Agency Law Basics

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is the primary consequence if an agent acts in his own name during a transaction?

The agent can sue the principal for damages.

The principal has no right of action against the third party. (correct)

The principal has recourse against the agent.

The third party can directly pursue the principal.

What must an agent do if the principal dies and there is unfinished business?

Wait for the principal's heir to decide.

Completely terminate any transactions.

Transfer the business to another agent.

Continue the business to avoid delay. (correct)

What standard of care is the agent required to follow when an agency is declined?

Standard of an expert in the field.

No specific standard is required.

Standard of a good father of a family. (correct)

Strict liability for any damages.

Under what condition must an agent advance necessary funds?

Except when the principal is insolvent. Signup and view all the answers

What should an agent do if there are no specific instructions from the principal?

Act as a good father of a family would do. Signup and view all the answers

What is the agent liable for if he prefers his own interests over the principal's?

All damages resulting from the conflict of interests. Signup and view all the answers

What is required of an agent regarding the accounts of their transactions?

Render an account and deliver all received amounts to the principal. Signup and view all the answers

Which action is prohibited for an agent who has the authority to lend money?

To borrow money without the principal's consent. Signup and view all the answers

Which circumstance does not cause the extinguishment of agency?

Voluntary transfer of rights from the principal Signup and view all the answers

What happens to an agency if the principal manages the business directly?

The agency is revoked Signup and view all the answers

What condition does not allow for the revocation of agency?

If the agency's purpose has been achieved Signup and view all the answers

When does revocation of an agency not affect third parties?

When the agent had general powers Signup and view all the answers

What is required for the agent to withdraw from the agency?

A notice to the principal Signup and view all the answers

When may the principal revoke the agency?

At any time and for any reason Signup and view all the answers

Which of the following statements about agency revocation is false?

Notice to all third parties is mandatory. Signup and view all the answers

What must happen for a third person to not raise the issue that an agent exceeded his powers?

The principal must ratify the agent's acts. Signup and view all the answers

What is one of the necessary conditions for an agent who withdraws to avoid liability?

The withdrawal is based on significant personal harm Signup and view all the answers

Which of the following is true about a third person requiring the agent to present a power of attorney?

The agent must present the power of attorney upon request. Signup and view all the answers

What responsibility does the commission agent have once he receives goods?

He must report any damage upon receipt. Signup and view all the answers

How should a commission agent handle goods belonging to different owners?

He must label them to reflect ownership. Signup and view all the answers

What is the consequence if a commission agent sells on credit without consent?

The principal can demand payment in cash. Signup and view all the answers

What must a commission agent do if he sells on credit with the principal's authority?

Inform the principal of the sale and the buyers' names. Signup and view all the answers

What happens if a commission agent receives an additional guarantee commission?

He bears the risk of collection for that sale. Signup and view all the answers

What is the commission agent liable for if he does not collect the credits on time?

He is liable for damages unless he proves diligence. Signup and view all the answers

What is the responsibility of an agent who appoints a substitute without having the power to do so?

The agent is responsible for the acts of the substitute. Signup and view all the answers

When an agent contracts in the name of the principal while exceeding his authority, under what condition is the contract void?

If the third party is aware of the agent's limits. Signup and view all the answers

In the absence of an express stipulation, how is the responsibility shared among multiple agents?

Each agent is individually liable for their own actions. Signup and view all the answers

How does an agent incur personal liability when contracting on behalf of the principal?

By exceeding the limits of their authority without notice. Signup and view all the answers

What must the principal demonstrate to bring action against a substituted agent?

That the substitute was incompetent or insolvent. Signup and view all the answers

What is the consequence for an agent who uses funds from the principal for personal use?

Interest accrues from the time of use. Signup and view all the answers

What happens if an agent acts according to the principal's orders?

The principal cannot claim ignorance regarding relevant circumstances. Signup and view all the answers

What is required for an agent to be held liable when their fellow agents exceed their authority?

No liability if not explicitly stated. Signup and view all the answers

Under what condition is the principal bound by the actions of an agent who has exceeded his power?

When the principal ratifies the actions expressly or tacitly Signup and view all the answers

What is the principal required to do if the agent requests necessary funds for executing the agency?

Reimburse the agent for advanced funds even if unsuccessful Signup and view all the answers

In which scenario is the principal not liable for the expenses incurred by the agent?

When the agent incurred expenses with prior knowledge of an unfavorable outcome Signup and view all the answers

What happens if two or more individuals appoint the same agent for a transaction?

They are solidarily liable to the agent for any consequences Signup and view all the answers

What can an agent do if he is owed reimbursement from the principal?

Retain the agency objects until reimbursement is made Signup and view all the answers

Which of the following is true regarding an agent acting in bad faith?

The agent is responsible for all resulting liabilities Signup and view all the answers

If an agent acts contrary to the principal's instructions, under what condition can the principal still be liable for expenses?

If the principal benefited from the agent's action Signup and view all the answers

Which statement about the indemnification of the agent by the principal is correct?

The principal is not liable if the agent caused damages through negligence Signup and view all the answers

Study Notes

Scope of Agency

When an agent acts in their own name, only the agent is bound to third parties; the principal has no recourse against these parties unless the contract involves the principal's property.
Provisions regarding the actions between principal and agent remain unaffected by this rule.

Agent's Obligations

An agent is required to fulfill the agency faithfully and is liable for damages due to non-performance.
Upon the principal's death, the agent must continue pending business to prevent jeopardizing interests.

Agency and Diligence

If an individual declines an agency, they must exercise the diligence of a good father of a family in safeguarding forwarded goods until a new agent is appointed or the owner retrieves them.

Financial Responsibilities

An agent required to advance funds must do so unless the principal is insolvent.
The agent must act according to the principal’s instructions, applying good judgment if instructions are absent.

Conflict of Interest

An agent must refrain from carrying out actions that would evidently damage the principal.
If an agent prioritizes their interests over the principal's, they are liable for resulting damages.

Borrowing and Lending

An authorized agent can borrow funds but must not lend without the principal's consent.
Agents are required to keep separate accounts of their transactions and deliver everything received on behalf of the principal.

Substitution and Accountability

Agents may appoint substitutes unless explicitly prohibited; responsibility lies with the agent for actions taken by any appointed substitute.
In cases of improper appointment of a substitute, the principal may take action against both the agent and the substitute.

Solidarity Among Agents

Unless expressly stated, multiple agents are not jointly liable for agency obligations. If solidarity is established, agents share responsibility for any non-fulfillment of duties.

Financial Liabilities of Agents

Any funds used by the agent for personal purposes are subject to interest from the date of use.
Agents are not personally liable to contracting parties unless they exceed authority without notifying them.

Principal's Liability

A principal is bound by contracts made by the agent within designated authority, even if the authority is exceeded in some respects.
The principal must advance necessary funds requested by the agent, reimbursing even if the venture was unsuccessful.

Termination of Agency

Agency can be terminated by revocation, withdrawal of the agent, or various other circumstances, including death or insolvency of involved parties.
A principal retains the right to revoke an agency at will and must notify the agent to return any documentation.

Effects of Revocation

Revocation does not affect contracts made with specific persons unless they are notified.
A general agency can be revoked when a specific power is granted to a different agent for a specific task.

Conditions and Restrictions on Revocation

An agency cannot be revoked if it pertains to an existing bilateral contract or a management role that is unjustly terminated.
The agent may withdraw from the agency with notice but must compensate for any damages caused unless withdrawal is due to unavoidable circumstances.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

This quiz covers the fundamental principles of agency law, focusing on the rights and obligations of agents and principals when contracts are made in the agent's name. Understand the implications of actions taken by agents and the relationships between them and their principals. Perfect for law students and those interested in legal studies.