Liability/ types of agencys

Question 1

A principal will be liable to the 3rd parties in contract if

Answer 1

his agent has authority to effect the contract

Question 2

Authority may come in 4 forms:

Answer 2

1. express actual authority
2. implied actual authority
3. apparent authority
4. inherent authority

Question 3

Express actual authority

Answer 3

A principal has expressly communicated to an agent, normally in spoken words or in a writing, the power to perform some act on the principal’s behalf.

Question 4

one of the most important powers that a principal can confer upon an agent

Answer 4

the power to borrow money or to execute and deliver promissory notes

Question 5

The power to borrow money or to execute and deliver promissory notes must be granted by

Answer 5

express terms or flow as a necessary and ineveitable consequence from the nature of the agency actually created

Question 6

Power of attourney

Answer 6

a formal manifestation from principal to agent, as well as to third parties with whom the agent interacts, that evidences the agent’s appointment and the nature or extent of the agent’s authority

Question 7

An agent has implied authority when the principal

Answer 7

does not expressly confer authority but the principals words or conduct, “reasonably interpreted, causes the agent to believe” that he has authority

Question 8

Implied authority includes the authority to do acts that are

Answer 8

incidental to or reasonably necessary to achieve the principals objectives

Question 9

An agent has apparent authority in dealing with a third person when the principal’s

Answer 9

words or conduct, reasonably interpreted, causes the 3rd person to believe that the agent has authority

Question 10

One who contracts to aquire property from a third person and convey it to another is the agent of the other only if

Answer 10

it is agreed that he is to act primarily for the benefit of the other and not for himself

Question 11

3 elements of a buyer/supplier relationship

Answer 11

1. fixed price (most important)
2. Acting in their own name and recieves title before the transferring
3. Independant business

Question 12

A principal will be liable to 3rd parties in contract if

Answer 12

his agent has authority ro effect the contract

Question 13

4 types of authority

Answer 13

1. express actual authority
2. implied actual authority
3. apparent authority
4. inherent authority

Question 14

Express Actual Authority

Answer 14

A principal has expressly communicated to an agent, normally in spoken words or in a writing, the power to perform some act on the principal’s behalf.

Question 15

Power of attourny

Answer 15

a formal manifestation from principal to agent, as well as to third parties whom the agent interacts, that evidences the agent’s appointment and the nature or extent of the agent’s authority

Question 16

An ageny has implied actual authority when

Answer 16

the principal does not expressly confer authority but the principal’s words or conduct, “reasonably interpreted, causes the agent to believe” that he has authority.

Question 17

Implied actual authority includes the authority to do acts that are

Answer 17

incidental to or reasonably necessary to achieve the principals objectives

Question 18

An agent has apparent authority in dealing with a third person when the principal’s

Answer 18

words or conduct “reasonably interpreted, causes the 3rd person to believe” that the agent has authority

Question 19

Real world solution to lender liability - Independant director

Answer 19

hire someone new to be the independent director to help out the business but they have veto power

Question 20

Why care about authority?

Answer 20

principal is liable on a contract if agent has authority

Question 21

3rd parties

Answer 21

person agent deals with on behalf of the principal

Question 22

Actual authority

Answer 22

principals communication reaches the agent

Question 23

Express actual authority

Answer 23

communicated directly and explicitly from princiapl

from the principals POV

Question 24

Implied/incidental actual authority

Answer 24

1. Necessary and proper
2. in a manner the agent reasonably believes the principal would have them act

Agents POV

Question 25

Apparent authority

Answer 25

principals communication reaches 3rd party | POV of the 3rd party ## Footnote done to keep unfair result from 3rd party

Question 26

# Actual authority authority to do an act can be created by

Answer 26

- written or spoken words of the principal OR - other conduct of the principal which - reasonably interpreted, causes the agent to be believe that the principal desires him so to act on the principals accout

Question 27

The agent acts with actual authority when, at the time of taking action that has legal consequence for the principal, the agent

Answer 27

reasonably believes, in accordance with the principals manifestation to the agent, that the principal wishes the agent so to act

Question 28

Actual v. Express

Answer 28

Express: very specific or detailed Implied: necessary and proper or reasonable interprestation

Question 29

An agent has actual authority to take action ...

Answer 29

- designated or implied in the principals manifestations to the agent - and acts necessary or incidental to achieving the principals objectives - as the agent reasonably understands the principals manifestations and objectives when the agent determines how to act

Question 30

Unless otherwise agreed, authority to conduct a transaction includes authority to do acts which are

Answer 30

incidental to it, usually accompany it, or are reasonably necessary to accomplish it

Question 31

Actual authority is created by a

Answer 31

- principals manifestation to an agent - that, as reasonablt understood by the agent - expresses the principals assent that the agent take action on the principals behalf

Question 32

Communication of actual authority | what the agent believes

Answer 32

- Methods: written, oral, conduct, silence (knowledge or reasonable person would do something) - principal can communicate to the agent directly or indirectly - communication must reach the agent

Question 33

An agent is authorized to do and to do only

Answer 33

- what is reasonable for him to infer that the principal desires him to do. - In the light of the principals manifestations - the facts as he knows or should know them at the time he acts

Question 34

# Actual Authority Knowledge and Deemed Knowledge Reasonable infrences come from:

Answer 34

1. the principals manifestation 2. facts known to agent, at the time of action 3. what agent should know, at the time of action

Question 35

# Actual Authority Scope is determined by a

Answer 35

reasonable person standard and an subjective person standard - reasonably interpred, causes the agent to believe the principal desires him so to act on the principals account

Question 36

An agents interprestation of the principals manifestations is reasonable if it reflects

Answer 36

- **any meaning known by the agent** to be ascribed by the principal - and, in the absense of any meaning known to the agent, as a **reasonable person in the agents position** would interpret the manifestations in light of the context, including **circumstances** of which the agent has **notice** and the agents **fiduciary duty to the principal**

Question 37

# actual authority An agents understanding of the principal objectives is reasonable if it accords with the

Answer 37

- principals manifestations and - the infrences that a reasonable person in the agents position would draw from the circumstances creating the agency