Agency Law

Question 1

To bind a P to a contract, what are the various authorities an Agent may have?

Answer 1

1) Actual (express or implied) Authority

2) Apparent Authority

3) Ratification

Question 2

What is Express actual authority?

Answer 2

It is actually contained within the 4 corners of the agency agreement.

It is effective even if it was granted mistakenly or because of misrepresentation

Question 3

What is Implied actual authority?

Answer 3

The agent reasonably believes that they have authority based on the principal’s actions or words.

Question 4

What is Apparent Authority?

Answer 4

Principal “holds out” another as possessing authority and based on this holding, a THIRD PARTY is reasonably led to believe that authority exists. Even though there is no authority between the agent and principal.

Question 5

For ratification to occur, the “principal” must:

Answer 5

1) Have knowledge of (or have reason to know) all material facts regarding the contract;

2) Accept the entire transaction (meaning the “principal” cannot merely ratify a portion of the transaction); AND

3) Have capacity (be competent and of legal age)

Question 6

A principal may be vicariously liable for the torts of their agent under two theories:

Answer 6

1) Respondeat Superior (in addition, the employer may be directly liable, for example, negligent hiring)

2) Apparent authority

Question 7

Generally, an employer is not liable for employee’s intentional tort. However, intentional torts will be viewed as within the scope of employment if the conduct is:

Answer 7

1) A natural incident of the employee’s duties (as where force is authorized or the nature of the work gives risk to hostilities);

2) Where the employee is promoting the employer’s business or is motivated to serve the employer; OR

3) Specifically authorized or ratified by the employer.

Question 8

A principal will incur liability for the acts of an independent contract where:

Answer 8

1) Inherently dangerous activities (such as blasting) are involved;

2) Nondelegable duties have been delegated; OR

3) The principal knowingly selected an incompetent independent contractor.

Question 9

What is the rule statement for an agency relationship?

Answer 9

An agency relationship is created when a person (principal) manifests an intent that another person (agent) act on his behalf and both parties consent to the agreement.

Question 10

What is the necessary voting requirement for a Pship to be bound to a contract that is conducted in the Pship’s ordinary course of business?

Answer 10

Majority vote

Question 11

What is the necessary voting requirement for a Pship to be bound to a contract that is conducted outside of the Pship’s ordinary course of business?

Answer 11

Unanimous vote

Question 12

What is the order of operations that Pship creditor must do to go after a partner’s personal assets to fulfill a debt?

Answer 12

Go through all of the Pship assets first

Then obtain a judgment to go after the partner’s personal assets

Question 13

Under a general Pship, what is the level of personal liability that a partner has for the Pship’s debts and obligations?

Answer 13

They are held jointly and severally liable for the Pship’s debts and obligations.