REG 7 Module 1

Question 1

What is required to create an agency?

Answer 1

1. Principal with contractual capacity (not a minor)

2. Consent of parties (parties agree to act as pricipal and agent)

Question 2

T/F: Writing is required and agent’s authority must be signed by the principal during sale of land.

Answer 2

True - only required during sale of land

Question 3

T/F: A manager has the authority to hire and fire employees, purchase inventory, and pay business debt.

Answer 3

True

Question 4

T/F: A manager has implied authority to sell or mortgage business fixtures or other property of the principal (other than inventory).

Answer 4

False - no implied authority

Question 5

T/F: A manager has implied authority to borrow money on behalf of principal.

Answer 5

False - no implied authority must be expressed

Question 6

What are two types of actual authority?

Answer 6

1. Expressed - in the agreement

2. To do things reasonably necessary to carry out the agency

Question 7

How can termination of Actual Authority happen?

Answer 7

1. Act of the parties
   a. Revocation: the principal
   b. Renunciation: the agent
   c. If violates contact damages may be available
   d. If agency couple with interest: only agent can terminate
2. Accomplishment of objective (limited purpose) or Expiration of Stated Period (expiration of period)
3. Termination of Actual Authority
   a. death of either
   b. Incapacity of principal
   c. Discharge in bankruptcy of principal
   d. Failure to acquire necessary license
   e. Destruction of subject matter of the agency (car destroyed in fire)
   f. Subsequent Illegality

Question 8

Is the Agent Liable if he discloses the principal?

Answer 8

The third party cannot hold the authorized agent liable, unless the agent doesn’t have authority.

Question 9

What’s a partially disclosed principal situation and who is liable?

Answer 9

Principe identity not disclosed to third party

Agent or principal liable - third party chooses

Question 10

What’s a undisclosed principal situation and who is liable?

Answer 10

Principe identity and existence not disclosed to third party

Agent or principal liable - third party chooses

Question 11

What is apparent authority?

Answer 11

Third party’s reusable belief that the agent has the power to bind which would arise out of actual authority.

Question 12

If partially disclosed or undisclosed principal is only liable if…

Answer 12

Agent had authority. If agent didn’t have authority principal is only bound if he ratifies.

Question 13

When is a principal liable for employee tort?

Answer 13

If tort was to serve the principal/ employer unless it was unexpected (illegal)