worksheet 19.2: Duties of Agents and Principals and Agent's Authority

Power of attorney:

A written document, which is usually notarized, authorizing another to act as one's agent; can be special (permitting the agent to do specified acts only) or general (permitting the agent to transact all business for the principal).

. An agent's authority to act for a principal: a. may be actual or apparent. b. must always be in writing. c. can be expressed only.

a. may be actual or apparent.

Equal dignity rule:

In most states, a rule stating that express authority given to an agent must be in writing if the contract to be made on behalf of the principal is required to be in writing. Failure to comply can make a contract voidable at the option of the principal.

Ratification

The act of accepting and giving legal force to an obligation that previously was not enforceable

An agent will have emergency powers: a. to protect the principal's property and rights when the agent is unable to communicate with the principal. b. when the agent is on the phone. c. when the principal is on the phone

a. to protect the principal's property and rights when the agent is unable to communicate with the principal.

The agency relationship is a fiduciary relationship and is based upon trust, and each party owes the other the duty to act with the utmost good faith. a. True b. False

a.True

Which of the following is NOT a duty the agent owes the principal? a. Performance b. Superior competence c. Notification d. Loyalty e. Obedience f. Accounting

b. Superior competence

Which of the following is NOT a duty the principal owes the agent? a. Compensation b. Reimbursement and indemnification c. Substantial ownership in the business d. Cooperation e. Safe working conditions

c. Substantial ownership in the business

Notary public:

A public official authorized to attest to the authenticity of signatures.

An agent's actions must be strictly for the benefit of the principal and must not result in any ___ profit for the agent.

An agent's actions must be strictly for the benefit of the principal and must not result in any SECRET profit for the agent.

Apparent authority

Authority arising from what the principal causes a third party to believe. When the principal, by either word or action, causes a third party to reasonably believe that the agent has authority to act, even though the agent has no express or implied authority

implied authority

Authority to do what is reasonably necessary to carry out express authority and accomplish the objectives of the agency

The degree of skill or care required of an agent is usually that expected of a(n) __________person under similar circumstances.

The degree of skill or care required of an agent is usually that expected of a(n) reasonable person under similar circumstances.

A gratuitous agent may be held liable to the principal for breach of the agency contract. a. True b. False

b. False

An agent's implied authority can be inferred by

the position the agent occupies

The equal dignity rule has several exceptions. For example, an executive officer of a corporation can conduct business transactions without written authority. Likewise, when an agent acts in the of a principal, the rule does not apply. Finally, when the agent's signature is merely a(n) , the agent does not need written authority to sign.

The equal dignity rule has several exceptions. For example, an executive officer of a corporation normally can conduct ordinary business transactions without written authority. Likewise, when an agent acts in the presence of a principal, the rule does not apply. Finally, when the agent's signature is merely a(n) formality , the agent does not need written authority to sign.

. When a third party reasonably believes a person has authority to act on another's behalf, even if that person does not have such authority, the situation is known as .

apparent authority

When the principal grants an agent an exclusive territory, we say that the principal has created a(n) ____________ . a) territorial agency b) exclusive agency c) gratuitous agency d) agency by operation of law

b) exclusive agency

Express authority

power given by one party to another in clear and definite terms to act on that person's behalf

Ratification occurs when the principal accepts responsibility for the agent's acts. For ratification to be valid, the agent must have acted on behalf of an principal, that principal must know all of the material , must the agent's act in its entirety, and must have the legal to ratify the transaction both at the time the agent engages in the act and at the time the principal ratifies it. The principal's ratification must occur before the third party from the transaction, and the principal must the same formalities when ratifying the act as would have been required to authorize it initially.

Ratification occurs when the principal accepts responsibility for the agent's unauthorized acts. For ratification to be valid, the agent must have acted on behalf of an identified principal, that principal must know all of the material facts , must affirm the agent's act in its entirety, and must have the legal authority to ratify the transaction both at the time the agent engages in the act and at the time the principal ratifies it. The principal's ratification must occur before the third party withdraws from the transaction, and the principal must observe the same formalities when ratifying the act as would have been required to authorize it initially.

The agent has the duty to act __________ for the benefit of the principal and not in the interest of the agent or a third party.

The agent has the duty to act SOLELY for the benefit of the principal and not in the interest of the agent or a third party.