Creation of Agency Relationship

Question 1

What are the general requirements for creating an agency relationship?

Answer 1

There must be both a manifestation of the principal’s intent and of the agent’s consent.

In other words, there must be mutual assent by both parties.

This means there must be mutual assent by both parties.

Question 2

What must the principal do to create an agency relationship?

Answer 2

The principal must manifest an intent to grant authority to another (agent) to act on the principal’s behalf and subject to the principal’s control.

Question 3

What must the agent do to create an agency relationship?

Answer 3

The agent must consent to the principal’s grant of authority (i.e., act on principal’s behalf and subject to the principal’s control).

Question 4

How can the principal and agent manifest the requisite intent and consent?

Answer 4

They can do so either:
* Expressly (writing or spoken words)
* Impliedly (conduct)

Question 5

What is the requisite capacity for the principal in an agency relationship?

Answer 5

The principal must have contractual capacity (capacity to enter into transactions, control one’s business affairs).

Question 6

What is the requisite capacity for the agent in an agency relationship?

Answer 6

The agent must have minimum mental capacity to consent.

Question 7

What is an additional requirement for creating a power of attorney?

Answer 7

Creating a power of attorney usually involves a signed writing.

Question 8

What is agency by ratification?

Answer 8

It is the retroactive creation of an agency relationship allowing a principal to grant retroactive authority for his agent’s earlier unauthorized actions.

Question 9

What must the principal have at the time of ratification to grant authority retroactively?

Answer 9

The requisite contractual capacity to authorize the agent’s actions and knowledge of all material facts concerning the transaction.

Question 10

How does a principal ratify an act?

Answer 10

By either:
* Manifesting assent that the act shall affect the principal’s legal relations
* Conduct that is justifiable only on the assumption that the principal consents to be bound.

Question 11

True or False: The relevant time to determine whether the principal has capacity to ratify is the time of the original act.

Answer 11

False

It is the time of ratification that is relevant.