Term
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Definition
| Agency Law deals with someone's ability to bind you to a contract with a third party |
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Term
| What is required for Agency to exist? |
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Definition
Both parties must consent to the relationship and intend for an Agency relationship to exist
Agent owes Principal fiduciary duty
Principal doesn't owe Agent fiduciary duty
A contract is NOT required and an Agency agreement is not based on Contract Law; Exception - If duties cannot be performed within a year; a signed writing is required |
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Term
| What is Actual Authority in an agency? |
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Definition
| Actual Authority is what is expressly granted or is implied by the duties you expect the Agent to perform and is necessary to carry them out |
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Term
| What is Implied Authority in an agency? |
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Definition
When authority is expressly granted; it is implied that the agent has the authority to carry out the duties
Does not include authority to sell or alter a business |
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Term
| What is Apparent (Ostensible) Authority in an agency? |
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Definition
Apparent Authority is based on the third party's perspective - they believe that the Agent has the
authority to enter into a contract based on:
*Prior dealings with agent
*Agent's title leads the third party to believe they can enter into a contract
*The Principal hires the Agent to carry out duties that normally carry with them the rights to enter into contracts |
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Term
| How is an Agency terminated? |
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Definition
*Both Agent and Principal agree to terminate
*Principal fires Agent
*Agent fires Principal
*Agent breaches their contract by doing something like violating their obligation to act as a fiduciary to Principal |
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Term
| How do you terminate Apparent Authority? |
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Definition
*Let the public know
*Let the people or entities that the Agent previously interacted with know
*In cases of death; or Principal is otherwise not competent to contract; ALL authority is revoked |
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Term
| What is an Agency Coupled with an Interest? |
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Definition
Agent acquires an ownership interest in the Agency
Can only be terminated early (before the interest expiration date) by the Agent
Unless the Agency has a specific time limit spelled out in a contract; the Agent's authority is irrevocable
by the Principal |
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Term
| When is an employee an Agent; and when does this make the employer liable? |
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Definition
Employees are agents while acting within the scope of their duties.
For employees who injure third parties while acting within the scope of their duties; both Employee and Employer are liable |
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Term
| When are Agents liable for torts (civil wrongs) they commit? |
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Definition
| Agents are liable for torts (civil wrongs) committed whether they had authority or not |
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Term
| Are Agents who act outside of their authority liable? |
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Definition
Agents who act outside of their authority will be liable for the act
Exception - Principal ratifies the contract which relieves Agent of liability
In order to ratify; Principal must know all of the facts and must ratify before third party cancels agreement
If Principal keeps the benefits of the contract; ratification is implied
Contract must be 100% ratified or there is no contract |
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Term
| What is an Agent's liability when acting for an undisclosed principle? |
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Definition
*Agent liable to third party even if acting within authority
*Third party can sue both Principal and Agent if Principal becomes disclosed
*Agent can then sue Principal |
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Term
| What are the requirements for a Power of Attorney (POA)? |
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Definition
Must be in writing
Must be signed by person granting the POA
Ends upon death of Principal
General POA - Agent authorized to handle all affairs
Special POA - Agent authorized to handle only specific affairs |
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