REG - Agency Flashcards
When an agency is coupled with an interest, and there is no provision relation to duration of agency, who can terminate before interest expiration?
Agency coupled with an interest arises when an agent acquires from the principal an interest in the subject matter of the agency. The authority of the agent is irrevocable by the principal.
Only the agency can terminate without liability in any type of agency.
What is a power of atorney?
It is written authority conferred to an agent in a formal writing. It can be general or it can grant the agent only restricted authority. Must be signed by the person granting authority.
Can be granted to anyone with the legal capacity to enter into an agency relationship.
Terminated by death of granter.
What happens when A working for company B takes away car from C because A believes C to have defaulted when B was wrong?
C can regain possession and collect money damages for the tortious act of conversion.
C can collect from either A or B, but can take judgment against only one.
Employee A has a right of indemnification against the employer for any damages he must pay a third person.
A - the agent/employee is always liable for his own torts even if committed in the course of employement
What is the duty of a gratuitous agent?
He must account to the principal for profits and everything that rightfully belongs to the principal including the principal’s property. Note the agent has a duty not to commingle funds.
What is the prerequisite for the creation of an agency relationship? What is required?
- Principal must be able to give legal consent (capacity)
- Agent must have sufficient mental and physical ability to carry out principal’s instructions
- Consideration not required
Relationship requires a meeting of the minds and consent to act. Written agreement not required. Relationship is not contractual. Not to be confused with POA.
What are the types of authority
Express - directly communicated and given to agent
Implied - reasonable implied from express authority and from conduct of principal
Apparent/ostensible - exists when the agent represents the principal to third parties to be his agent
What happens if the agent acts outside their scope of authority? When is principal held liable?
Even though the agent acted outside scope, the principal can ratify the contract. Retention of the benefits of the contract constitutes implied ratification.
Ratification must occur before 3rd party withdraws.
In unauthorized contract, 3rd party does not have option of electing to hold principal liable.
Who is liable if agent makes a contract but does not disclose principal?
Agent is liable as a party to the contract. The agent would have the same authority as if the principal were disclosed. The disclosure of the existence and identity of the principal after they have entered into a contract does not relieve the agent of his contractual obligations.
The third party after learning the identity of principal can elect to hold either agent or principal liable.
Principal can be held liable for agent’s negligence.
When does ratification occur?
Occurs when there is a subsequent approval by the principal of an agent’s unauthorized action.
In order for it to take place, the principal must have knowledge of all material facts regarding the contract. Principal does not need to notify third party of their intention to ratify expressly. If the principal acts in a manner that implies ratification, it is interpreted as so.
When is an agency coupled with an interest created?
Any time the agent has either a property interest or a security interest in the subject matter of the agency. If a lender obtains authorization to sell pledged securities and applies the proceeds to the loan in the event of the borrower’s default, that lender becomes an agent with a security interest in the subject matter of the agency relationship, and the agency is irrevocable.
Under which scenarios are the agent personally liable?
1 - make contract which he had no authority to make but which the principal ratifies
2 - he commits a tort while in principal’s business
3 - acts for an undisclosed principal and principal is subsequently disclosed
2 and 3 - agent is personally liable
In 1, agent is free of any liability
What principals can ratify an unauthorized contract made by agent?
Fully disclosed principal and partially disclosed principal
NOT undisclosed
