Section 19: Agency

Question 1

Agency Agreements

Answer 1

• Do not need to be in writing except when Statute of Frauds (GROSS) applies
  
  • Agency to sell real estate
  • Agency to run for a period exceeding one year

Question 2

Agent has a duty

Answer 2

Fiduciary

Question 3

Actual Authority

Answer 3

• Principle intends to give the agent the authority
• Express Authority - principle explicitly states the agent has the authority
• Implied Authority - principle assigns a task which cannot be carried out without having certain authority
  
  • Ex: Bartender has authority to sell drinks at the bar

Question 4

Apparent Authority

Answer 4

• Principle takes an action that creates the appearance to third parties that agent has certain authority
  
  • Ex: Hiring someone has VP

Question 5

Ratification

Answer 5

• The agent acts without authority but the principle decides after the contract is made to honor it
• Principle must be fully disclosed, understand the contract was made on their behalf
• Can accept by simply stating it or accepting benefits
• Must ratify befrore 3rd party withdraws

Question 6

Types of Principals:

Fully Disclosed

Answer 6

• 3rd party knows identity of principal
• Principal liable - agent not liable to 3rd party

Question 7

Types of Principals:

Partially Disclosed

Answer 7

• 3rd knows agent is acting for another, but not identity
• Principal and agent jointly and severally liable

Question 8

Types of Principals:

Undisclosed

Answer 8

• 3rd party belives agent is acting for themselves only
• 3rd may hold either principal or agent liable
• Agent required to perform under the contract
• When principal is undisclosed, the agent cannot ahve apparent authority
• 3rd party not entitled to disclosure of principal

Question 9

Types of Agents:

General Agent

Answer 9

• Has board authority to act for the principal in a variety of transactions

Question 10

Types of Agents:

Special Agent

Answer 10

Has authority that is limited to a single transaction or series of transactions

Question 11

Types of Agents:

Sub-Agent

Answer 11

• 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 fiduciary duty and a duty of loyalty to both the princpal and agent

Question 12

Termination of Agent Authority:

Agreement

Answer 12

• parties originally contracted for the agency to alast a period time that has elapsed or both parties agree to terminate an agency

Question 13

Termination of Agent Authority:

Unilateral

Answer 13

• Principal dismisses agent,
• agent resigns

Question 14

Termination of Agent Authority:

Operation of Law

Answer 14

• Death of principal or agent (contracts already made, stand)
• Insanity of principal (contracts already made, stand)
• Subject of agreement becomes illegal or impossible (unenforceable)
• Principal bankrupt

Question 15

Notification of Termination of Agency to Third Parties

Answer 15

• Give Both
  
  • Actual Notice - 3rd parties are directly informed that the agency has terminated (personal notice)
  • Constructive Notice - an announcement of the termination is made in publications that 3rd parties are likely to read (public notice)