Agency Basic Principles

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24 Questions

In a business setting, who typically negotiates business dealings on behalf of another person or business?

The Agent

What is the primary function of an Agent in a business transaction?

To act as a liaison between the Principal and the Third Party

In the context of Agency Law, who bears the legal liability in a contract between the Principal and the Third Party?

The Principal

What is the relationship between the Principal, the Agent, and the Third Party in a business transaction?

The Agent represents the Principal, and the Principal enters into a contract with the Third Party

Under what circumstances does the Agency relationship arise?

In various circumstances, including business and personal dealings

Who is the party that is not directly involved in the contract, but is represented by the Agent?

The Principal

What is the term for when an agent's powers are clearly set out in their appointment?

Express Appointment

In what type of agency relationship does the principal approve a contract after the fact?

Agency by Ratification

What is the term for when an agent is appointed without receiving payment?

Gratuitous Agency

In what type of agency relationship does the court imply a principal/agent relationship based on the actions of the parties?

Implied Agency

What type of agency arises when an agent is appointed to act in a specific transaction?

Specific Agency

What type of agency relationship arises when an individual agrees to act for another without receiving payment?

Gratuitous Agency

What is the primary requirement for an agent to take action in an emergency situation on behalf of the principal?

There must be no practical way to obtain instructions from the principal

What is the term for when an agent holds themselves out to others as an agent of the principal, and the principal is aware of this but does nothing?

Agency by Estoppel

What is the consequence for the principal if they are aware that an agent is holding themselves out to others as their agent, but do nothing about it?

The principal is estopped from denying the agency relationship

What is the primary duty of an agent to the principal?

To follow the instructions of the principal

What is the term for an agency relationship that arises due to an emergency situation?

Agency by Necessity

What type of document may be required for the appointment of an agent, depending on the actions to be carried out?

All of the above

What is the primary duty of an agent with regards to the principal's instructions?

To act with reasonable care and skill, regardless of the type of agency relationship

In what circumstance can an agent exercise a lien over the principal's property?

When the principal fails to pay the agreed remuneration

What is the consequence of an agent making a secret profit or misusing confidential information?

The agent may be sued by the principal

How can an agency relationship be terminated?

By the mutual agreement of the parties or by the unilateral action of one party

What is the agent's duty with regards to the principal's money and property?

To keep the money and property separate from the agent's own

In what circumstance can an agent claim indemnity against the principal?

When the agent incurs expenses in the performance of services

Test your understanding of the fundamental principles of agency in business law, including the roles of agents and principals. Learn how agents represent businesses and negotiate dealings on their behalf. Explore the legal principles that govern these relationships.

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