Chapter 7

Question 1

Agency

Answer 1

the authority on one person (agent) to make legally binding commitments with third parties for someone else (principal)

Question 2

Key areas for agency consideration

Answer 2

1. nature of the actual or notional authority of the agent to involve the principal in contracts
2. mutual rights and duties of the agent and principal and their liabilities to 3rd parties

Question 3

Does an agent usually have liability to a third party

Answer 3

no

Question 4

Ways agency relationship can be created

Answer 4

Express agreement -
Usually in writing, the principal will appoint the agent, typically with specific authority

Implied agreement -
Result of the conduct of the two parties, the courts may imply an agency relationship… does not require the writing formality

Ratification - after the fact. Where someone adopts or approves someone else’s actions on his behalf after that actions took place

Estoppel - not officially an agent but the principal holds out to third parties that somebody is their agent then they cannot deny that the somebody is their agent

Necessity - action taking third party becomes an agent by necessity (emergency situation)

Question 5

Authority of an agent may be

Answer 5

Express: authority may be written or oral
Implied authority: arises where the agent acts in accordance with what is normal in the circumstances
Apparent authority: authority may be greater than actual authority

Question 6

An agent can make contracts for the principal within the scope of whatever authority the principal has given the agent

Answer 6

Trye

Question 7

Can an agent be empowered to make contracts by a principal who cannot make contracts due to a legal disability

Answer 7

No

Question 8

As long as third parties know that they are dealing with an agent even when they don’t know who the principal is they will be bound to. The principal by agency contracts

Answer 8

Yes

Question 9

Reach of warranty of authority

Answer 9

is an action available against an agent who misrepresents his or her authority to a third party and as a result of that misrepresentation, the third party enters into a contract and suffers loss.

Question 10

Actual implied authority

Answer 10

Authority arising from the individuals position

Question 11

Actual express authority may be granted

Answer 11

Under an explicit agency agreement
Under a partnership agreement
Under an employment contract
By operation of law

Question 12

Power of attorney

Answer 12

A document where an agents authority to sign deeds for the principal is given by deed

Question 13

Maxim delegatus non protest delegare

Answer 13

A delegate cannot delegate

Question 14

Which is authority by holding out

Answer 14

Apparent authority

Question 15

Duties owed by agent to principal

Answer 15

Exercise due care and skill
Avoid conflicts of interest
Act in good faith for the benefit of the principal

Question 16

The name given to the right of an agent who has not been paid to retain the principals goods

Answer 16

Lien