Types of Agency Relationships and Creation

Question 1

What are the two parties in an agency relationship?

Answer 1

Principal - the party who delegates authority to another in order to accomplish a task or consummate a transaction
Agent - one who acts on a principal’s behalf to accomplish a task or consummate a transaction for the principal

Question 2

What is the prerequisite for the creation of an agency relationship?

Answer 2

Principal must have capacity

Question 3

Special Agent

Answer 3

One authorized to conduct a single transaction or series of transactions on the principal’s behalf

Question 4

General Agent

Answer 4

One authorized to conduct all necessary personal or business transactions for the principal (restaurant owner-manager relationship)

Question 5

Universal Agent

Answer 5

One authorized to do all acts that can be legally delegated to an agent

Question 6

Power of Attorney

Answer 6

A formal written creation of an agency relationship that lists the authority granted.
Must be signed at least by the principal
Construed narrowly

Question 7

Independent Contractor

Answer 7

Someone who acts on behalf of a principal, but the principal does not control the agent’s day to day activities, and the scope of the contract is limited.
A disclosed principal is not liable to third parties for its agent’s unauthorized misrepresentations if the agent is an independent contractor.

Question 8

Subagent

Answer 8

An agent hired by another agent on behalf of the principal

Question 9

Agency coupled with an interest

Answer 9

An agency in which the agent holds a property right in the subject matter of the agency (book agent gets a percentage of future royalties from sales of the book or movie rights)

Question 10

Gratuitous agency relationship

Answer 10

When an agent is serving without consideration (real estate agent doesn’t get paid unless they sell a house)

Question 11

Express Agency Relationship

Answer 11

(Told) - Does not require a written record unless the contract falls under the Statute of Frauds (real estate or cannot be reasonably completed within one year)

Question 12

Apparent Agency

Answer 12

An agency relationship in which the agent does not have an express agreement but still has authority to act as an agent for a principal because of the appearance of having that authority.

Question 13

Lingering Apparent Authority

Answer 13

When the principal fires an agent, but the agent continues to act as an employee

Question 14

Agency by Estoppel or Ostensible Authority

Answer 14

Principal acts as if another is his or her agent (you go to the hospital for care. A person wearing scrubs looks to you like they work for that hospital)

Question 15

Creation of an agency relationship by Ratification

Answer 15

If someone enters into a contract on behalf of an assumed principal, the principal is not bound, but can choose to be bound by the agreement.