Principal's Liability to Third Parties

Question 1

When is agent capable of binding Principal to a Contract?

Answer 1

When acting with any form of Authority. (actual, apparent, ratification)

Question 2

Actual Authority (Express)

Answer 2

Based on words by principal

Question 3

Actual Authority (Implied)

Answer 3

Based on reasonable inferences from principals statements or conduct (industry custom/course of dealings)

Question 4

Termination of Actual Authority

Answer 4

Express, Drastic change of conditions, operation of law (death, insanity, bankruptcy, dissolution)

Question 5

Apparent Authority

Answer 5

What a reasonably third party would concur, based upon statements or conduct of PRINCIPAL.

Question 6

Inherent Authority

Answer 6

Binds principal even though agent had no actual authority. DESIGNED to PROTECT THIRD PARTIES

Question 7

Termination of Apparent Authority

Answer 7

Notice

Question 8

Ratification

Answer 8

Approval by principal, MUST RATIFY WHOLE CONTRACT, MUST BE AT A TIME WHERE HE COULD REJECT