Topic 1

Question 1

When does agency exist?

Answer 1

Agency exists where: (1) one person (the principal) consents that another (the agent) shall act on P’s behalf and subject to P’s control and (2) A consents so to act

Question 2

What is a partnership?

Answer 2

“A partnership is an association of two or more persons to carry on as co-owners a business for profit”

Question 3

What is a corporation?

Answer 3

A legal person created by state action, possessing the following critical attributes:

1. Legal personality
2. Limited liability
3. Separation of ownership and control
4. Liquidity
5. Flexible capital structure

Question 4

What is a universal agent?

Answer 4

A universal agent is authorized to perform all acts that can be lawfully delegated to a representative

Question 5

What is a general agent?

Answer 5

A general agent is authorized by the principal to transact all business affairs of the principal at a certain place

Question 6

What is a specific agent?

Answer 6

A specific agent is authorized by the principal to handle a specific business transaction

Question 7

What is agency coupled with an interest?

Answer 7

Agent has paid for the right to have authority for a business

Question 8

What is a subagent?

Answer 8

Agent appoints other agents

Question 9

(1) What are the facts in Gorton v. Doti?

(2) What is the issue and why does it matter?

Answer 9

(1) (a) Doti volunteered her car for the purpose of furnishing additional transportation; (b) Doti designated the coach as the driver (condition precedent to her car being driven); (c) Doti consented to the coach driving her car and the coach consented to driving the car
(2) Whether an agency relationship existed between Doti and Garst - matters b/c as a principal, Doti would be liable for the conduct of her agent, Garst

Question 10

What is express agency?

Answer 10

An agency that occurs when a principal and an agent expressly agree to enter into an agency agreement with each other. Express agency contracts can be either oral or written unless the Statute of Frauds stipulates that they must be written.

Question 11

What is implied agency?

Answer 11

An agency that occurs when a principal and an agent do not expressly create an agency. The agency is implied from the conduct of the parties. The extent of the agent’s authority is determined from the particular facts and circumstances of the particular situation.

Question 12

What is the legal standard for an agency relationship?

Answer 12

Agency is the fiduciary relationship that arises when
–
one person (a “principal”) manifests assent to another person (an “agent”) that the agent shall act
•
on the principal’s behalf and
•
subject to the principal’s control,
–
and the agent manifests assent or otherwise consents so to act

Question 13

Test for capacity to act as a principal

Answer 13

Does the principal have the capacity to do the act for which the agent was appointed?

Question 14

Legal standard for manifestation of assent to serve as a principal

Answer 14

(1) Express conduct
(2) Non-express conduct
•Silence
•P puts A “in a position or office with specific functions or responsibilities”
•P puts A “in a position in an industry or setting in which holders of the position customarily have authority of a specific scope”

Question 15

Legal standard for control

Answer 15

a principal has the right to give interim instructions or directions to the agent once their relationship is established

Question 16

(1) How was there a manifestation of consent by Cargill that Warren act on Cargill’s behalf?
(2) How was Warren subject to Cargill’s control?

Answer 16

(1) Cargill accepted the grain produced by Warren as part of its ordinary operations, which operations were financed by Cargill
(2) Cargill directed Warren to implement certain operations. Cargill had control over the end result, even if only by prescribing the agent’s responsibilities.

Question 17

What is apparent agency?

Answer 17

• Agency that arises when a principal creates the appearance of an agency that in actuality does not exist.
• When an apparent agency is established, the principal is estopped from denying the agency relationship.
• It is the principal’s actions that create an apparent agency.

Question 18

What is agency by ratification?

Answer 18

An agency that occurs when:

1. A person misrepresents himself or herself as another’s agent when in fact he or she is not, and
2. The purported principal ratifies (accepts) the unauthorized act.

Question 19

What are four ways an agency relationship can be terminated?

Answer 19

(1) Agreement of parties:
•The contract between principal and agent states when it will end.

(2) Agency at will:
•At common law, agency relationships presumed to be “at will” and thus terminable at any time by either party after notice.
–Revocation is when the principal revokes authority of agent to act
–Renunciation is when agent notifies principal they quit

(3) Fulfillment of the purpose of the agency relationship:
•I.e., completion of task.

(4) By operation of law:
Termination occurs automatically; e.g., upon death of either agent or principal