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18 Cards in this Set

  • Front
  • Back
Agency: big picture questions
- How was it formed?
- Rights & liabilities of principals & agents
- Termination
Definition of agency relationship
Principal authorizes or appoints an agent to act on his behalf
How is an agency relationship formed?
- agreement express or implied
- estoppel / apparent authority (principal held them out)
types of authority
- actual authority
- apparent authority
- inherent authority
inherent authority
- agent only slightly exceeds his authority
- principal later ratifies (can be implicit)
duties of agent to principal
- perform
- loyalty
- obedience
- reasonable care
- notify
Is it assumed that the principal knows what the agent knows?
YES - unless agent is acting in her own interest or against the principal
Sub-agent liable to principal?
Only if agent has authority from principal to appoint a sub-agent
Agent breach of duty: theories of liability
- breach of contract
- tort liability

Remedies:
- return funds
- withhold compensation
duties of principal to agent
- HONOR terms of contract
- COMPENSATE & reimburse
- COOPERATE & not interfere with agent's performance
Principal breach of duty: theories of liability
- breach of contract (must mitigate)

Remedy: claim or lien against principal's property (unless K provides otherwise)
agent contracts with third party: liability of principal, agent, and third party
+ principal is liable if agent acted with P's authority

+ agent is liable IF:
- pretended she had authority
- all parties intended that agent be treated as party to the K
- principal's identity is disclosed/unknown

+agent is liable to principal (unless agent fraudulently concealed principal's identity)
termination of agency relationship
Agency ends when agent is no longer AUTHORIZED to act as the principal's agent:
- either may terminate at will
- destruction of subject matter
- major change in business conditions or laws
- bankruptcy, incapacity or death of either
- dissolution of corporation/partnership
- breach of agent's fiduciary duty
- occurrence of special event
- vote of other partners
- court order
- partner's bankruptcy
- appointment of a receiver
- termination of business entity that is a partner
agent contracts with third party: liability of principal
principal is liable if agent acted with P's authority
agent contracts with third party: liability of agent to third party
agent is liable IF:
- PRETENDED she had authority
- all parties INTENDED that agent be treated as party to the K
- principal's IDENTITY is undisclosed/unknown
agent contracts with third party: is agent liable to principal?
agent is liable to principal (unless agent fraudulently concealed principal's identity)
agent breach of duty: possible remedies
- return funds
- withhold compensation
principal breach of duty: possible remedies
- claim or lien against principal's property (unless K provides otherwise)