Agency Law - Introduction, Types, Duties

Which of the following is generally defined as a relationship between a principal and an agent?

Agency

A fiduciary is a person who has a duty to act primarily for another person's benefit.

True Explanation: A fiduciary is a person who has a duty to act primarily for another person's benefit. A lawyer, for example, is a fiduciary for his or her client.

An agency relationship can be created only for a lawful purpose.

True Explanation: An agency relationship can be created only for a lawful purpose in the same way that a contract must have a legal purpose.

An agency relationship that arises when an individual misrepresents herself as an agent for another party and that party accepts the unauthorized act is an agency by ________.

ratification Explanation: An agency relationship that arises when an individual misrepresents herself as an agent for another party and that party accepts the unauthorized act is an agency by ratification.

Agency relationships must be created by expressed agreement.

False Explanation: Agency relationships may be created by expressed or implied agreements. When parties form an agency relationship by making a written or oral agreement, the agency is known as expressed agency, or agency by agreement. Expressed agency is the most common type of agency. In some cases, however, an agency relationship is not created by an expressed agreement but is instead implied by the conduct of the parties. The circumstances of a situation determine the extent of an agent's ability to conduct business on behalf of the principal. However, the implied authority cannot conflict with any express authority.

The principal must assist the agent in the performance of his or her duties, and the principal can do nothing to interfere with the reasonable conduct of the agent. This is known as the duty of indemnification.

False Explanation: The principal owes a duty of cooperation to the agent. Therefore, the principal must assist the agent in the performance of his or her duties. Furthermore, the principal can do nothing to interfere with the reasonable conduct of an agent.

Which of the following is a person who has a duty to act primarily for another person's benefit?

Fiduciary Explanation: A fiduciary is a person who has a duty to act primarily for another person's benefit. A lawyer, for example, is a fiduciary for his or her client.

In which type(s) of agency is the principal-agent relationship inferred from the conduct of the parties?

Implied agency Explanation: In an implied agency relationship, the agent has implied authority; that is, the relationship is inferred from the conduct of the parties. Consequently, the authority of the agent is implied on the basis of words and actions of the principal to the agent.

Expressed agency is also known as agency by ________.

agreement Explanation: When parties form an agency relationship by making a written or oral agreement, the agency is known as expressed agency. Expressed agency is also known as agency by agreement.

A person in a position of trust and confidence is known as a(n) ________.

fiduciary