Chapter 13- Insurance ( The agency relationship)

What is the two types of contract liability to the outsider in the Agency relationship?

1. Liability of the Principal to the Outsider 2. Liability of the Agent to the Outsider

Even though the Agent's fiduciary duty varies based on circumstances, what are some general duties the agents must follow?

1. Make full disclosure of all material information that may affect the principal's position 2. avoid any conflict of interest that affects the interest of the principal 3. avoid acting for two principals in the same transaction 4. avoid using the principal's property, money, or information to secure personal gains 5. Avoid accepting or making secret commission or profit

What are the three ways the termination of agency agreements occur?

1. Parties may agree to bring their relationship to an end 2. One party may give notice of termination to another 3. relationship dissolved by law due to death

What are the obligations of the Principal?

1. Pay the agent a specified fee or percentage for services rendered unless the Agent agreed to work for free 2. Assist the agent in the manner described in the contract 3. Reimburse the agent for reasonable expenses associated with carrying out his agency duties 4. Indemnify against losses incurred in carrying out the agency business

What are 3 ways agency by estoppel is created?

1. Representation of Authority (Apparent) 2. Extension of existing authority (Actual + Apparent) 3. Termination or Reduction of Authority (Apparent)

What are the 3 types of power of attorney available?

1. a general power of attorney 2. a specific power of attorney 3. a personal care power of attorney

In what situations will the agent have implied authority?

1. the authority is inferred from the position the agent occupies 2. the authority is reasonably necessary to carry out or otherwise implement the agent's express authority 3. authority arises by virtue of a well-organized custom in a particular trade, industry, or profession

What is a fiduciary duty? fiduciary?

A duty imposed on a person who has a special relationship of trust with another. A fiduciary is a person who has a duty of good faith toward another because of their relationship.

What is a power of attorney?

A power of attorney is a written document in which one person gives authority to another person to act on her behalf.

What is an undisclosed principal?

A principal whose identity is unknown to a third party, who has no knowledge that the agent is acting in an agency capacity. From the perspective of the outsider, there is no principal waiting in the background.

What is implied authority?

Also an authority that the agent actually has but is presently implication only.

What is Agency by Ratification?

An agency relationship created when one party adopts a contract entered into on his behalf by another who at the time acted without authority. Example, P adopts actions of X, and X retroactively becomes an A. There is no authority until P adopts X's actions.

What is agency by Estoppel?

An agency relationship created when the principal acts such that a third party reasonably concludes that an agency relationship exists.

When an agent has not been given particular instructions on how a decision to be carried out, how is the agent expected to act?

An agent is required to perform in accordance with the principal's instructions and when there is none the agent's performance must meet the standard of the particular trade or industry.

What is the liability of the agent to the outsider?

An agent who acts without authority and contracts with an outsider is liable to the third party for breach of warranty of authority. In this case, no contract has formed between either the principal and the outsider or the agent and the outsider.

What is apparent authority?

Apparent authority refers to a situation where a reasonable third party would understand that an agent had authority to act. This means a principal is bound by the agent's actions, even if the agent had no actual authority, whether express or implied.

What is the person receiving the power called?

Attorney, agent, donee.

What is the person giving the power called?

Donor or principal.

In what type of relationships does fiduciary duty arise?

In any relationship where the facts indicate sufficient elements of power and influence on the part of one party and reliance, vulnerability, and trust on the part of the other.

If the agent chooses to represent two principals or using the principal's property, what must the agent do?

It is not an absolute prohibition against conflicts such as acting for two principals. The agent simply must not do any of these activities secretly and he must obtain the fully informed consent of the principal prior to the event.

Are implied terms in an agent principal contract less "real" than the other?

No, they just exist in another less tangible form.

When is the principal responsible for any tort committed by an agent?

P is vicariously liable or any tort committed by the agent while the agent is acting within the scope of agent's express, implied, or apparent authority.

What is extension of existing authority?

P represents to OS that X has authority in excess of actual authority given.

What is representation of authority?

P represents to OS that X has authority to act as an Agent (A) even though no actual authority is given

What is Termination or reduction of authority?

P terminates or reduces A's authority but does not give notice to OS.

What is the "springing power of attorney"?

Power of attorney springs to life when an event specified in the power of attorney has taken place.

What is the profit rule and conflict rule a fiduciary must follow?

Profit rule- a fiduciary must not profit by virtue of her position Conflict rule- a fiduciary must not place herself in a position where her own interests conflict with the interest of the principal.

What is a personal care power of attorney?

The agent has authority to act for the principal in relation to personal matters such as housing and health.

What is a general power of attorney?

The agent has full authority to exercise all the principals rights in relation to her property and financial affairs. Ex. depositing cheques, paying loans, etc.

What is a specific power of attorney?

The agent has the authority to act for the principal only in relation to certain matters or in specified circumstances. Ex. sell a car, cash a pension cheque, accept offer for property purchase

What is the law of agency?

The law governing the relationship where one party (the agent) acts on behalf of another (the principal).

What is actual authority?

The power of an agent that derives from either express of implied agreement.

What is the liability of the Principal to the Outsider?

The principal's liability to the third party depends on the nature of the agent's authority.

What is an agency?

The relationship that exists when one party represents another party in the formation of legal relations

What is the concept of authority?

When an agent acts within the scope of the agent's authority and negotiates a contract for the principal, the principal is bound by the contract whether he likes it or not. Even when the agent has acted outside the scope of her authority in entering into the contract, the contract may still bind the principal.

Who is a principal?

a person who has permitted another to act on her behalf.

Who is an agent?

a person who is authorized to act on behalf of another

What is Agency by agreement?

agency relationship created by contract normally involving the principal authorizing an agent to act on her behalf in exchange for some fee or other remunerations.

What is express authority?

it is the written or oral authority granted by the principal to the agent. This is the authority the agent actually has.

What is warranty of authority?

representation of authority by a person who purports to be an agent.

Who is the outsider?

the party with whom the agent does business on behalf of the principal