Business Law: Agency Flashcards
What is the duty of indemnification?
The duty of indemnification is the duty to hold the agent harmless for liabilities the agent incurs on behalf of the principal. A principal owes her agent the duty of indemnification, which requires the principal to reimburse the agent for costs and liabilities incurred by the agent as a result of authorized acts on behalf of the principal.
A principal has an implied duty to reimburse (indemnify) the agent for all expenses incurred by the agent in carrying out the agency.
What is an agency coupled with an interest?
An agency coupled with an interest arises only when the agent is given an interest in the subject matter of the agency. A sales commission is not a sufficient interest.
Does a contract for services need to be in writing?
A contract for services need not be in writing unless it cannot be performed within one year.
However, most states require an agency agreement to be in writing if the agent is to purchase or convey interests in land.
What is respondeat superior?
Under the doctrine of respondeat superior, a principal, including a corporation, can be held liable for an employee’s tort committed within the scope of employment.
Respondeat superior is an agency concept that makes an employer liable for the actions of an employee done within the scope of employment.
What is ratification?
Ratification occurs when a principal agrees to be bound by a previously unauthorized contract entered into by an agent on the principal’s behalf. This is not a duty.
A third party may withdraw from a transaction or agreement entered into with an agent who exceeded his or her authority at any time prior to the principal’s ratification of the agent’s unauthorized acts.
What is ultra vires?
Ultra vires is a doctrine limiting a corporation’s power to act outside the scope of the corporation’s stated purposes or statutory powers
What is estoppel?
Corporation by estoppel prevents (stops) a party to a lawsuit from successfully arguing that an entity is not a corporation on account of the failure of the entity to comply fully and timely with all the provisions of state law with respect to the formation and operation of a corporation. The party is so prevented (“estopped”) on account of that party’s previously treating the entity as if the entity had been a properly formed and properly operated corporation.
What is actual authority?
Actual authority is the authority that the agent reasonably believes she possesses because of the principal’s communications to the agent.
What is renunciation?
Renunciation is the agent’s termination. Renunciation would terminate the agent not by operation of law but by the act of a party. Either party has the power (but not necessarily the right) to terminate an agency relationship.
What is constructive trust?
Constructive trust is a remedy to ensure that the principal can recover secret profits obtained by the agent because of the wrongful conduct.
Is an agent liable under a contract made with a third party when the agent is acting on behalf of a (an) disclosed principal or undisclosed principal?
An agent general is not liable on contracts that the agent makes on the principal’s behalf if the principal is disclosed, but the agent is personally liable on contracts the agent makes on behalf of the principal when the principal is undisclosed.
Once an undisclosed principal becomes known to the third party, the third party can elect to hold either the agent or the principal liable for breach of contract.
Is a principal generally liable for an agent’s torts?
A principal generally is not liable for an agent’s torts, but can be liable when the torts are authorized.
What is specific performance?
Specific performance is a court order to fulfill the terms of a contract.
