Ch. 11: Agency & Partnerships Flashcards
(29 cards)
What is an agent?
A person who represents and acts for a principal in dealings with third parties.
What creates an agency relationship?
Express/implied contract, estoppel, ratification, or gratuitously.
What is actual authority?
Authority specifically given to the agent in an agency agreement.
What is express authority?
Authority clearly stated in the contract.
What is implied authority?
Authority inferred from the principal’s actions or conduct.
What is apparent authority?
When a third party reasonably believes the agent has authority based on the principal’s behavior.
What is estoppel in agency law?
A legal principle preventing a principal from denying an agent’s authority if the third party relied on it.
What is ratification?
When a principal approves an agent’s unauthorized actions after the fact.
What is agency by necessity?
Created by urgent circumstances, like selling perishable goods.
Name one duty of an agent.
To act within the scope of authority and perform duties with reasonable care.
What is fiduciary duty?
Obligation to act in utmost good faith, full disclosure, and best interests of the principal.
Can an agent profit from agency work without disclosure?
No, all benefits must be disclosed and approved by the principal.
What is the principal’s duty to the agent?
To honor the contract, pay for services, and reimburse expenses.
Who is liable if the agent acts for an undisclosed principal?
The agent may be liable to the third party.
What happens if an agent acts beyond authority?
They may be liable for breach of warranty of authority.
When is a principal vicariously liable?
When the agent is an employee acting within the scope of employment.
How is an agency terminated?
By contract terms, agreement, death, insanity, or bankruptcy.
What is a power of attorney?
A formal agency contract under seal, sometimes enduring mental incapacity.
What are specialized agents?
Agents in fields like real estate, insurance, and law, often with fiduciary duties.
What is a sole proprietorship?
A business owned and operated by one individual.
What is unlimited liability?
Sole proprietors and general partners are personally liable for business debts.
What is a partnership?
Two or more people carrying on business together for profit.
Can a partnership be created unintentionally?
Yes, through conduct (inadvertent creation).
Are partners agents of each other?
Yes, each partner can bind the others.
