UBE Agency 2017 Flashcards
What is an Agency Relationship?
Agency Relationship is formed when
- the PRINCIPAL, either
- expressly (orally, or in writing) or
- impliedly (by principal’s conduct) or,
- through misinterpretation by a third party
- grants the AGENT the power to bind the principal
When does an Agency Relationship exist?
When does an Agency relationship exist?
- P manifests assent to an Agent
- Agent acts on P’s behalf
- Agent’s action are subject to P’s control
- Agent manifests assent or otherwise consents
“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.”
What types of Principals are there?
- Individual
-
Employer (as opposed to independent contractor)
- Agent is employed to perform some service
- P has the right to control the physical conduct of agent’s performance
- P has control over day-to-day activities
- P supplies the tools
- A has a structured pay period
- A has a specialized skill level
- P directs work to completion
- Entrepreneurs, Corporations, Partnerships
PRINCIPAL - Who can be a Principal?
P must have both:
- MENTAL CAPACITY and
- LEGAL CAPACITY
*Principal’s capacity is measured is not when the principal enters into the agency agreement but when the agent acts. The time at which the principal must have capacity is the moment the agent acts on the principal’s behalf.”
What two things are needed to show Legal Capacity?
Legal Capacity
Principles must be either:
- An individual or a recognized legal entity, like a partnership or a corporation, capable of holding rights and undertaking obligations.
- An individual must usually be of age before entering into a Principal-Agent relationship. Ordinarily, a minor may not act as a principal.
*An unincorporated non-commercial organization has no capacity to act as a principal (although the individual members could act as principals in their personal capacities).
What is needed to show Mental Capacity?
Mental Capacity of Principal
The party must have the mental capability to understand the nature and consequences of entering the agreement.
* In most states, a contract entered into by someone without mental capacity is VOIDABLE either by that person when she regains capacity or by her personal representative (though there are a few states that hold such contracts void).
* An agency appointment and any act of an agent done on behalf of an incompetent principal may be ratified or disaffirmed by the principal when he or she regains competence or by the principal’s personal representative.
Who may act as an AGENT?
Generally anyone may act as an agent.
- Minors or individuals who are mentally incompetent to enter contracts on their own behalf may serve as agents.
- Mental capacity need not be present in an Agent as much as it is in the Principal. (Minimal Mental Capacity allowed)
- An Agent need not possess the same level of capacity as a Principal but must still consent to perform.
In what ways can a party be restricted from becoming an Agent?
- Legal restrictions may prohibit an agent from representing both parties in a transaction. This is called dual agency. (Restriction may be waived by informed consent documented by a signed writing.)
- Many states require agents acting in certain activities, such as real estate, to be licensed.
- There are some acts that are non-delegable (Agent cannot do the act for the Principal)
Is Consideration required
to manifest the Agent’s consent?
Consideration is not required to enter into a valid agency agreement.
What is Agency Consent?
The parties may consent
- orally,
- in writing, or
- by conduct.
“This agent may act on my behalf under my authority.”
What classes do Agents fall into depending on their authority?
Classes of Agents:
- Universal Agent
- General Agent
- Special Agent
What types of Agents may exist?
Types of Agents:
- Individual
- Employee
- paid hourly or for long periods of time
- work is integral to that of P
- tasks are completed under P’s direction
- Independent Contractor
- not subject to P’s control regarding the physical conduct of A’s performance
- Gratuitous Agent - an agency relationship may be created but an enforceable contract cannot be created
- Trustee - subject to the control of the settlor or benef.
- Subagent
- person apointed by AGENT to perform the functions that the agent has agreed to perform for P
Under what types of Authority may an Agent Act?
- Actual Authority
- Apparent Authority
What indicates Actual Authority?
ACTUAL AUTHORITY
- The agent may act on behalf of the Principal only when the principal gives the agent Actual Authority to.
- Express: The Principal gives the Agent Authority to do something specific on behalf of the Principal, whether orally or in writing >> “reasonable person standard” - the part that is understood
- Implied: When you give an agent Express Authority to perform some act, it is inferred that you are also giving them Authority to:
- Take any unspecified action “necessary or incidental to achieving the principal’s objectives” (that were expressly granted), or achieve the objectives expressly authorized.
- Act in accordance with industry customs and practices (unless specifically told by the Principal not to)
- Carry On: Do any act that the principal has previously acquiesced to the agent doing
- Act reasonably in the event of an emergency, making unspecified decisions that affect principal, until the principal can make her own decisions >> becomes an “agent of necessity”
What indicates Apparent Authority?
APPARENT AUTHORITY - Principal says “She is my agent and can act on my behalf” to third party.
