Restatement of the Law, Agency 3rd Sec. 5

Question 1

Notifications and Notice—In General

Answer 1

§ 5.01 Notifications and Notice—In General

(1) A notification is a manifestation that is made in the form required by agreement among parties or by applicable law, or in a reasonable manner in the absence of an agreement or an applicable law, with the intention of affecting the legal rights and duties of the notifier in relation to rights and duties of persons to whom the notification is given.
(2) A notification given to or by an agent is effective as notification to or by the principal as stated in § 5.02.
(3) A person has notice of a fact if the person knows the fact, has reason to know the fact, has received an effective notification of the fact, or should know the fact to fulfill a duty owed to another person.
(4) Notice of a fact that an agent knows or has reason to know is imputed to the principal as stated in §§ 5.03 and 5.04.

Question 2

Notification Given by or to an Agent

Answer 2

§ 5.02 Notification Given by or to an Agent

(1) A notification given to an agent is effective as notice to the principal if the agent has actual or apparent authority to receive the notification, unless the person who gives the notification knows or has reason to know that the agent is acting adversely to the principal as stated in § 5.04.
(2) A notification given by an agent is effective as notification given by the principal if the agent has actual or apparent authority to give the notification, unless the person who receives the notification knows or has reason to know that the agent is acting adversely to the principal as stated in § 5.04.

Question 3

Imputation of Notice of Fact to Principal

Answer 3

§ 5.03 Imputation of Notice of Fact to Principal

For purposes of determining a principal’s legal relations with a third party, notice of a fact that an agent knows or has reason to know is imputed to the principal if knowledge of the fact is material to the agent’s duties to the principal, unless the agent

(a) acts adversely to the principal as stated in § 5.04, or
(b) is subject to a duty to another not to disclose the fact to the principal.

Question 4

An Agent Who Acts Adversely to a Principal

Answer 4

§ 5.04 An Agent Who Acts Adversely to a Principal

For purposes of determining a principal’s legal relations with a third party, notice of a fact that an agent knows or has reason to know is not imputed to the principal if the agent acts adversely to the principal in a transaction or matter, intending to act solely for the agent’s own purposes or those of another person. Nevertheless, notice is imputed

(a) when necessary to protect the rights of a third party who dealt with the principal in good faith; or
(b) when the principal has ratified or knowingly retained a benefit from the agent’s action.

A third party who deals with a principal through an agent, knowing or having reason to know that the agent acts adversely to the principal, does not deal in good faith for this purpose.