REG 19 - Agency

Question 1

Agency

Answer 1

A relationship in which one party, an agent, acts on behalf of another (the principal) for contractual obligations.

• An agent must have authority from the principal in order to act on the principal’s behalf.
• An agent has a fiduciary duty to act loyally on behalf of the principal.
• Agent is liable to principal if the agent binds the principal to a contract based on aparent authority.

Question 2

When is an agency agreement required to be in writing?

Statute of Frauds - GROSS

Answer 2

An agency does NOT require a contract & NO consideration need be offered. The agency agreement itself need NOT be in writing except under certain circumstances when the Statute of Frauds apply: (GROSS)

• An agency to sell Real estate
• An agency to run for a period exceeding Over 1 year

Question 3

Employee Agent

vs.

Independent Agent

Answer 3

Employee Agent is under the control of the employer.

• Employer controls the time & manner of performance
• Employer is responsible for the financial risk associated with the relationship
• Employer is liable for the employee’s torts committed during the course of the employment & withn scope

Independent (Agent) Contractor is NOT subject to the control of the principal.

• Independent contractors are responsible for their own torts.

Question 4

What are the three types of Agent Authority?

Answer 4

1. Actual Authority - the principal intends to give agent power to contract.
   
   • Express authority - where the principal explicitly states the agent has authority
   • Implied authority - where the principal assigns the agent a task which cannot be carried out without having certain authority to act on the principal’s behalf.
2. Apparent Authority - Principal creates impression that agent has authority.
   
   • Good faith 3rd party reasonable assumed that the agent had authority/power.
     
     • Agent is liable to principal
3. Unauthorized Action - the agent acts without authority.
   
   • Ratification - Principal gives agent authority after contract is made.
     
     • Must ratify before 3rd party withdraws
     • Must know the details of the contract made by the agent on behalf
     • Princupal must be fully disclosed

Question 5

Types of Principals (3)

Answer 5

• Fully Disclosed
  
  • 3rd party knows the identity of the principal
  • Principal is liable, NOT the agent
• Partially Disclosed
  
  • 3rd party knows agent is acting for another, but NOT the identity of the principal
  • Principal & Agent jointly & severally liable
• Undisclosed
  
  • 3rd party believes the agent is the principal
  • 3rd party may hold either princial or agent solely liable
  • Agent required to perform under contract
  • When principal is undisclosed, the agreement CANNOT have apparent authority
  • 3rd party not entitled to disclose of principal

Question 6

Types of Agents (3)

Answer 6

General Agent - has broad authority to act for the principal in a variety of transaction.

Special Agent - has authority that is limited to a single or series of transaction.

Sub-Agent - an agent appointed by another agent who is authorized to appoint sub-agents in connection with his performance of the principal’s business. A sub-agent has a fiduciary duty & a duty of loyalty to both the principal & agent.

Question 7

Termination of an Ageny (3)

Answer 7

Agreement - the parties originally contracted for the agency to last a period of time that has elapsed, or the parties mutually agree to terminate an agency of indefinite duration.

• Notice must be given to remove aparent authority
  
  • Actual Notice
  • Constructive Notice

Unilateral - principal dismisses the agent OR agent resigns.

• Either party has the power to terminate the agency at any time, even if it means a beach of contract.

Operation of Law - agency terminates due to provision of law.

• Death of principal or agent
• Insanity of principal
• Illegal or impossible agreement
• Principal goes into bankruptcy

Question 8

Tort vs. Crime

Answer 8

Tort - is an action that causes injury to another (negligent driving), although there was no intent to do so.

Crime - is an action that causes injury to another, when there is intent to do harm (scienter).