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Questions and Answers
What legal effect does a contract entered into through an agent have?
What legal effect does a contract entered into through an agent have?
- It is only binding on the agent.
- It cannot be enforced in court.
- It has no legal consequences.
- It has the same legal consequences as if the principal entered into the contract personally. (correct)
Who can employ an agent according to the law of agency?
Who can employ an agent according to the law of agency?
- Anyone regardless of their mental capacity.
- Any person of the age of majority and of sound mind. (correct)
- Only individuals over the age of 30.
- Only corporations and businesses.
What is required for an agent’s actions to bind the principal?
What is required for an agent’s actions to bind the principal?
- The principal must be present during the transaction.
- The agent must be related to the principal.
- The agent must act within the scope of their instructions. (correct)
- The agent must be an adult.
Which of the following statements is true regarding agents and principals?
Which of the following statements is true regarding agents and principals?
What does the Latin phrase 'Quit facit per alium facit per se' imply?
What does the Latin phrase 'Quit facit per alium facit per se' imply?
Can minors act as agents?
Can minors act as agents?
What happens if an agent exceeds their authority?
What happens if an agent exceeds their authority?
What type of principals can jointly appoint one agent?
What type of principals can jointly appoint one agent?
What is necessary for creating an agency contract?
What is necessary for creating an agency contract?
What can an agent do when they have the authority to act?
What can an agent do when they have the authority to act?
What happens when an agent receives notice or information?
What happens when an agent receives notice or information?
What distinguishes an agent from a servant?
What distinguishes an agent from a servant?
Which statement about mercantile and non-mercantile agents is true?
Which statement about mercantile and non-mercantile agents is true?
What is the role of a sub-agent?
What is the role of a sub-agent?
What is the effect of misrepresentations made by an agent within their authority?
What is the effect of misrepresentations made by an agent within their authority?
Which of the following is an incorrect statement regarding agency contracts?
Which of the following is an incorrect statement regarding agency contracts?
What is the primary consequence if an agent improperly appoints a sub-agent?
What is the primary consequence if an agent improperly appoints a sub-agent?
Which of the following best describes the concept of Agency by Estoppel?
Which of the following best describes the concept of Agency by Estoppel?
Under what conditions can Agency of Necessity be validly created?
Under what conditions can Agency of Necessity be validly created?
If a servant, acting on behalf of the master, buys unauthorized items on credit, what is likely the outcome?
If a servant, acting on behalf of the master, buys unauthorized items on credit, what is likely the outcome?
Which statement correctly reflects the agent’s responsibility regarding a sub-agent's actions?
Which statement correctly reflects the agent’s responsibility regarding a sub-agent's actions?
In the case of a wife acting as an Agent of Necessity, what determines whether she has the authority to pledge her husband's credit?
In the case of a wife acting as an Agent of Necessity, what determines whether she has the authority to pledge her husband's credit?
What defines an express agreement in creating an agency?
What defines an express agreement in creating an agency?
Which of the following scenarios does NOT create Agency of Necessity?
Which of the following scenarios does NOT create Agency of Necessity?
What is the primary condition under which a wife can act as an agent for her husband?
What is the primary condition under which a wife can act as an agent for her husband?
What is NOT a duty of an agent towards their principal?
What is NOT a duty of an agent towards their principal?
In what scenario can a principal revoke an agent's authority?
In what scenario can a principal revoke an agent's authority?
What happens if an agent deals in business on their own account without the principal's knowledge?
What happens if an agent deals in business on their own account without the principal's knowledge?
When does an agent's remuneration become due according to general rules?
When does an agent's remuneration become due according to general rules?
Which of the following is a duty of the principal towards the agent?
Which of the following is a duty of the principal towards the agent?
What right does an agent have in the absence of a special contract?
What right does an agent have in the absence of a special contract?
Which statement about the relationship between agents and principals is true?
Which statement about the relationship between agents and principals is true?
Study Notes
Law of Agency
- Contracts made through an agent are legally binding as if the principal executed them personally.
- Agent acts to create contractual relationships with third parties on behalf of the principal.
- An example illustrates that when an agent collects payment, the principal releases the debtor from obligations.
Agent and Principal
- Any person of legal age and sound mind may appoint an agent.
- An agent is defined as a person authorized to act on behalf of another.
- A principal can have multiple agents; several principals can appoint one agent jointly.
Authority of Agents
- Agents must operate within a specific scope of authority as defined by the principal.
- Agents can bind principals through actions taken within the scope of their authority.
- Misrepresentations or fraud committed by an agent bind the principal if within authority; otherwise, they do not.
Types of Agents
- Agents are categorized into mercantile agents (involved in trade) and non-mercantile agents (involved in other professional capacities).
- A sub-agent can be appointed by an agent and must act under the agent’s control; the agent is liable for the sub-agent’s actions.
Creation of Agency
- Express agreements can create agency either orally or in writing.
- Implied agency can arise from the conduct of parties or their relationship.
- Agency by estoppel prevents a principal from denying an agent's authority when they've led third parties to believe in its existence.
Agency of Necessity
- Allowed when it’s impossible to contact the principal, there’s an urgent need, and actions taken are honest and in the principal's interest.
- A wife can act as an agent of necessity for household expenses unless provided with a financial allowance, which limits her authority.
Duties of Agents
- Agents must follow the principal's directions or industry customs.
- Agents have to provide proper accounts of transactions to the principal upon request.
- They must communicate difficulties to the principal and seek instructions during challenging situations.
Rights and Duties of Principals and Agents
- Principals must compensate agents for damage caused by their negligence.
- Principals have the right to claim compensation for agent breaches and can revoke authority.
- Agents typically earn remuneration upon completing the assigned task.
- Agents can retain the principal's property until compensation for their services is fulfilled.
Conclusion
- The agency relationship is grounded in trust and responsibility, establishing rights and obligations for both agents and principals in contractual arrangements.
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Description
Test your understanding of the Law of Agency, focusing on contracts entered into and obligations arising from agents' actions. Explore case examples that illustrate how these legal principles apply in real-life situations. See how the authority of an agent can affect contractual obligations.
