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Agency Relationship in Contract Law
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Agency Relationship in Contract Law

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Questions and Answers

What is the first step in the creation of an agency relationship based on the law of contract?

  • Setting the scope of the agent's authority
  • Defining the duties and responsibilities of the agent
  • Mutual agreement between the principal and agent (correct)
  • Signing a formal written contract

    • What is a crucial requirement for both the principal and the agent to enter into a valid agency agreement?

  • Having prior experience in legal matters
  • Having a strong financial background
  • Being related by blood or marriage
  • Being of legal age and sound mind (correct)

    • What must the parties involved in creating an agency relationship intend to do?

  • Have a background in legal matters
  • Exchange valuable goods as consideration
  • Create an agency relationship (correct)
  • Sign a formal written contract

    • Which group of individuals may lack the legal capacity to enter into a valid agency agreement?

    <p>Minors and mentally incapacitated individuals</p> Signup and view all the answers

    Why is it essential for both parties to consent to the arrangement when forming an agency relationship?

    <p>To ensure a legally binding agreement</p> Signup and view all the answers

    What are the two essential elements in establishing an agency relationship?

    <p>Express and Implied Authority</p> Signup and view all the answers

    How is express authority typically granted to an agent?

    <p>Through written or verbal instructions</p> Signup and view all the answers

    What distinguishes express authority from implied authority?

    <p>Express authority is granted in writing, implied arises from conduct</p> Signup and view all the answers

    Under what circumstances does implied authority allow an agent to act?

    <p>When actions are necessary or customary to carry out duties</p> Signup and view all the answers

    What authorizes an agent to take actions that are not expressly specified by the principal?

    <p>Implied Authority</p> Signup and view all the answers

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