Study Unit 19 Flashcards
What are the requirements to form an agency?
- Intent of both the principal and agent to form an agency
- Conduct is sufficient to form an agency even if the intent is not expressed.
- Agency may be implied inn law without intent to form the relationship.
- Legal purpose of the agency
- Legal capacity of the principal to perform the act assigned
What are the three forms of a power of attorney?
Form Description
General Power of Attorney The agent is authorized to do anything necessary
Special Power of Attorney The agent is authorized for only specific transactions
Durable Power of Attorney The agent is authorized during a period of principal’s incapacity
What are the four types of agents?
Type Description
General Agent The agent is authorized to perform all acts relevant to the agency
Universal Agent The agent is authorized to conduct all of the principal’s business that the principal may legally
delegate
Special Agent The agent is authorized to perform specific activities subject to specific instructions
Del credere agents The agent acts as both a salesperson or broker for the principal and a guarantor of a third party’s
obligation to the principal
Describe the term “agency coupled with an interest.”
In an agency coupled with an interest, the agent has a specific, current, and beneficial interest in the subject matter of the agency.
* The principal does not have the right or power of termination. * The agent’s interest in the subject matter is not exercised for the benefit of the principal.
What are the two types of authority that allow an agent to act on the principal’s behalf?
- Actual authority
* Express actual authority: expressly told by words of the principal
* Implied actual authority: inferred from world or conduct of the principal - Apparent authority
* Induction of a reasonable person to conclude that the agent has actual authority
How does the disclosure of the identity of the principal affect the existence of an agent’s apparent authority?
Disclosure of Principal Existence of Apparent Authority
Disclosed Exists Undisclosed Does not exist (the third party is unaware of any agency)
List the 5 duties an agent owes to the principal.
Duty Description
Loyalty Acting solely in the principal’s interest with utmost loyalty and in good faith
Care and diligence Using reasonable care and skill in performing agency duties and avoiding injury to the interests of the
principal
Notification Notify the principal of all needed information in possession of agent
(Disclosure)
Obedience Following lawful, explicit instructions of the principal within the bounds of authority conferred
Accounting Accounting for money or property received or expended on behalf of principal and not commingling
the agent’s money with that of the principal
What party (principal or agent) is liable for the contractual liability to a third party when an agent signs a contract with the third party and the identity of the principal is (1) disclosed, (2) undisclosed, or (3) partially disclosed?
Disclosure of Principal Bearer of Contractual Liability
Disclosed Principal Undisclosed Principal and/or agent (only when actual authority is granted) Partially disclosed Principal and/or agent
List the duties a principal owes to an agent.
Duty Description Financial * Compensating the agent for services * Keeping records of payments * Reimbursing expenses * Indemnifying for losses
Occupational * Not impairing the agent’s performance
* Caring * Disclosing known risks to the agent * Providing the agent with reasonably safe working conditions
Define ratification by a principal under agency law.
Ratification is a voluntary and irrevocable election by the disclosed principal to treat as authorized an unauthorized act or contract purportedly done or entered into on the principal’s behalf.
When is an employer liable for the torts of an employee?
The employer may be held liable for a tort when the employee (not independent contractor)
* Commits a tort, whether negligently or intentionally; * Was not authorized to perform the act; or * Performs the act within the scope of employment (work is assigned or controlled by the employer).
When is a principal liable for the crimes of an agent?
A principal may be criminally liable for the crimes of an agent if
* The principal approves or directs the crime, * The principal participates or assists in the crime, or * Violation of a regulatory statute constituted the crime.
Compare an employee and in independent contractor inn the context of agency law.
Employee Independent contractor
Controlled by
Employer Yes No
Employer liable for
Torts committed Yes No
Employer liable
For Material
Misrepresentation Yes Yes
List the two ways to terminate an agency relationship.
- Termination by the parties
- At will by wither (the party not breaching the contract) or both parties
- Termination by operation of law
Give examples of how an agency relationship can be terminated by the operation of law.
- Death or incapacity (principal or agent)
- Illegality of agent’s duties
- Bankruptcy of the principal
- Destruction of the subject matter
- Change in circumstances that infer the termination of actual authority