The Agency Relaitonship Flashcards
What are the three components of an agency relationship?
(ABC)
Assent - both parties manifest assent to work with one another.
Benefit - the agent agrees to work for the principal’s benefit
Control - the agent agrees to work subject to the control of the principal.
Note: no consideration needed.
Who can be a principal?
Anyone with legal capacity.
Excludes minors.
Control over day-day activities, giving tools for job, pay period.
Unincorporated associations cannot be principals.
Who can be an agent?
Any person with minimal capacity (minors too).
Must be able to assent to agency relationship, perform tasks on behalf of principal, and be subject to principals control.
What are the types of agents?
Servant/Employees - employer has the right to control the physical conduct of work.
Independent Contractors:
- Own tools, fixed fee, free to work for others, maintain high level of independence.
Principals more liable when they have more control.
Can either party terminate an agency relationship unilaterally?
Yes.
What are the four types of legal authority generally?
- Actual Express
- Actual implied
3 Apparent - Ratification
When is the principal liable for contracts that an agent enters on behalf of the principal?
When the principal authorized the agent to enter the contract, and the agent acted with legal authority.
What is actual express authority?
Look to communication between the agent and principal.
The principal creates actual express authority using words, written or spoken to convey authority.
Must meet subjective and objective test. (agent believes that he is doing what the principal wants him to d and believe is reasonable)
Note: Terminates on death of principal when agent finds out about death. Or when agent dies.
Can also be terminated by revocation, change in circumstances (insolvency, disaster, change in statute), passage of time, loss of capacity, statutory mandated term.
What is actual implied authority?
Look to communication between principal and agent.
Created by words, writing, or other conduct, telling agent to do whatever is necessary to achieve principal’s objective.
Act within the accepted business custom or general trade usage.
What is apparent authority?
Look to communication between the principal and the 3rd party.
Principal creates by words, written or spoken, or conduct that makes 3rd party reasonably believe that the principal consents to have acts done on the principal’s behalf by the agent.
What is ratification?
There’s no pre-act communication.
Requires: principal has knowledge of the material terms of the contract and the principal then accepts the contract’s benefits.
Principal must ratify entire act, must have legal capacity, timely, and have knowledge of material facts.
What are subagents?
An agent can appoint a subagent only if he has actual or apparent authority to do so.
Owes a duty of loyalty to principal and agent.
Agent is responsible to the principal for subagent’s conduct. Principal is bound to subagent’s acts. Noice to subagent = notice to principal.
