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Business Law Ch. 19
The Relationship of Principle and Agent
39
Business
Undergraduate 2
04/07/2010

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Term
Agent
Definition
relationship authorizing one party (the agent) to act for and on behalf of the other party (the principal).
Term
Scope of Agency Purpose
Definition
generally, whatever business activity a person may accomplish personally he may do through an agent.
Term
Employment Relationship
Definition
one in which the employer has the right to control the physical conduct of the employee.
Term
Independent Contractor
Definition
a person who contracts with another to do a particular job and who is not subject to the control of the other.
Term
Formalities
Definition
though agency is a consensual relationship that may be formed by contract or agreement between the
Term
Requirements
Definition
no particular formality usually is required in a contract of agency, although appointments of agents for a period of more than one year must be in writing.
Term
Duty of Obedience
Definition
agent must act in the principal's affairs only as authorized by the principal and must obey all reasonable instructions and directions.
Term
Duty of Diligence
Definition
agent must act with reasonable care and skill in performing the work for which he is employed.
Term
Duty to Inform
Definition
agent must use reasonable efforts to give the principal information relevant to the affairs entrusted to her.
Term
Duty to Account
Definition
agent must maintain and provide the principal with a true and complete account of money or other property that the agent has received or expended on behalf of the principal.
Term
Fiduciary Duty
Definition
agent owes a duty of utmost loyalty and good faith to the principal.
Term
Compensation
Definition
a principal must compensate the agent as specified in the contract, or for the reasonable value of the services provided, if no amount is specified.
Term
Reimbursement
Definition
the principal must pay back to the agent authorized payments the agent has made on the principal's behalf.
Term
Indemnification
Definition
the principal must pay the agent for losses the agent incurred while acting as directed by the principal.
Term
Tort Duties
Definition
include the duty to provide an employee with reasonably safe conditions of employment and to warn the employee of any unreasonable risk involved in the employment.
Term
Termination of Agency
Definition

The following are all examples of (a/an) ---:

  • Lapse of Time
  • Fulfillment of Purpose
  • Mutual Agreement of the Parties
  • Revocation of Authority
  • Renunciation by the Agent
  • Operation of Law Death – of either the principal or the agent
  • Incapacity – of either the principal or the agent
  • Change in Circumstances
  • Loss or Destruction of the Subject Matter
  • Change in Law
Term
Bankruptcy
Definition
bankruptcy of a principal usually terminates all of his agency relationships; if the credit of the agent is important to the agency relationship, the relationship will be terminated by the bankruptcy of the agent.
Term
The Right to Control
Definition
The difference between an employee and an independent contractor is ---
Term
Not subject
Definition
An independent contractor is (subject/not subject) to others' control
Term
Independent Contractor
Definition

The following are all rights to (a/an) ---:

  • Amount of time agent works for principle
  • Length of time served as agent for principle
  • Commonly provides supplies
  • Payment by time or job
  • Degree of skill
  • Scope of principle control

 

Term
Independent Contractor
Definition

The following are all examples of (a/an) ---:

  • Lawyer
  • Roofer
  • Doctor
  • Painter
  • Artist
  • Engineer
  • Charter Pilot
  • Etc.
Term
One Year
Definition
All appointments of agents for more than --- must be in writing.
Term
Power of an Attorney
Definition
Authorization to act on a person's behalf in legal or business matter (special or limited).
Term
"Upon Grantor's Mental Incapacitation"
Definition
The power of an Attorney expires by its terms or "---".
Term
Principle
Definition
Another word for a grantor or donor of power.
Term
Agent
Definition
One authorized by the Principle is simply an ---.
Term
Power of an Attorney
Definition

The following are examples of the termination of the ---:

 

  • Guardian is appointed for Principle
  • Revocation by Principle
  • Stated expiration date or occurrance
  • Death of Principle
Term
Agency by Ratification
Definition
Agency relationship created when a principal confirms and accepts a purported agent's unauthorized act.
Term
Agency Coupled with an Interest
Definition
An agent has possession or control of the property of his principal and possesses a legal rights against interference by third parties.
Term
Apparent Agency
Definition
Situation wherein the agent's conduct causes a client or prospective insured reasonably to believe that the agent has the authority to sell an insurance policy and contract on behalf of the insurance company.
Term
Attorney-in-Fact
Definition
a person who holds the power of attorney. He or she is the person who is legally designated to transact business or execute documents on behalf of the principal or grantor.
Term
Estoppel
Definition
a legal doctrine that prevents a person from adopting a position, action, or attitude, asserting a fact or a right, or prevents one from denying a fact inconsistent with an earlier position if it would result in an injury to someone else.
Term
Express Agency
Definition
where a priniciple and agent enter into an agreement.
Term
Exclusive Agency Contract
Definition

Restrictive agreement that binds a principal and an agent in an association under which neither can make any similar deals with the other's competitors for a specified period.

 

Term
Implied Agency
Definition
occurs when the words and actions of the parties indicate that there is an agency relationship.
Term
Imputed Knowledge
Definition
Cognizance of a circumstance or fact attributed to a party because of its position, or its relationship with or responsibility for another party.
Term
Incidental Authority
Definition
Authority that is necessarily incidental to the express authority, arises from the custom of trade, or past practices of the involved parties.
Term
Irrevocable Agency
Definition
an agency which cannot be revoked or terminated by the principal.
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