EXAM 4 Flashcards
When Principal acts on their own behalf, who is liable?
The Principal is ALWAYS liable
Agency Agreement is where:
The employee gets authority from their employer
Who does a 3rd Party Contract happen between
Principal and 3rd Party
3 Types of Authority
Express, Implied, Apparent
Express Authority
Oral or Written Authority
When does Express Authority happen
For specific events or for a long time
Implied Authority
Implied from express authority or actions from Principal
When is an agent NOT bound to the contract?
When they are acting within their actual authority
2 Requirements for Apparent Authority:
Principal and Agent known relationship, 3rd Party reasonably believes Agent has actual authority
When looking objectively at apparent authority, we must look at the situation from the perspective of the __________
3rd Party
Agent can be liable to Principal for
Breach of Duty of Obedience
Apparent Authority can exist when:
Fired/Quit, 3rd Party unaware, Agency Agreement not terminated due to death, Agent exceeds actual authority
How apparent authority is cut off:
Death/Incapacity of Principal, Principal must notify in order to cut off
Actual Authority is terminated earlier for death/incapacity if:
Agent is given notice of death/incapacity or reasonable time has passed since last communication
2 Types of Notice
Actual, Constructive
Actual Notice is required when:
3rd Party has dealt with Agent before to contract w Principal
Actual Notice can be _______________ but it must be _______________
Oral or written; CLEAR
Constructive Notice Example
Newspaper, Journal Ad
Constructive Notice required for:
Current customers (didn’t deal w Agent), Non-customers
Ratification occurs when
Agent enters into a contract on Principal’s behalf w neither actual nor apparent authority
Ratification can be
Express (oral/written) or Implied (accept benefits of contract)
If ratified, when is the Principal liable?
BEGINNING OF THE CONTRACT
Requirements for ratification
ENTIRE contract must be ratified before the 3rd party withdraws
Can ratifications be revoked?
NO