Ch. 33-34

Question 1

What is an Agency?

Answer 1

Contractual relationship between Principal and Agent aimed at entering the Principal into a contract with a third party

Question 2

Who are the parties?

Answer 2

Principal, Agent, and Third Party

Question 3

What is a principal?

Answer 3

The party represented by another

Question 4

What is an agent?

Answer 4

Person acting on behalf of the Principal

Question 5

What is a third party?

Answer 5

Person the who enters into a contract with the principal

Question 6

What is the effect?

Answer 6

Creates a fiduciary relationship between the principal and the agent requiring the agent to act primarily for the benefit of the principal

Question 7

How are agencies classified?

Answer 7

• Expressed
• Implied

Question 8

What do expressed agencies do?

Answer 8

they are stated orally or in writing for all to see

Question 9

What do implied agencies do?

Answer 9

they are implied by the actions of the parties

Question 10

What are the situations resulting in expressed agencies?

Answer 10

• Power of attorney
• Durable power of attorney

Question 11

What is POA/ Durable POA?

Answer 11

Formal written document, signed by the principal, that grants power to the agent allowing them to bind the principal in contract to a third party.

Question 12

Does a durable POA last beyond the capacity of the principal?

Answer 12

Yes

Question 13

What situations result in implied agencies?

Answer 13

• Estoppel
• Ratification

Question 14

What is estoppel?

Answer 14

Principal through their actions lead third party to believe that another individual serves as their agent although no formal agreement of Agency exist between Principal and purported Agent.

Question 15

What are the elements of ratification?

Answer 15

• the potential agent must misrepresent themself as agent for another party
• potential principal has complete knowledge of all contractual terms including of all material facts
• potential principal must accept the unauthorized act
• potential principal must ratify agent’s act in its entirely

Question 15

What is ratification?

Answer 15

Agent leads third party to believe they are agent for specific principal enters contract and principal accpets/ratifies the contract

Question 16

Knowing this is a Fiduciary Relationship, does this relationship give rise to new obligations for
the Principal and the Agent?

Answer 16

Yes, they now have obligations to each other, but the obligations of each party are
different because their roles are different

Question 17

What obligations does the principla have to the agent?

Answer 17

Compensation
Reimbursement and indemnification
Cooperation
Safe working conditions

Question 18

What is indemnification?

Answer 18

compensation for harm or lost

Question 19

What obligations does the agent have to the principal?

Answer 19

Loyalty
Notification
Performance
Obedience
Accounting

Question 20

What is an agency contract?

Answer 20

A contract between the agent and the principal

Question 20

When a party is found to be in breach of the Agency contract, what remedies are available to the non-breaching party if it’s the Principal?

Answer 20

Constructive trust
Avoidance
Indemnification

Question 20

Why can an agency contract be breached?

Answer 20

When parties fail to live up to their obligations imposed by the Agency contract.

Question 21

When a party is found to be in breach of the Agency contract, what remedies are available to the non-breaching party if it’s the Agent?

Answer 21

Tort and contract remedies
Demand for an accounting
Specific performance

Question 22

What is a target contract?

Answer 22

A contract between the principal and the third party

Question 23

When the Target Contract is signed by the agent, is the Principal now bound by the terms of the Target Contract?

Answer 23

It depends on the Scope of Authority granted to the Agent in the Agency Contract and whether or not the Agent acted within that Scope of Authority

Question 24

Who is liable for Target Contract liabilities when agent acts within scope of authority?

Answer 24

It depends on the classification of the Principal.

Question 25

What are the different classifications of the Principal?

Answer 25

Disclosed Partially Disclosed Undisclosed

Question 26

When the principal is disclosed, who is liable?

Answer 26

Principal liable, Agent not liable

Question 27

When the principal is undisclosed, who is liable?

Answer 27

Principal liable, Agent Liable

Question 28

When the principal is partially disclosed, who is liable?

Answer 28

Principal liable, Maybe Agent

Question 29

Who is liable for Target Contract liabilities when agent’s actions exceed their Scope of Authority?

Answer 29

It depends on what the 3rd party believed about the person with whom they were negotiating.

Question 30

Did the 3rd party believe the agent was mistaken about Agent’s authority to negotiate the Target Contract?

Answer 30

Agent not liable, Principal not liable

Question 30

What other liabilities may arise out the agency contract?

Answer 30

Tort liabilities

Question 31

Did the 3rd party reasonably believe the agent has authority to negotiate the Target Contract?

Answer 31

Agent liable, Principal not liable

Question 32

What is Tort?

Answer 32

A wrongful act committed against the 3rd party by the Agent that results in damages to the 3rd Party’s property or person

Question 33

Who is liable for the damage to the 3rd party?

Answer 33

Agent is always liable because they committed the wrongful act It depends for the prinicipal

Question 34

When is the principal liable for the damages done toe a third party?

Answer 34

- Directs agent to commit tortious act - Fails to provide proper instruments, tools, or adequate instructions to Agent - Respondeat superior - Agent Misrepresentation

Question 35

What constitutes as respondeat superior?

Answer 35

Principal liable if Agent wrongfully injures third party Negligently hired

Question 36

What is agent mispresentation?

Answer 36

Agent lies to 3rd party

Question 37

What about criminal responsibility?

Answer 37

If Agent commits crime, agent always liable for crime

Question 37

Is Principal Liable for crime?

Answer 37

Depends on whether or not Principal authorized the act

Question 37

What is an unauthorized act?

Answer 37

In scope of employment, principal not responsible for agent's crime

Question 38

What is an authorized act?

Answer 38

Principal responsible for agent's crime

Question 39

When does the agency contract terminate?

Answer 39

by acts of parties by operation of law

Question 40

What is considered an act of parties?

Answer 40

Lapse of time Fulfillment of purpose Occurrence of specific event Mutual agreement by parties Revocation of authority Renunciation by agent

Question 41

What is considered an operation of law?

Answer 41

Death Insanity Bankruptcy Change in circumstances Change in law Impossibility of performance Disloyalty of agent War

Question 42

What type of relationship does one between an agent and independent contractor cover?

Answer 42

between the employee and employer

Question 43

Is the individual that hires the independent contractor liable for the independent contractors tortious actions under doctrine of respondeat superior?

Answer 43

No Except for hazardous activities