed later.

Question 11

duty of care

Answer 11

The fiduciary duty of agents, officers, and directors
to act with the same care that a reasonably prudent person would exercise under similar circumstances. Sometimes expressed as the duty to use the same level of care a reasonably prudent person would use in the conduct of his or her own affairs.

Question 12

duty of loyalty

Answer 12

The fiduciary duty of agents, officers, and directors to act in good faith and in what they believe to be the best interest of the principal or the corporation.

Question 13

duty of obedience

Answer 13

The fiduciary duty of agents, officers, and directors to obey all reasonable orders of his or her principal.

Question 14

electronic agents

Answer 14

Autonomous computer programs that can be dispatched by the user to execute certain tasks.

Question 15

equal dignities rule

Answer 15

Under this rule if an agent acts on behalf of another (its principal) in signing an agreement of the type that must under the statute of frauds be in writing, the authority of the agent to act on behalf of the principal must also be in writing.

Question 16

express authority

Answer 16

The power of an agent to act for a principal based on that agent’s justifiable belief that the principal has authorized him or her to do so; may be given by the principal’s actual words or by an action that indicates the principal’s consent.

Question 17

express ratification

Answer 17

Express ratification occurs when the principal, through words or behavior, manifests an intent to be bound by the agent’s act.

Question 18

fiduciary

Answer 18

A person having a duty to act primarily for the benefit of another in matters connected with undertaking fiduciary responsibilities.

Question 19

fiduciary duty

Answer 19

The obligation of a trustee or other fiduciary to act for the benefit of the other party.

Question 20

implied authority

Answer 20

The power of an agent to do whatever is reasonable to complete the task he or she has been instructed to undertake.

Question 21

implied ratification

Answer 21

Implied ratification occurs when the principal, by his or her silence or failure to repudiate the agent’s act, acquiesces in it.

Question 22

independent contractor

Answer 22

A person is deemed to be an independent contractor only if the employer neither exercises control over the means of performing the work nor the end result of that work.

Question 23

indirect representation

Answer 23

Rules that apply when an intermediary acts on instructions and on behalf of, but not in the name of, a principal, or when the third party does not know or have reason to know that the intermediary is acting as an agent.

Question 24

principal

Answer 24

A person who delegates a portion of his or her tasks to another person who represents the principal as an agent.

Question 25

ratification

Answer 25

A principal affirms through words or actions a prior act of an agent that did not bind the principal.

Question 26

respondeat superior

Answer 26

(let the master answer) The doctrine under which an employer may be held vicariously or secondarily liable for the negligent or intentional conduct of the employee that is committed in the scope of the employee’s employment.

Question 27

undisclosed principal

Answer 27

Use of an agent so that the third party to an agreement does not know or have reason to know of a principal’s identity or existence.

Question 28

usual authority

Answer 28

The authority that the agent has been allowed to exercise in the past.

Question 29

vicarious liability

Answer 29

The imposition of civil or criminal liability on one party (e.g., an employer) for the wrongful acts of another (e.g., an employee). Also called imputed liability.