Agency Relationships

Question 1

What are the requirements for an agency to form?

Answer 1

(1) Mutual assent
(2) Agent is acting on behalf of the principal
(3) The principal has the right to control the agent’s actions

Question 2

When may an agent represent more than one principal?

Answer 2

(1) Agent provides full disclosure to both parties
(2) Both parties consent

Question 3

What are the three types of principals?

Answer 3

(1) Disclosed
(2) Partially disclosed
(3) Undisclosed

Question 4

What are the four types of agents?

Answer 4

(1) General agent
(2) Special agent
(3) Coagent
(4) Subagent

Question 5

What is a general agent?

Answer 5

An agent authorized to conduct a series of transactions that involve continuity of service

Question 6

What is a special agent?

Answer 6

An agent authorized to conduct a specific transaction or series of transactions that do not involve continuity of service

Question 7

What is a coagent?

Answer 7

Another agent appointed by the principal

Question 8

What is a subagent?

Answer 8

A person appointed by the agent to perform acts that the agent has consented to perform on behalf of the agent’s principal

Question 9

What are the seven ways an agency relationship can terminate?

Answer 9

(1) Accomplishment of purpose
(2) Expiration of a specific term or within a reasonable time
(3) Termination by either party
(4) Relationship becomes illegal
(5) Change in circumstances that leads the agent to believe the principal would no longer consent
(6) Serious neglect, dishonesty, or breach of duty by agent
(7) Death or mental incapacity of either party

Question 10

In what circumstances will an agency relationship not end upon the principal’s death, insanity, or insolvency?

Answer 10

(1) The agency is irrevocable
(2) The principal specified that the agent has the authority to bind the principal, even after death or incapacity