Agency Flashcards
What is Agency Law?
Agency Law deals with someone’s ability to bind you to a contract with a third party.
What is required for Agency to exist?
Both parties must consent to the relationship and intend for an Agency relationship to exist.
Agent owes Principal fiduciary duty.
Principal doesn’t owe Agent fiduciary duty.
A contract is NOT required and an Agency agreement is not based on Contract Law.
Exception: If duties cannot be performed within a year, a signed writing is required.
What is Actual Authority in an agency?
Actual Authority is what is expressly granted or is implied by the duties you expect the Agent to perform and is necessary to carry them out.
What is Implied Authority in an agency?
When authority is expressly granted, it is implied that the agent has the authority to carry out the duties.
It does not include authority to sell or alter a business.
What is Apparent (Ostensible) Authority in an agency?
Apparent Authority is based on the third party’s perspective; they believe that the Agent has the authority to enter into a contract based on:
Prior dealings with agent
Agent’s title leads the third party to believe they can enter into a contract
The Principal hires the Agent to carry out duties that normally carry with them the rights to enter into contracts.
How is an Agency terminated?
An Agency is terminated if:
Both Agent and Principal agree to terminate
Principal fires Agent
Agent fires Principal
Agent breaches their contract by doing something like violating their obligation to act as a fiduciary to Principal.
How do you terminate Apparent Authority?
In terminating Apparent Authority, one must:
Let the public know
Let the people or entities that the Agent previously interacted with know
In cases of death or Principal is otherwise not competent to contract, ALL authority is revoked.
What is an Agency Coupled with an Interest?
Agent acquires an ownership interest in the Agency.
It can only be terminated early (before the interest expiration date) by the Agent.
Unless the Agency has a specific time limit spelled out in a contract, the Agent’s authority is irrevocable by the Principal.
When is an employee an Agent, and when does this make the employer liable?
Employees are agents while acting within the scope of their duties.
For employees who injure third parties while acting within the scope of their duties, both Employee and Employer are liable.
When are Agents liable for torts (civil wrongs) they commit?
Agents are liable for torts (civil wrongs) committed whether they had the authority or not.
Are Agents who act outside of their authority liable?
Agents who act outside of their authority will be liable for the act.
Exception:
Principal ratifies the contract which relieves Agent of liability.
In order to ratify, Principal must know all of the facts and must ratify before the third-party cancels the agreement.
If Principal keeps the benefits of the contract. ratification is implied.
The contract must be 100% ratified or there is no contract.
What is an Agent’s liability when acting for an undisclosed principle?
The agent is liable to the third-party even if acting within their authority.
The third-party can sue both Principal and Agent if Principal becomes disclosed.
The agent can then sue Principal.
What are the requirements for a Power of Attorney (POA)?
A POA must:
Be in writing
Be signed by person granting the POA
End upon death of Principal
General POA - Agent authorized to handle all affairs
Special POA - Agent authorized to handle only specific affairs
