Contracts Flashcards
Issue
whether principal liable for contracts entered into by its agent
Principal is liable for Ks entered into by its agent ONLY if the principal…
AUTHORIZED the agent to enter the K
Types of authority (4)
1) actual express authority
2) actual implied authority
3) apparent authority
4) ratification
Actual express authority: actual express authority can be…
oral and private
Actual express authority: can be oral and private EXCEPT
if K itself must b in writing, then express authority must be in writing as well (e.g. conveyance of land)
Actual express authority can be revoked (making K unauthorized) by (2)
1) unilateral act of either the principal or the agent
2) death or incapacity of principal
Death or incapacity will revoke actual express authority except when…
principal gives the agent a durable power of attorney
Power of attorney is a…
Durable is…
written expression of authority to enter a TRANSACTION
big, bold, clear survival language (survives death or incapacity)
How is actual express authority interpreted?
narrowly interpreted (confined to actual words used)
Actual implied authority (via conduct or circumstance) (3 ways)
1) necessity
2) custom
3) prior acquiescence by principal
Actual implied authority: NECESSITY: there is implied authority to do all tasks which are…
NECESSARY to accomplish an EXPRESSLY AUTHORIZED task
Actual implied authority: CUSTOM: there is implied authority to do all tasks which…
by custom are performed by persons w/ agent’s title or position
Actual implied authority: prior acquiescence by the principal: there is implied authority to do all tasks which…
agent BELIEVES to be authorized to do from prior acquiescence by the principal
Apparent authority 2 part test
1) principal “cloaked” agent with the appearance of authority
2) third party reasonably relies on appearance of authority
Ratification: authority can be granted AFTER the K has been entered if (2 things + exception)
1) principal has KNOWLEDGE of all material facts regarding the K AND
2) principal ACCEPTS its BENEFITS
Exception: ratification cannot ALTER the terms of the K (if does, ratification not valid)
