Agency Flashcards
(21 cards)
two main types of agency relationships in business
Employer-employee and principal-independent contractor
written or oral
Formation of Agency Relationships
Express Agreement
formed through the actions or conduct of the parties, even without a formal agreement
Formation of Agency Relationships
Implied by Conduct
principal approves an unauthorized act
Formation of Agency Relationships
Ratification
principal’s actions cause third party to believe agency exists
Formation of Agency Relationships
Estoppel
mutual agreement, lapse of time, achievement of purpose, revocation/renunciation
Termination of Agency Relationships
By act of the parties
death, insanity, bankruptcy, war, or illegality
Termination of Agency Relationships
By operation of law
principal approves an unauthorized act later
Scope of Authority & Principal’s Liability
Ratified authority
reasonable third party belief based on principal’s conduct
Scope of Authority & Principal’s Liability
Apparent authority
express or implied
Scope of Authority & Principal’s Liability
Actual authority
When is a principal liable for the agent’s actions?
When the agent acts within the scope of actual or apparent authority
reasonable skill and care
Agent’s Duties to Principal
Performance
inform the principal of relevant facts
Agent’s Duties to Principal
Notification
no conflicts of interest or secret deals
Agent’s Duties to Principal
Loyalty
follow lawful instructions
Agent’s Duties to Principal
Obedience
no mingling of funds, keep records
Agent’s Duties to Principal
Accounting
Cooperation
Principal’s Duties to Agent
assist the agent in performance
for expenses reasonably incurred
Principal’s Duties to Agent
Reimbursement
pay as agreed
Principal’s Duties to Agent
Compensation
terminate the agency, sue for damages, seek injunction
Remedies for Breach in Agency Relationships
For the principal
sue for compensation, indemnification
Remedies for Breach in Agency Relationships
For the agent
