Power and Authority of Agents

Question 1

Agent’s main power over principal

Answer 1

Power to bind principal

Question 2

When agent’s acts bind principal

Answer 2

Agent’s acts bind Principal if done within the scope of power authorized by the agency relationship

Question 3

Two kinds of agency authority

Answer 3

Actual authority
Apparent authority

Question 4

How actual authority created

Answer 4

Express = Authorization by Principal’s oral or written words

Implied = Authority to conduct transaction reasonably necessary to carry out Agent’s express authority

Question 5

How apparent authority created

Answer 5

Arises based on Principal’s representations to a third party where the third party is led to believe Agent is acting with Principal’s authority

Question 6

Effect of apparent authority

Answer 6

Principal is accountable for results of third party beliefs about an actor’s authority to act when belief is reasonable and traceable to manifestations of the Principal

Question 7

Principal power to ratify unauthorized acts

Answer 7

Principal ratifies an unauthorized transaction entered into by Agent if Principal has knowledge of all material facts and:

• manifesting assent that the act will affect Principal’s legal relations, or
• by conduct that is justifiable only on the assumption that Principal consents to be bound