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10 Questions

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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?

Minors and mentally incapacitated individuals Signup and view all the answers

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

To ensure a legally binding agreement Signup and view all the answers

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

Express and Implied Authority Signup and view all the answers

How is express authority typically granted to an agent?

Through written or verbal instructions Signup and view all the answers

What distinguishes express authority from implied authority?

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

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

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

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

Implied Authority Signup and view all the answers