CREATION OF AGENCY RELATIONSHIP Flashcards
What is an agent?
An agent is a person or entity that acts on behalf of another (the principal)
Who is the person or entity that the agent acts on behalf of?
The principal
What type of relationship is agency?
a fiduciary relationship
How is an agency created?
Agency exist if there is (1) assent (2) benefit, and (3) control
What does assent mean?
Assent is the formal or informal agreement between the principal and the agent
What does the benefit element mean?
The benefit element means that the agent’s conduct on behalf of the principal primarily benefits the principal
What does the control element mean?
the control element means that the principal has the right to control the agent by being able to supervise the agent’s
performance
What degree of control is required to create an agency relationship?
the degree of control not need to be significant; an agency relationship exists if the elements above are met – even if the parties state otherwise
What are the 3 types of agency relationships?
the 3 types of agency are: (1) universal agent, (2) general agent, and (3) special agent
What is a universal agent?
A universal agent has broad authority to act on behalf of the principal, including performing all acts the principal is
allowed to perform
What is a general agent?
A general agent is one who has the authority to conduct a series of transactions over a period of time for a particular purpose,
business or operation
What is a special agent?
A special agent has limited authority (1) to conduct a specific act or transaction or (2) to conduct certain actions over a
specified period of time
