Chapter 7: Agency Law

Question 1

Agency Creation

Answer 1

An agency can be established in three ways:

• By appointment
• By estoppel
• By ratification

Question 2

Ratification

Answer 2

Four conditions must be met:

• The agent must have purported to act for the principal
• The principal must ratify the entire transaction, not just favorable parts
• The principle must ratify the agreement before the third party elects to withdrawal from the agreement
• The principal must have all material facts available before the ratification is binding

Question 3

Agents Authority

Answer 3

Actual Authority

• Express Authority
• Implied Authority

Apparent Authority

Question 4

Agent’s Duties to Principal

Answer 4

• Loyalty
• Obedience
• Reasonable care
• Accounting
• Information

Question 5

Principle’s Duty to Agent

Answer 5

• Agreed on period of employment
• Compensation
• Reimbursement for expenses
• Indemnity for losses

Question 6

Agency Termination

Answer 6

• Just cause
• Lapse of time
• Accomplishment of purpose
• Revocation
• Renunciation
• Death or incapacity
• Changed circumstances

Question 7

Contractual Rights and Liabilities

Answer 7

• A third party’s rights against a principal
• A principal’s rights against a third party
• An agent’s liabilities to a third party
• An agent’s rights against a third party

Question 8

Principal’s Liability for Agent’s Tort

Answer 8

Respondeat Superior attributes agent’s tort to the principal when two conditions are met:

• The agent must be an employee of the principle
• The tort must be committed while the agent is acting within the scope of his or her employment

Question 9

Principal’s Liability for Agent’s Torts

Answer 9

• Generally, a principal is not liable for the torts of agents that are independent contractors