Chapter 19

Gratuitous Agent

One who acts on behalf of a principal without being paid. These agents are held to a lower level of liability than paid agents.

Agency may be created by

1.) Agreement 2.) Ratification 3.) Necessity 4.) Operation of law

Agency contract is terminated by an act of the parties when

1.) The principal and the agent have mutually agreed on termination 2.) The principal has dismissed the agent 3.) The agent has given up the position 4.) The purpose of the agency relationship is fulfilled

Agent

A person authorized to act on behalf of another and subject to other's control in dealing with third parties.

General agent

A person authorized to assume complete charge of his or her principal's business or who is entrusted with general authority to act for the principal in all business-related matters.

Special agent

A person delegated to act only in a particular transaction, under definite instructions, and with specific limits on the scope of his or her authority.

Principal

A person who authorizes an agent to act on his or her behalf and subject to his or her control.

Irrevocable agency

An agency contract that cannot be terminated by a principal in which the agent has an interest in the subject matter of the agency in addition to the remuneration that he or she receives for services.

Agency by ratification

An agency that results when a principal approves an unauthorized act performed by an agent or approves an act done in the principal's name by an unauthorized person.

Express authority

An agent's authority that the principal voluntarily and specifically sets forth as oral or written instructions in an agency agreement. The authority that has actually been given by the principal, either orally or in writing.

Contract of agency

An agreement between a principal and an agent by which the agent is vested with authority to represent the principal.

Who may appoint an agent

Any competent party (a person or corporation) who has the legal right to perform an act may delegate his or her performance to another by appoint an agent.

Who may be appointed as an agent

Anyone who is legally competent to act for himself or herself may serve as an agent for another. Minors and others who lack the capacity to enter into contracts on their own may still be considered competent to represent other persons as agents if they are capable of properly carrying out the duties of an agency relationship.

The authority of an agent

Can be express, implied, or apparent.

Main difference between principal-agent and employer-employee relationship

Is an employer's power to control the activities of a non-agent employee. Whereas an agency agreement brings about a relationship between a principal and a third party that results in a contract, an employee who is not also an agent has no such rights or powers.

Power of attorney

Legal document that formally creates an agency. An instrument in writing by which one person, as principal, appoints another person as agent and confers the authority to perform certain specified acts on behalf of the principal.

Implied authority

The authority an agent reasonably assumes he or she has that relates to the express authority granted by the principal.

Apparent Authority

The authority that a third party may reasonably assume an agent possesses, despite the fact that the agent does not actually possess such authority.

Attorney in fact

The person appointed as agent when the power of attorney is exercised. Precise legal term for the person appointed as agent.

Agency by operation of law

An agency that is created when a court finds the need for an agency to achieve a desired social policy. For example, a parent may not be proving a child with certain necessities of life. In this case, a court may appoint an agent, called a guardian ad litem, with the authority to purchase whatever necessities the parent has failed to provide.

Agency by necessity

An agency that is created when circumstances make such an agency necessary.