Creation of Agency

Question 1

What is “agency”?

Answer 1

If refers to the legal relationship whereby an agent is authorized to represent a principal in business dealings with third parties.

Question 2

For a valid agency relationship to exist, there must be,

Answer 2

1. capacity (principal = full; agent = at least lminimal mental capacity)
2. consent
3. writing if required by SOF (think land transactions)

Question 3

Who must have contractual capacity?

Answer 3

The principal. The agent needs only minimal capacity. – he can be a minor

Question 4

How many an agent be disqualified?

Answer 4

for representing both parties or failing to have a required license

Question 5

How may an agency relationship be created?

Answer 5

By an act of the parties or by operation of law.

Question 6

What are the three ways the parties can create an agency relationship?

Answer 6

1. agreement (actual authority)
2. holding out by the principal (apparent authority)
3. ratification

Question 7

What are the two ways an agency relationship may be created by law?

Answer 7

1. Estoppel (virtually the same as apparent authority – required 3rd party reliance on P’s communication)
2. Statute - like secretary of state as out-of-state motorist’s agent for service of process)