Contractual Powers of Agents

Question 1

Express Actual Authority

Answer 1

Authority to do an act created by written or spoken words or other conduct of the principal which, reasonably interpreted, causes the agent to believe that the principal desires him to so act on the principal’s account (except for gifting property, unless expressly authorized).

Question 2

Implied Actual Authority

Answer 2

Where authority is implied given the surrounding facts, circumstances, past conduct of the parties, or acquiescence.

Question 3

Apparent Authority

Answer 3

With apparent authority, the principal’s objective manifestations are made to the a third party. Requires a third party to believe subjectively that the agent has authority to bind the principal, and that belief must be objectively reasonable.

Question 4

Inherent Authority

Answer 4

The power of an agent which is derived not from authority, apparent authority, or estoppel, but solely from the agency relation and exists for the protection of persons harmed by or dealing with a servant or other agent.

Question 5

Liability of Agent When Principal Undisclosed

Answer 5

When an agent acting with actual authority makes a contract on behalf of an undisclosed principal,

(1) unless excluded by the contract, the principal is a party to the contract;
(2) the agent and the third party are parties to the contract, and
(3) the principal, if a party to the contract, and the third party have the same rights, liabilities, and defenses against each other as if the principal made the contract personally

If the contract treats the agent as a principal, the undisclosed principal cannot enforce it as a party.

Question 6

Liability of Agent When Principal Disclosed

Answer 6

Generally, an agent is not liable on a contract arranged by the agent unless there is clear and explicit evidence of the agent’s intention to substitute or superadd his own personal liability for that of his principal.

Question 7

Liability of Agent When Principal Partially Disclosed

Answer 7

The agent is liable unless he discloses the existence of a principal.

Question 8

Agent’s Warranty of Authority

Answer 8

The third party must know that the agent is not authorized. To avoid this problem, have indicia of authority.

Question 9

Ratification (Definition)

Answer 9

Ratification is the affirmance by a person of a prior act which did not bind him but which was done or professedly done on his account, whereby the act, as to some or all persons, is given effect as if originally authorized by him.

Question 10

Express Ratification

Answer 10

A manifestation of an election by the one on whose account an unauthorized act has been performed to treat the act as authorized, or conduct by him justifiable only if there is such an election.
(1) A principal may ratify an agent’s torts when he acts with knowledge of salient elements.

Question 11

Implied Ratification

Answer 11

If the principal, with full knowledge of the material facts, receives, accepts, and retains benefits from the contract; remains silent, acquiesces in or fails to repudiate or disaffirm the contract; or otherwise exhibits conduct demonstrating an adoption and recognition of the agent’s act as binding.

Question 12

Types of Notice

Answer 12

(1) Actual knowledge
(2) Imputed knowledge, where notice goes to the agent of the principal, knowledge is imputed to the principal
(3) has reason to know