Agency

Question 1

Agency Principles

Answer 1

An agent is one who acts on behalf of the principal. Principals are bound by the acts of its agents who have the authority to bind the principal.

Question 2

Actual Authority

Answer 2

An agent’s actual authority comes from the relationship between the agent and the principal. Actual authority may be express (written or communicated) or implied (through prior dealings and course of conduct). Actual authority is based on what the agent has been instructed to do.
a. Express authority refers to any express agreement between the principal and the agent. Authority may be implied from the surrounding circumstances. Implied authority is that which is reasonably necessary to accomplish the objectives of the relationship.

Question 3

Apparent Authority (Authority Based Upon Outward Appearances)

Answer 3

In the absence of express authority, a corporation may be estopped to deny the authority of one of its agents where the corporation has created the appearance that the agent has the authority to act. Apparent authority arises when the principal holds out another as having certain authority, causing the third party to believe that such authority exists.