Creation of an Agency Relationship

Question 1

Requirements for creating an Agency Relationship

Answer 1

Principal must manifest an intent to grant authority to Agent to act (1) on Principal’s behalf and (2) subject to Principal’s control

AND

Agent must consent to Principal’s grant of authority (i.e., act on Principal’s behalf and subject to her control)

** To create an agency relationship there must be both a manifestation of the principal’s intent and of the agent’s consent. In other words, there must be mutual assent by both parties.

Question 2

What is Agency by Ratification?

Answer 2

Allows Principal to grant retroactive authority for Agent’s earlier unauthorized actions

Question 3

What is required for Agency by Ratification? And how does the Principal ratify?

Answer 3

At the time of ratification, Principal must have:
(1) requisite contractual capacity to authorize Agent’s actions, AND
(2) knowledge of all material facts concerning the transaction

Principal ratifies by either:
(1) manifesting assent that the act will affect Principal’s legal relations, OR
(2) by conduct that is justifiable only on the assumption that Principal consents to be
bound