Chapter 21 Vocab.

Front 1

Agency

Back 1

is a relationship between two parties created by an implied or an express agreement or by law, that empowers one of the parties by word or action to legally bind the other.

Front 2

Principal

Back 2

the person who so empowers another to enter into legal relationship in his or her behalf.

Front 3

Agent

Back 3

the party so empowered.

Front 4

warranty of the principals capacity

Back 4

is imposed by laws on the agent. the law assumes that the agent promised the third party that the principal had capacity.

Front 5

Scope of authority

Back 5

is the range of acts authorized by the principal.

Front 6

Express authority

Back 6

is communicated directly by the principal to the agent orally or written.

Front 7

Power of attorney

Back 7

any writing that appoints someone as an agent.

Front 8

implied authority

Back 8

is the power to do anything that is reasonably necessary or customary to carry out the duties expressly authorized.

Front 9

apparent authority

Back 9

is the authority that the principal, with knowledge or through negligence,permits the agent to assume or which the principal holds the agent out as possessing.

Front 10

Ratification

Back 10

the approval of a previously unauthorized act, or an act outside the agents scope of authority.

Front 11

fiduciary duties

Back 11

require certain categories of persons, such as agents, to subordinate their personal interests in order to act for the benefit of another person.

Front 12

duty of loyalty

Back 12

means the agent may not secretly benefit from the agency transaction.

Front 13

duty of obedience

Back 13

means that the agent must carefully obey the instructions of the principal.

Front 14

duty of confidentiality

Back 14

requires the agent to treat information about the principal with great caution.

Front 15

Duty of reasonable care and skill

Back 15

this requires the agent to exercise the degree of care and skill that a reasonably prudent person would use in a similar situation.

Front 16

duty of accounting

Back 16

requires an agent to account to the principal for all money and property of the principal that comes into the agents possession

Front 17

commingling

Back 17

is mixing the funds or property of a fiduciary such as an agent with those of the person whom the fiduciary duty is owed such as her or his client , employer, or principal.

Front 18

undisclosed principal

Back 18

an agent is not allowed to reveal the principals existence or identity.