Bus Law Ch 24

Front 1

Agency can be created in 4 different ways

Back 1

Expressed agency, Implied Agency, Apparent Agency, Agency by Ratification.

Front 2

Expressed Agency

Back 2

principal and agency expressly agree to enter into a contract.Agent is authorized to contract on behalf of the principal.

Front 3

Implied Agency

Back 3

the agent’s authority is not based on an oral or written agreement but through the conduct of the principal and agent.

Front 4

Implied authority

Back 4

it is inferred from and is no bigger than expressed authority. Typically, the agent has implied authority perform acts customarily necessary to fulfill the agent’s express authority.

Front 5

Apparent Authority

Back 5

it is not real authority. Due to the facts and circumstances a reasonable third party would believe that the agent had actual authority to represent the principal.

Front 6

Agency by ratification

Back 6

principal may chose to bind himself to an act that is beyond the actual or apparent authority of an agent or non-agent if the person subsequently ratifies the act.

Front 7

Requirements of ratification

Back 7

1: Must be expressed or implied.

2: Must be made with knowledge of all material facts.

3: Must occur prior to repudiation by the third party.

4: The agent must have purported to act on behalf of the principal.

5: The principal must have legal capacity to authorize the act.

Front 8

Liability to third parties

Back 8

Generally, a principal who authorizes an agent to act on his behalf is liable to a third party if the principal fails to perform.

For torts of the agent – (agent always liable for own torts) depends if an employee or independent contractor –

Employee vs. independent contractor = control

Employers control their employees – they don’t control independent contractors.

Principal is vicariously liable under the doctrine of respondeat superior for the negligence or intentional torts of an employee who is acting with apparent or actual authority within the scope of his employment.

Independent contractor – Generally, the principal is not liable (no control) – only for inherently dangerous type activities.

Front 9

For actions of Principal

Back 9

Never liable for torts – no control

Under Contract - Agent will be liable depending upon the type of agency.

If an agent enters into a contract that exceeds his authority, he is liable to the principal.

Front 10

Fully disclosed

Back 10

– meaning the third party knows that the agent is an agent and who the principal is – the agent is not liable under contract.

Front 11

Partially undisclosed or undisclosed

Back 11

partially – third party knows agent is agent but does not know who the principal is. Fully – third party does not know that agent is an agent. Here both the principal and agent are liable under the contract.