Chapter 8 Section 2: Agency

Question 1

Define agency

Answer 1

A legal relationship in which the principal appoints the agent to act on his behalf

Question 2

In an agency relationship, which party needs to have capacity?

Answer 2

The principal, not the agent.

Question 3

Under what circumstance is an agency agreement required to be in writing?

Answer 3

If it is for land or for longer than one year

Question 4

Is consideration required to form an agency relationship?

Answer 4

No

Question 5

What is power of attorney?

Answer 5

Written authorization of agency. Only the principal needs to sign.

Question 6

What are the duties of the agent?

Answer 6

Duty of loyalty - act only in principal’s interest
Duty of obedience - obey reasonable instructions
Duty of reasonable care - liable if negligent
Duty to account - keep your money separate

Question 7

What are the duties of the principal?

Answer 7

Compensation

Reimbursement

Question 8

Is an agency relationship at will?

What’s the exception

Answer 8

Yes

Agency coupled with interest

Question 9

What circumstances can agency power arise through?

Answer 9

A grant of actual authority
Apparent authority
Ratification

Question 10

What causes actual authority?

Answer 10

Express communication

Implied by action or lack of action

Question 11

How do you terminate actual authority?

Answer 11

Act of the parties
Accomplishment of objective or expiration of stated period
Termination of actual authority (death, incapacity, discharge, failure to get license, destruction of subject matter, subsequent illegality)

Question 12

What is apparent authority based on?

Answer 12

A third party’s reasonable belief that the agent has the power to bind the principal (based on title or position)

Question 13

Are secret limiting instructions of the apparent authority effective?

Answer 13

Not unless the third party is given notice

Question 14

What notice must you give a third party to make secret limiting instructions of apparent authority effective?

Answer 14

Actual notice to old customers

Constructive notice to new

Question 15

Is notice required if apparent authority is terminated by law?

Answer 15

No

Question 16

Can you ratify part of a transaction?

Answer 16

No - you have to do the whole thing

Question 17

Under what circumstances is the principal liable for the agent’s actions?

Answer 17

When the agent had actual or apparent authority, or they ratified.
If an undisclosed principal, they are only liable to a third party if agent had actual authority

Question 18

What if the principal is partially disclosed?

Answer 18

The third party can hold either the principal or the agent liable, but not both

Question 19

Can the agent hold the third party liable?

Answer 19

No, only the principal can

Question 20

Is the principal usually responsible for the torts committed by the agent?
What’s the exception?

Answer 20

No
Doctrine of respondeat superior - an employer can be liable for an employee’s torts committed within the scope of employment

Question 21

What are the requirements for respondeat superior to come into play?

Answer 21

1. Establish employer-employee relationship

2. Establish scope of employment

Question 22

Is the employer responsible under respondeat superior if it was a temp or independent contractor?

Answer 22

No

Question 23

Under respondeat superior, is the employer responsible for negligence? Intentional torts?

Answer 23

Yes

Not usually, unless it was actually within the scope of employment