Agency

Authority

Ratification Authority: An agent acts without authority, but the principal later affirms the acts

Apparent Authority

Enforcement

Third Party v Agent

Principal v. Third Party

Third party v. Principal

Unidentified principal (partially disclosed): Exiistence but not identity is known to third party

Undisclosed principal: Both existence and identity of principal are unknown

Disclosed Principal: Existence and identity are known

Agent is generally not bound

Exception: Parties intend the agent will be liable

Exception: Agent's implied warranty of authority - agent is liable for actions taken "on behalf of principal" without authority

Agent is liable; generally the third party may elect which of agent/principal to bind

Generally: The third party is bound in contract to the principal

Disclosed principal

Unidentified/undisclosed principal

Principal, but not the agent may enforce the contract

Either principal or agent may enforce; principal is entitled to benefits

Exception: Fraudulent concealment of principal - principal may not enforce & third party may have the right to withdraw (affirmative misrepresentation)

Exception: Increased burden to third party (e.g. a requirements contract - the requirements of a mom-and-pop store (agent) are considerably less thatn the requirements of Walmart (principal)

When an agent acts with authority, the principal is bound (even if the principal is undisclosed or unidentified)

Actual Authority

Implied:: Authority the agent believes she has as a result of the act of the principal

Express (contined within 4 corners of oral/written agreement)

Specific language governs over general

Express authority is effective, even if granted based on a misrepresentation or mistakenly to an unintended agent

Extravagant language is interpreted conservatively

Extension of express authority: authority to use means reasonably necessary to carry out express grant

Custom and Usage known to Agent

Acquiescence - principal's acceptance or failiure to object to a series of unauthorized acts that reasonably lead thh agent to believeshe has the authority to continue similar acts

Emergency or necessity

Delegation - generally not permitted

Exception: Ministerial acts

Exception: delegation necessary because of circumstances/impossiblity (e.g. contractor may delegate authority to hire electrician), or custom of particular business,

Elements

Reasonable reliance by a third party

Actions of the principal

Inaction by the principal when there is a duty to act (e.g. to correct a statement by the "agent," made in his presence)

Affirmative action of the principal by word or conduct

Types

Agent exceeds actual authority: Agent previously exceeded & Principal is aware that 3d party knew of this fact

Lingering authority: An agent will continue to have authority as to a third party when the principal fails to notify a party, who knows of the agency from prior dealings (unless the agency knows or should have known of the termination

Imposters: Principal's negligence leads a 3d party to believe the imposter has actual authority

By position: An agent will have apparent authority to perform customary responsibilities for the position to which principal assigned him; secret limiting instructions do not limit the apparent authority vis-a-vis a third party

Elements

Methods

Principal knows, or should have known, all material facts at time of affirmance

Principal accepts entire transaction

Principal has capacity (competent & legal age) [Exam tip - do not discuss, unless facts suggest it is an issue]

No consideration required [Exam tip: Do not discuss unless facts suggest consideration is an issue, e.g. a defense asserted is lack of consideration]

Express

Implied

Silence when a duty exists to disaffirm, or

Principal brings a lawsuit involving the transaction

Accepts benefits of transaction when still possible to decline them, or