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Flashcards in Agency Deck (16):

What are the 4 ways in which an agency can be created?

- by consent
- by estoppel
- by necessity
- by ratification


What are the 2 ways in which an agency can be created by consent?

1) Express agreement - principal actually appoints agent in writing or oral.
2) Implied agreement - agreement implied from parties' conduct or relationship


Describe estoppel using an example

When a director has been agreeing contracts on behalf of a company and the company has always been fine with it. If one of the contracts is then breached, the company is liable even though they didn't properly express consent.


Does there need to be pre-existing agency relationship between the principal and the agent for estoppel to occur?



What are the requirements to act in necessity?

- emergency situation
- agent cannot contact principal
- agent acting in good faith for best interests of principal
- cannot be a complete stranger


Explain ratification

Properly appointed agent exceeds authority or person having no authority acts as an agent, the principal is not liable under that contract unless they ratify it


If a contract is ratified...

- principal becomes liable
- principal bound from when contract was made
- agent relieved of liability
- no authority for agent on future acts


Principal can only ratify if...

- they exist at time of contract
- principal has legal capacity
- agent identified the principal
- they are made aware of contract terms


In order to ratify, the principal must...

- ratify whole contract
- ratify within a reasonable time
- communicate clear intention to ratify


What are the duties of an agent? Spacopc

- accountability
- no conflict of interest
- performance
- obedience
- skill
- personal performance
- confidentiality


What are the rights of an agent?

- indemnity (repaid expenses)
- remuneration (entitled to a reasonable amount if not specified)
- lien (can withhold assets until payment)


What are the 3 types of authority of an agent?

- actual express
- actual implied
- ostensible/apparent


Actual express authority

Principal clearly states their authority


Actual implied authority

Implied by customary behaviour os past conduct, e.g. partner acting on behalf of partnership


Ostensible authority

Similar to estoppel. Not actual authority.



- principal is liable unless clearly stated otherwise by parties
- agent liable unless third party become aware of principal, then third party can sue either