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Flashcards in Agency Deck (20):

Capacity Requirements for Agency Relationship

Principal: contractual capacity
Agent: minimal capacity


Formalities of Creating an Agency Relationship

1) Capacity
2) Consent
3) Writing **

** Writing (unless under SOF)


Methods of Creating an Agency Relationship

Act of Parties
- Agreement
- Holding out by principal (apparent authority)
- Ratification
Operation of Law
- Estoppel
- Statute


Agent's Duties

Express duties, fiduciary duties of loyalty, obedience to lawful instructions, and reasonable care


Principal's Remedies Against Agent

Contract actions, tort actions, actions for secret profits, equitable actions, and withholding of compensation for intentional torts or intentional breach of duties


Principal's Duties

Duties imposed by contract, reasonable compensation, and reimbursement for expenses


Agent's Remedies

Contract remedies with a duty to mitigate
Possessory lien for any money due


Actual Authority

Authority that agent reasonably believes he possesses based on principal's dealings with her

Express: contained in four corners of agreement
Implied: agent's reasonable belief as result of principal's actions


Termination of Actual Authority

Lapse of specified or reasonable time
The happening of specific event
A change in circumstance
Agent's breach of fiduciary duty
Either party's unilateral termination
Operation of law


Irrevocable Agencies

An agency coupled with an interest may not be unilaterally terminated


Apparent Authority

Arises from reasonable belief of third party where principal directly or indirectly holds out another as possessing certain authority


Types of Apparent Authority

When Agent Has No Actual Authority
- Imposter
- Lingering Apparent Authority (should provide notice)
When Agent Exceeds Actual Authority
- Prior Act
- Position


Inherent Authority

When court wishes to protect third parties

- Respondeat superior
- Conduct similar to that authorized



agency relationship is created when "agent" purports to act on behalf of "principal" without authority, but principal later validates the act and becomes bound retroactively


Prerequisites for Ratification

- Principal must know or have reason to know material facts
- Accept the entire transaction
- Have capacity


Methods of Ratification

- acceptance of transaction's benefits
- silence if there is a duty to disaffirm
- suing on transaction


What May Be Ratified

Anything unless:
- performance was illegal
- third party has withdrawn
- material change in circumstances


Liability of the Parties: Third Party vs. Principal

Principal will be liable to the third party on a contract entered into by her agent if the agent had valid authority to act (actual, apparent, by ratification)


Liability of the Parties: Third Party vs. Agent

Disclosed Principal (existence and identity known to third party)
- A disclosed principal is always liable on the contract and the agent is generally not liable (except if agent was intended to be liable or implied warranty)

Undisclosed Principal
- Liability for both the principal and agent


Liability of the Parties: Third Party Liability

Disclosed Principal
- Only principal may enforce

Unidentified/Undisclosed Principal
- Either agent or principal may enforce

Principal may not enforce if there has been affirmative fraudulent misrepresentation of principal's identity