Definitions You Should Memorize

Question 1

Agency definition

Answer 1

agency is a fiduciary relationship that arises when one person (principal) manifests assent to another person (agent) that the agent shall act on the principal’s behalf and both parties agree to the relationship.

Question 2

What elements are needed to create an existing agency relationship?

Answer 2

an agency relationship exists if there is (1) assent (formal or informal); (2) benefit (conduct primarily benefits the principal; and (3) control (principal has right to contorl the agent; doesn’t have to be significant)

Question 3

actual authority

Answer 3

actual authority exists when the principal makes a manifestation that causes the agent to reasonably believe that the agent is authorized to act on principal’s behalf

Question 4

express actual authority

Answer 4

express actual authority can be created by oral or written words, clear direct and definite language, or specific detailed terms and instructions.

for this to exist, the principal’s manifestation must cause the agent to believe that the agent is doing what the principal wants, and the agent’s believe is reasonable.

Question 5

apparent authority

Answer 5

exists when 3rd party reasonably relies on manifestations by a principal concerning an agent’s authority to act on principal’s behalf.

for apparent authority to exist, a 3rd party must believe that the agent acted with actual authority, and such belief must be reasonable and traceable to a manifestation by the principal…

an agent purporting to be acting for a principal gives an implied warranty of authority to the third party. if the agent lacks the power to bind the principal, then a breach of the implied warranty has occurred, and the agent is liable ot the third party.

Question 6

principal disclosure

Answer 6

a principal is an undisclosed principal if the third party has no notice of their existnece. an agent who enters into a contract on behalf of a principal becomes a party to the contract