Agency/Mandate Flashcards
(40 cards)
What is agency?
A fiduciary relationship when one person (principal) manifests assent to another person (agent) that the agent shall act on the principal’s behalf and subject to the principal’s control––and the agent manifests or consents to the act.
What is the difference between agency and procuration
Procuration (power of attorney is a unilateral judicial act that confers authority on another person to represent the principal in Legal Relations
Mandate is a bilateral contract where the agent represents the principal in one or more affairs.
Mandate
A contract by which a person (principal) confers authority on another person (mandatary) to transact one or more affairs for the principal.
Elements of mandate
(1) Contract
(2) Control
(3) Action on behalf of another
Types of mandate contract
Can be either onerous or gratuitous.
There is a presumption of gratuity, however in the business context this relationship is typically onerous (for money).
Form of mandate contract
Generally there are no form requirements for a mandate contract, but when the law prescribes a certain form for an act, a mandate authorizing the act must be in that form.
Equal Dignities Rule
if a contract must be in writing, then the contract or mandate must also be in writing (purchase of immovable property).
Principal-Agent relationship
- PAT Triangle
The principal is bound to the mandatary to perform obligations the mandatary contracted within the limits of his limits of his authority.
Describe Principal-third party relationship
- PAT Triangle
the principal is bound to perform the contract that the mandatary––acting within the limits of his authority––makes with a third person.
Describe Agent-third party relationship
- PAT Triangle
If the agent contracts:
(1) in the name of the principal
(2) within the limits of authority
then he DOES NOT BIND himself personally for performance
EXCEPTION: if the agent expressly promises the performance of the contract, then he binds himself for the performance even if he contracted in the name of principal.
General Rule-Agent Disclosure
Agent should disclose principal’s identity/existence to avoid personal liability.
Describe Third party to Principal relationship
-PAT Triangle
A third person with whom an agent contracts with in the name of the principal OR in his own name as mandatary, is bound to THE PRINCIPAL for performance of the contract.
Reimbursement (Principal to Agent)
Principal is bound to reimburse Agent and pay Agent even if the purpose of the mandate was not accomplished––as long as it was not due to Agent’s fault.
EX: If Agent purchased equipment and used personal gas to go pick up equipment, Principal would have to reimburse Agent for the expense
EX: then, if Agent drove far away to buy the equipment but was not able to make the purchase once he got there, THROUGH NO FAULT OF AGENT, then Principal must still reimburse.
Actual Authority
What can the agent do within the bounds of his authority
If an agent lacks actual authority for act, Agent may be personally bound to third party.
Can be Express or Implied
Express Authority
Written or Oral
Required when:
- dealing with the purchase or sale of property
- contracting a loan, acknowledging remission of debt
- draw or endorse promissory note
- entering into a compromise or arbitration
Don’t forget equal dignities rule
Implied Authority
Highly Contextual
- based off past practices or industry customs
- Incidental and General authority encompass this idea
Incidental Authority
authority to perform acts incidental to or necessary for performance of a mandate
General Authority
the principal may confer on the mandatary general authority to do whatever is appropriate under the circumstances.
- General Manager
Agent Acting Outside of Actual Authority: Agent and Third Persons
Agent becomes personally bound to the third person with whom he contracts
Exceptions:
(1) the third person knew at the time the contract was made that the agent had exceeded authority
(2) the principal ratifies the contract
If Agent made an implied warranty of authority with the third party, he is at least liable fo damages arising from breach of implied warranty of authority
Agent Acting Outside of Actual Authority: Agent and Principal
Agent is answerable to the principal for a resulting loss that the Principal sustains
Principal is NOT answerable to Agent for any loss that the mandatary sustains because of acts that exceeded authority.
EXCEPTION:
principal is liable if he ratifies those acts
Apparent Authority (agent is acting outside of actual authority)
One who causes a third person to believe that another person is his agent is bound to the third person who in GOOD FAITH contracts with the putative mandatary.
Elements of apparent authority
(1) Manifestation by Principal
- Express
- Pattern of Conduct
- Position
- Acquiescing in an agent’s conduct
- Intermediary
(2) Reasonable Reliance on the Manifestation by 3rd party
- Burden of proving reasonable belief rests on 3rd party
Undisclosed Agency
- NEVER apparent authority
- Agent who contracts in his own name without disclosing agent status BINDS HIMSELF PERSONALLY
- Agent has burden of proving disclosure if in dispute
Partially disclosed agency
- An agent who enters into a contract and discloses stats as agent but not his principal––BINDS HIMSELF PERSONALLY FOR THE PERFORMANCE OF THE CONTRACT
- Agent ceases to be bound when the principal is disclosed
- Duty to disclose rests with Agent - Agent must bring 3rd party to ACTUAL KNOWLEDGE (Atlantic Salmon v. Curran).
- 3rd persons are still bound to the principal UNLESS the obligation is strictly personal or the right is un assignable––regardless of undisclosed or partially undisclosed
- Principal is bound to perform the contract and Agent makes with 3rd persons––so long as A had actual Authority
