Creation and Termination

Question 1

Agency

Answer 1

Agency is the fiduciary relationship that exists between an agent and principal where the agent acts on the principal’s behalf and is subject to the principal’s control.

Question 2

Elements of Agency

Answer 2

1. The parties voluntarily consent (express or implied) to enter into an agency relationship
2. The agent is subejct to the principal’s control (e.g., supervision is sufficient - the amount of control may be limited)

Question 3

Termination of Agency

Answer 3

1. Terminated by the parties
2. Terminated by operation of law

Question 4

Terminated by the parties

Answer 4

(a) the agent or principal manifests to the other the desire to cease the agency relationship (termination is effective when the other party receives notice of the termination);
(b) express terms of the agency expire (e.g., the principal expressly hires agent for 6 months); OR
(c) the purpose of the agency relationship is fulfilled

Question 5

Terminated by operation of the law

Answer 5

(a) the agent or principal dies (some jurisdiction require that the part receive notice of the other’s death)
(b) the agent or pcincipal loses capacity (some jurisdiction require that the party receive notice of the other’s incapacity) OR
(c) the agent materially breaches a fiduciary duty owed to the principal