Understanding Agency Concepts

What is the primary role of an agent in a principal-agent relationship?

In a transaction facilitated by an agent, who holds the legal relationship with the third party?

What happens if something goes wrong in a transaction facilitated by an agent?

Which of the following actions is typically NOT a function performed by an agent on behalf of the principal?

What kind of relationship does an agent have with the principal?

In a scenario where an agent is appointed to buy a phone, who authorizes the agent's actions?

What is one reason for having an agent?

Which party handles the transaction directly with the third party in a principal-agent relationship?

What determines what an agent can and cannot do?

Which statement is true regarding a principal's capacity?

Which type of agent has unlimited authority to act on behalf of the principal?

Why does it not matter whether an agent has active capacity?

What is a characteristic of a del credere agent?

In what situation can an agent be appointed without a contract?

What type of agency involves partial disclosure of the principal?

Which of the following best describes a limited agent?

Understanding Agency

Agency is a legal relationship where an agent acts on behalf of a principal.
An agent possesses authority to create, alter, or discharge legal obligations for the principal with third parties.

Roles in Agency

The agent performs transactions, while the principal is the party represented.
Actions taken by the agent are legally attributed to the principal, as if the principal performed them.

Visual Example of Agency

Charlie (principal) authorizes Kevin (agent) to transact with Cynthia (third party).
Kevin and Cynthia have no direct contractual relationship; only Charlie and Cynthia do.
If issues arise, the agent may be liable to either the principal or the third party.

Agent Responsibilities

Agents are empowered to:
- Contract on behalf of the principal.
- Sign documents.
- Perform juridical acts.
- Transfer property.
- Initiate court actions or appeals.
- Handle financial transactions (accept or make payments).

Benefits of Using Agents

Using agents is practical, efficient, and often necessary due to:
- Specialized knowledge or expertise.
- Geographic limitations, particularly in international dealings.
- Companies requiring representation.

Agent Authority

Agent's powers come from a contract or established authority.
Agents can be appointed without a contract, leading to ambiguities in their authority and duties.

Capacity Considerations in Agency

The principal must possess contractual capacity to be bound by the contract facilitated by the agent.
Agents do not need active capacity to perform their duties; their role is purely facilitative.
Scots law does not mandate agents have contractual capacity; this contrasts with English law, which permits agency through unilateral authority by the principal.

Types of Agents

Universal Agent: Holds unlimited authority for various transactions (e.g., general power of attorney).
General Agent: Authorized for a broad range of activities on behalf of the principal.
Limited Agent/Ad Hoc: Engaged for specific tasks only.
Del Credere Agent: Acts as a guarantor for the financial solvency of third parties.

Principal Disclosure

Agents may disclose their agent status and the principal's identity (disclosed principal).
Alternatively, agents may indicate their agent status without revealing the principal (unidentified principal).

This quiz covers the fundamental concepts of agency, including the legal relationship between agents and principals. It explores the roles of both parties, the responsibilities of agents, and provides a visual example for better understanding. Test your knowledge on how agents execute transactions and the legal implications involved.