Creation of the Agency Relationship Flashcards
What is an agency relationship?
A fiduciary arrangement where a principal gives an agent permission to act on their behalf within authorized limits, thereby binding the principal.
Does the agency relationship have to be based on a contract?
No, the relationship can be based on a contract but does not have to be.
What are the three requirements for an agency relationship?
- Both parties must assent to the agency
- The agent must agree to act on behalf of the principal
- The agent must act under the control of the principal
How can the principal and agent manifest intent and consent?
- Expressly (writing or spoken words)
- Impliedly (conduct)
Who can be an agent?
Generally, anybody with minimum mental capacity may act as an agent.
Can minors and incompetents act as agents?
Yes, both minors and incompetents may act as agents.
Can one be an agent for two adverse parties to a transaction?
No, unless both parties are fully advised and consent.
Who can be a principal?
Any person who has capacity to effect his own transactions has capacity to appoint an agent to act on his behalf.
How can one prove the existence of an agency relationship?
By circumstantial evidence, including the situation of each party and their words and actions.
What is a disclosed principal?
A principal is disclosed if, at the time of the transaction, the party has notice that the agent is acting for a principal and has notice of the principal’s identity.
What is an undisclosed principal?
If the third party has no knowledge of the existence or identity of a principal, the principal is undisclosed.
What is a partially disclosed principal?
A partially disclosed principal is one whose existence, but not identity, is known to the third party.
Is an agent who enters into a contract for an undisclosed or partially disclosed principal liable on the contract?
Yes, an agent is personally liable on the contract.
Does an agent for a fully disclosed principal incur personal liability?
No, an agent for a fully disclosed principal does not ordinarily incur personal liability.
What happens when a contract is made by someone claiming to represent a nonexistent principal?
The contract is void, and parties misled and harmed can sue the supposed agent for damages.
What is a general agent?
A general agent is employed by a principal to transact all of his business of a particular kind.
What is a special agent?
A special agent is employed by the principal especially for one transaction.
What are subagents?
Individuals authorized by an original agent to perform tasks, creating a new agency relationship.
What happens when the principal has authorized the agent to appoint subagents?
The subagent has the same responsibilities to the principal as the original agent.
Is the agent liable to the subagent?
Yes, breaches of duty by the subagent will be imputed to the agent.
What if the subagent has been appointed without the principal’s authority?
No agency relationship exists between the principal and the subagent.
What is a gratuitous agent?
A gratuitous agent agrees to perform all the duties of an agent without compensation.
What is an independent contractor?
A person who contracts to do something for another but is not controlled by the other.
Can an independent contractor be an agent?
He may or may not be an agent depending on whether he is an employee.
