7.1 - Agency

Question 1

A legal relationship in which one person or entity (principal) assents to have another person or entity act on the principals behalf :

Answer 1

Agency

Question 2

What is required to create an agency relationship?

Answer 2

A principal with contractual capacity and consent of the partie

Question 3

Many states require a written agency agreement if:

Answer 3

1. The agent is to buy or sell an interest in land for the principal
2. Agency agreements that cannot be performed within 1 year

Question 4

Do both the principal and agent need to be competent?

Answer 4

No, just the principal needs to be competent

Question 5

A written authorization of agency where the agent has the power to act on behalf of the principal

Answer 5

Power of attorney

Question 6

The agent under a power of attorney is referred to as:

Answer 6

Attorney in fact

Question 7

What are the 4 duties an agent owes to a principal?

Answer 7

Duty of loyalty
Duty of obedience
Duty of reasonable care
Duty to account

Question 8

This person owes a duty of care to both the agent and the principal:

Answer 8

Subagent (assistant)

Question 9

What are 4 remedies a principal can take is an agent breaches a duty?

Answer 9

Tort damages
Contract damages
Recovery of secret profits
Withhold compensation

Question 10

What are the 2 duties a principal has to an agent?

Answer 10

1. Compensation
2. Reimbursement / indemnification

Question 11

Who has the right to terminate an agency coupled with an interest?

Answer 11

Only the agent

Question 12

An agents power to bing a principal can arise through:

Answer 12

1. A grant of actual authority
2. Apparent authority or estoppel
3. Ratification

Question 13

Sometimes called real authority is the authority the agent reasonably believes he possesses because of the principals communications to the agent:

Answer 13

Actual authority

Question 14

Includes the authority to do things reasonably necessary to carry out the agency (eg. manage a business, hire employees, etc.)

Answer 14

Implied actual authority

Question 15

Is expressly granted either orally or through written instructions:

Answer 15

Express actual authority

Question 16

Termination of actual authority can occur by:

Answer 16

1. Act of parties
2. Accomplishment of objective
3. Expiration of stated period
4. Automatic termination of actual authority

Question 17

How is actual authority terminated automatically by operation of law by any of the following:

Answer 17

Death of either the principal or the agent
Incapacity of the principal
Discharge in bankruptcy of the principal
Failure to acquire a necessary license
Destruction of the subject matter of the agency
Subsequent illegality

Question 18

Situations in which the gent will nevertheless have the power (but not the right) to bind the principal:

Answer 18

Apparently authority

Question 19

Requires a holding out by the principal or negligent inaction by the principal. The purported agents mere representation that she is an agent is not sufficient to establish apparent authority:

Answer 19

Apparent authority

Question 20

This is based on the third party’s reasonable belief that the agent has the power to bind the principal:

Answer 20

Apparent authority

Question 21

Will perform a series of transactions involving a continuity of service:

Answer 21

General agent (business manager))

Question 22

Will perform one or more transaction not involving a continuity of services:

Answer 22

Special agent (realtor)

Question 23

When a principal terminates an agents actual authority, the agent will continue to have apparent authority until:

Answer 23

The principal notifies third parties who might have known of the agency

Question 24

Must be given to terminate apparent authority to old customers:
Must be given to terminate apparent authority as to potential customers who may have known of the agency but who had not done business with the agent:

Answer 24

Actual notice
Constructive notice

Question 25

If a person intentionally or carelessly caused a 3rd party to believe another is their agent and the 3rd party detrimentally relied on this belief:

Answer 25

The person will be estoppel from denying the other person acted as their agent and will be bound

Question 26

Allows a principal to choose to become bound by a previously unauthorized act of his or her agent:

Answer 26

Ratification

Question 27

The general rule is that a principal is not liable for the torts committed by the agent, however the exception is that:

Answer 27

An employer can be liable for an employees torts if they were committed within the scope of employment

Question 28

One who works full time for an employer, uses employer tools, is compensated on a time basis, is subject to the supervision of the principal:

Answer 28

An employee

Question 29

Has a calling of her own and who uses her own tools, is hired for a particular job, is paid a give amount for that job and followed her own direction in carrying out the job:

Answer 29

Independent contractor

Question 30

An employer can be liable for the torts of an independent contractor if:

Answer 30

The employer authorized the tortious acts or if the work involved ultra-hazardous activity