Chapter 7 Flashcards
How does the law define an agent?
a party who is authorized by another party (the principal) to act on the principals behalf.
define the term agency
the legal relationship between the principal and the agent.
Name 3 trascations that often involve agency relationships
- real estate transactions
- financial services transactions
- contract negotiations.
what is ‘actual authority’
the authority to act on behalf of the principal that the principal intentionally confers on the agent and that the agent reasonable believes is conferred.
Actual authority can be either express or implied. Define both
Express: is the authority that a principal explicitly confers on the agent.
implied: is the authority that a principal intends an agent to have and that arises incidentally from an express grant of authority
Are formalities required to create an agency relationship?
no, parties can consent orally or in writing. Some types do require writing such as the statute of frauds
Name 4 duties of the agent to the principal
- duty of loyalty and good faith
- duty of obedience
- duty of competence
- duty of an accounting
Who is responsible for the unlaweful actions committed by the agent on the instructions of the principal?
both are liable.
What are the 3 duties of the principal to the agent?
- compensation
- reimbursement
- indemnification
What are 3 factors that might be considered in determining the reasonable value of an agents service
- types of services the agent provided
- prior dealings between the parties
- customs and trade practices of the business.
define the term indemnification
means the compensation or reimbursement of another persons’ loss.
Whether a principal is bound to a contract made by an agent depends on what?
- the principal was disclosed, partially disclosed or undisclosed
- the agent was acting within the scope of his actual or apparent authority `
what is a disclosed principal?
the term given to the principal when an agent enters into a contract with a third party on behalf of the principal.
what is the term given to a principal when an agent enters into a contract on behalf of the principal but does not identify them?
a partially disclosed principal.
What is the term given to the principal when an agent purports to act on his own behalf and does not mention the existence of a principal?
undisclosed principal
What is apparent authority?
the authority that is not expressly conferred on an agent but is authority that the principal either intentionally or negligently allows a third party to believe the agent possess.
Most common law jurisdictions require a showing of what 3 elements to prove apparent authority?
- representation by the principal to a third party
- reliance on that representation by a third party
- a change in position by a third party in reliance on that representation.
A principal accepts a contract made by the agent upon its behalf, by ratification. Define this action
Ratification is the adoption by a principal of an act that was taken on the principals’ behalf but without the principals authorization. By rafting the contact the principal affirms that is a party to the contract.
What do you call an agency relationship, established by the ratification of unauthorized action ?
agency by ratification
For a ratification to be effective, it requires what 5 requirements to be met?
- a principal can ratify only those contracts that she could have authorized.
- the agent must have purported to act on behalf of a principal
- the principal must have full knowledge of all facts
- principal must ratify the entire contract
- principal must ratify the contact within reasonable time.
define vicarious liability
indirect liability.
Does an employer have vicarious liability for the torts of an independent contractor?
No
What is generally considered when determining whether an individual was acting in the course of her employement?
- whether the employees conduct was the conduct she was hired to preform
- whether the tortious event occured within the employees normal work time
- whether the event occurs at a place of employement
Define joint and several liability
Means that each defendant in a case is independently liable for the entire amount of damages awarded to a plantiff regardless of a defendants share of responsibility for the losses.
Whether an agent is personally liable under a contract to a third party generally depends on what?
whether the agent contracted in her own name.
Define warranty
a promise or guarantee recognized by law that a statement of fact is true.
What is a ‘warranty of authority’
a guarantee recognized by law that an agent is acting on behalf of a principal who has contractual capacity and that the agent has authority to act for the principal.
Most common law jurisdictions require a showing of what 3 elements to prove a breach of warranty of authority
- an agent represents that he has authority to act on behalf of a principal
- no such authority actually exists
- a third party relies on that misrepresentation to his detriment.
How can an agency relationship be terminated?
- act of one of the parties
- mutual agreement to the parties
- performance of the agency agreement
- operation of the law
Is the termination of an agency relationship when the agent is an employee, governed by the employment laws in addition to, or in place of …. the laws of agency?
addition to
True or false: an agent and a principal have the legal right to agree to end the agency relationship at any time, without incurring futher legal ability to each other.
This is true, as long as both parties agree.
What is the term given to an agency relationship that is to continue for an unspecified amount of time?
Agency at will.
When can the principal or agent terminate an agency at will?
at any time, for any reason by giving the other party notice of termination.
What is termination by operation of law mean?
that an agents authority to bind the principal automatically terminates as a result of the operation of law rather than as the result of an action of the agent or principal
Name some events that terminate an agency relationship by operation
- someone dies
- principal loses his contractual capacity
- an event makes it impossible for the agency agreement to be performed
- the agent loses the capacity to perform the agency agreement.
