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REG > REG: Business Law1 - Agency > Flashcards

REG: Business Law1 - Agency Flashcards

1
Q

List the circumstances in which an agency relationship would be terminated as a matter of law,

A
  • Death of the principal (or death of the agent)
  • Principal’s incapacity
  • Agent’s failure to acquire a necessary business license
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2
Q

Forming an agency relationship requires that:

1) The principal consents to the agency
2) The agent consents to the agency
3) Both consent to the agency

A

Both must consent

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3
Q

All transactions related to the purchase or sale of land must be in writing under the statute of frauds, thus requiring an agent for a corporation to have a written agency agreement. True or False.

A

True

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4
Q

What kind of authority is created when ratification occurs?

A

Actual authority

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5
Q

Is there an age requirement for agency?

A

No

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6
Q

In an agency coupled with an interest, who has the right to terminate the agency?

A

The agent (not the principal - not even upon death, insanity, or bankruptcy).

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7
Q

If an agency is not coupled with an interest, the principle always has the right to terminate the agency relationship. True or false.

A

True

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8
Q

Notification to third parties (by the principle) is necessary in which situations (3)?

A

Achieving the agency’s purpose, termination by mutual agreement, and a termination by the principal.

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9
Q

In an agency relationship between and agent and undisclosed principle, the principal is required to indemnify the agent for any contract entered into by the agent within the scope of the agency agreement. True or False.

A

True

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10
Q

Specific performance involves a contract (contractual agreement). True or false.

A

True

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11
Q

If a principal is guilty of violating a duty, and the agent has completed their side of the agreement, the principal owes the agent what?

A

Compensation (past services), reimbursed expenses, and indemnification from any legal actions (future damages). In addition, the principle is not able to withhold further performance from the agent.

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12
Q

When there is no agency relationship b/w a principle and agent, the requirements for an enforceable ratification for a contract are—the principal must have all the material facts related to the contract and be free from duress and voluntarily accept the benefit of the contract. True or false.

A

True

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13
Q

In most states, when the principal is partially disclosed (agent discloses they are acting as an agent for someone who’s identity is not known), the agent is also treated as a party to the contract, and the third party can hold the agent liable for contractual nonperformance.

A

True. The principle can also be held liable.

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14
Q

A Power of Attorney must be sign by both the principle and agent. True or False.

A

False. Only the principle.

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15
Q

A Power of Attorney is valid after death. True or False.

A

False.

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16
Q

A Power of Attorney may be limited or specific. True or False.

A

True. There are usually different kinds of powers of attorney - financial, etc.

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17
Q

Generally, a disclosed principal will be liable to third parties for its agent’s unauthorized misrepresentations if the agent has what kind of relationship with the principle?

A

Employee. But not independent contractor.

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18
Q

What is the scope of authority given to an agent?

A

The agent is empowered to do whatever is necessary to fulfill the purpose of the agency “in the ordinary course of business.”

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19
Q

Is a contract that was entered into by an agent (w/ a third party) binding upon the principle, if the principle was declared incompetent (incompacitated) by a judge beforehand, and the principle was undisclosed AND the third party did not receive notice?

A

No. The agent would be liable.

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20
Q

What is respondeat superior?

A

A legal doctrine, most commonly used in tort, that holds an employer or principal legally responsible for the wrongful acts of an employee or agent, if such acts occur within the scope of the employment or agency.

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21
Q

Can one perform an illegal act and still be operating within their scope of employment?

A

No. And respondeat superior would no longer apply.

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22
Q

What is a gratuitous agent?

A

A gratuitous agent acts for the benefit and under the control of another and does not receive any compensation for the action. Basically a volunteer agent.

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23
Q

Can an agent commingle the principal’s property or funds with her own?

A

No, never.

24
Q

Can an agent keep an accounting for the principal?

A

Yes. They are required to.

25
Q

When a valid contract is entered into by an agent on the principal’s behalf, in an undisclosed principal situation, the principle may be liable once disclosed. True or false.

A

True.

26
Q

If an agent fails to make a full disclosure of the existence and identity of the principal at the time the contract is made (i.e., the principal is undisclosed), the agent has potential contractual liability to the third person. True or False.

A

True.

27
Q

In an agency relationship between a principle and sales representative (agent), the agent’s commission is equivalent to an interest. True or false.

A

False.

28
Q

Subagents owe a fiduciary duty only to the agent. True or False.

A

False. The subagent owes a fiduciary duty to both the agent and the principle.

29
Q

A principal will not be liable to a third party for a tort committed by an agent unless the tort was committed within the scope of the agency relationship. True or False.

A

True.

30
Q

Upon the termination of an agent, the agent retains “apparent” authority, and contracts made thereafter by the agent in the name of the principal may be binding upon the principal despite the fact that the agent’s express authority was terminated. True or False.

A

True.

31
Q

What should a principle do to eliminate the possibility of apparent authority being exercised by a dismissed agent?

A

Issue 2 types of notices: 1) Actual notice to third parties who have previously dealt with the principal through the agent; 2) Constructive notice (i.e., general public notice through newspaper or trade journal advertisements) to other parties who were merely aware of the existence of the agency.

32
Q

What is actual authority?

A

Specific powers granted by the Principal to the Agent.

33
Q

In private contract law, what is ratification?

A

Ratification is a principal’s approval of an act by its agent (who has lack of authority) to legally bind the principal.

34
Q

For an agent who works on commission, a principle is required to maintain pertinent records, account to the agent, and pay the agent according to the terms of their agreement. True or False.

A

True.

35
Q

What is agency by estoppel?

A

Same as apparent authority. When a principal acts in such a way as to lead a third party to reasonably believe that another is the principal’s agent.

36
Q

Is Actual authority expressed or implied?

A

Both. It can be expressed by the principal orally or in writing, or implied by the principal’s actions.

37
Q

What is apparent authority?

A

When a PRINCIPAL’S actions could result in a third party believing the agent had authority even when it may not be actual (expressed or implied).

38
Q

What is an agent?

A

Anyone authorized to act on behalf of another (principal).

39
Q

List some example of agents.

A

Employees, partners, corporate officers, real estate agent/broker, powers of attorney

40
Q

What is required to create an agency relationship? Is a written contract required?

A

A meeting of the minds. No contract is required.

41
Q

Can a minor appoint an agent?

A

Yes, as long as they can give legal consent and are mentally competant.

42
Q

Can an agent bind its principal contractually with a third party if the contract is outside the scope of the agency?

A

No

43
Q

Generally, is an independent contractor an agent?

A

No

44
Q

A power of attorney exists for a definite amount of time. True or False?

A

False.

45
Q

If a principal is disclosed to a third party, who is liable under contract - the principal or the agent?

A

Principal

46
Q

If a principal is not disclosed or only partially disclosed to a third party, who is liable under contract?

A

The third party can go after the principal OR the agent, but not both.

47
Q

What are the duties of Principal to agent?

A

1) Compensation; 2) Reimbursement for reasonable expenses; 3) Cooperate with agent

48
Q

What are the duties of Agent to Principal?

A

1) Fiduciary; 2) Due care; 3) Duty not to compete; 4) Inform principal of all relevant info; 4) Accounts for profits, property received, and expenditures; 5) Authority to bind principal contractually with third parties.

49
Q

Who can terminate an agency relationship?

1) Principal; 2) Agent; 3) Both

A

Both - it must be mutual

50
Q

What are the 2 ways that agency can be terminated?

A

1) By act of parties; 2) by operation of law

51
Q

How can agencies be terminated when it is by an act of parties?

A

1) By time (if agency was time limited): 2) by mutual consent; 3) by accomplishment of an objective.

52
Q

How can agencies be terminated when it is by a matter of law?

A

1) Death, incompetance or insanity of either party; 2) Bankruptcy of principal; 3) Destruction of subject matter; 4) Subject of agreement becomes illegal or impossible; 5) Failure to obtain required license.

53
Q

What is the different between implied actual authority and apparent authority?

A

Third party is involved in the definition of apparent authority.

54
Q

What is the test for apparent authority?

A

What is reasonable for a third party to believe.

55
Q

What is an “agency coupled with an interest?”

A

when an agent has possession or control of the property of his principal and possesses a legal rights against interference by third parties.

the agency usually cannot be revoked by the principal before the expiration of the interest and is not terminated by the death or insanity of either the principal or the agent.

REG (8 decks)

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