Lecture 2

Question 1

Rest. 3d 2.05 Estoppel to Deny Existence of Agency Relationship

Answer 1

A person who has not made a manifestation that an actor has authority as an agent and who is not otherwise liable as a party to a transaction purportedly done by the actor on that person’s account is subject to liability to a 3rd party who justifiably is induced to make a detrimental change is position because the transaction is believed to be on the person’s account if
(1) the person intentionally or carelessly caused such belief, or
(2) having notice of such belief and that it might induce others to change their positions, the person did not take reasonable steps to notify them of the facts

Question 2

Rest. 3d 2.06 Liability of Undisclosed Principal

Answer 2

(1) an undisclosed principal is subject to liability to a 3rd party who is justifiably induced to make a detrimental change in position by an agent acting on the principal’s behalf and without actual authority if the principal, having notice of the agent’s conduct and that it might induce others to change their positions, did not take reasonable steps to notify them of the facts

Question 3

Rest. 3d 4.01(1) Ratification Defined

Answer 3

(1) Ratification is the affirmance of a prior act done by another, whereby the act is given effect as if done by an agent acting with actual authority

Question 4

Rest. 4.01 (2) Ratification Defined

Answer 4

(2) A person ratifies an act by
(a) manifesting assent that the act shall affect the person’s legal relations, or
(b) conduct that justifies a reasonable assumption that the person so consents

Question 5

Rest. 4.01 (3) Ratification Defined

Answer 5

(3) Ratification does not occur unless
(a) the act is ratifiable as states in 4.04
(b) the person ratifying has capacity as stated in 4.04
(c) the ratification is timely as stated in 4.05 and
(d) the ratification encompasses the act in its entirety as stated in 4.07

Question 6

Rest. 3d 4.02 Effect of Ratification

Answer 6

(1) subject to the exceptions stated in subsection (2), ratification retroactively creates the effects of actual authority
(2) ratification is not effective:
(a) in favor of a person who causes it by misrepresentation of other conduct that would make a contract voidable
(b) in favor of an agent against a principal when the principal when the principal ratifies to avoid a loss; or
(c) to diminish the rights or other interests of persons, not parties to the transaction, that were acquired in the subject matter prior to the ratification

Question 7

Rest. 3d 4.03 Acts that may be ratified

Answer 7

A person may ratify an act if the actor or purported to act as an agent on the person’s behalf

Question 8

Rest. 3d 4.04 Capacity to Ratify

Answer 8

(1) A perosn may ratify an act if
(a) the person existed at the time of the act, and
(b) the person had capacity as defined in 3.04 at the time of ratifying the act
(2) at a later time, a principal may avoid a ratification made earlier when the principal lacked capacity as defined in 3.04

Question 9

Rest. 3d 4.05 Timing of Ratification

Answer 9

A ratification of a transaction is not effective unless it precedes the occurrence of circumstances that would cause the ratification to have adverse and inequitable effects on the rights of third parties. These circumstances include:
(1) any manifestation of intention to withdraw from the transaction made by the third party
(2) any material change in circumstances that would make it inequitable to bind the 3rd party, unless the third party chooses to be bound; and
(3) a specific time that determines whether a third party is deprived of a right or subjected to a liability

Question 10

Rest. 3d 4.06 Knowledge Requisite to Ratification

Answer 10

A person is not bound by a ratification made without knowledge of material facts involved in the original act when the person was unaware of such lack of knowledge

Question 11

Rest. 3d 4.07 No Partial Ratification

Answer 11

A ratification is not effective unless it encompasses the entirety of an act, contract, or other single transaction

Question 12

Rest. 3d 4.08 Estoppel to Deny Ratification

Answer 12

if a person makes a manifestation that the person has ratified another’s act and the manifestation as reasonably understood by a third party may be estopped to deny the ratification

Question 13

Rest. 3d 6.01 Agent for Disclosed Principal

Answer 13

When an agent acting with actual or apparent authority makes a contract on behalf of a disclosed principal,
(1) the principal and the 3rd party are parties to the contract and
(2) the agent is not a party to the contract unless the agent and 3rd party agree otherwise

Question 14

Rest. 3d 6.02 Agent for Unidentified Principal

Answer 14

When an agent acting with actual or apparent authority makes a contract on behalf of an unidentified principal,
(1) the principal and the 3rd party are parties to the contract and
(2) the agent is a party to the contract unless the agent and the 3rd party agree otherwise

Question 15

Rest. 3d 6.03 Agent for Undisclosed Principal

Answer 15

When an agent acting with actual authority makes a contract on behalf of an undisclosed principal,
(1) unless excluded by the contract, the principal is a party to the contract;
(2) the agent and the 3rd party are parties to the contract; and
(3) the principal, is a party to the contract and the 3rd party have the same rights, liabilities and defenses against each other as if the principal made the contract personally subject to 6.05-6.09

Question 16

Rest. 3d 6.04 Principal Does Not Exist or Lacks Capacity

Answer 16

unless the 3rd party agrees otherwise, a person who makes a contract with a 3rd party purportedly as an agent on behalf of a principal becomes a party to the contract if the purported agent knows or has reason to know that the purported principal does not exist or lacks capacity to be a party to a contract

Question 17

Rest. 3d 6.10 Agent’s Implied Warranty of Authority

Answer 17

A person who purports to make a contract, representation or conveyance to or with a third party on behalf of another person, lacking power to bind that person, gives an implied warranty of authority to the 3rd party and is subject ot liability to the 3rd party for damages for loss caues by breach of that warranty including losso f the benefit expected from performance by the principal, unless
(1) the principal or purported principal ratifies the act as stated in 4.01; or
(2) the person who purports to mae