INTRODUCTION TO THE LAW OF AGENCY
http://www.scribd.com/doc/52197323/Agency-Defined
WHO IS AGENT?
WHO IS PRINCIPAL?
WHAT IS CONTRACT?
A. NATURE OF AGENCY
agency. 1. A fiduciary relationship created by express or implied contract or by law, in which
one party (the agent) may act on behalf of another party (the principal) and bind that other party
by words or actions. See AUTHORITY (1). [Cases: Principal and Agent 1. C.J.S. Agency §§ 2,
4–6, 23, 25–27, 33, 38–40, 58.]
“The basic theory of the agency device is to enable a person, through the services of another,
to broaden the scope of his activities and receive the product of another's efforts, paying such
other for what he does but retaining for himself any net benefit resulting from the work
performed.” Harold Gill Reuschlein & William A. Gregory, The Law of Agency and Partnership§
1, at 3 (2d ed. 1990).
Black's Law Dictionary (8th ed. 2004) , Page 191
general agency.A principal's delegation to an agent, without restriction, to take any action
connected with a particular trade, business, or employment. — Also termed universal agency.
[Cases: Principal and Agent 93. C.J.S. Agency § 172.]
implied agency.An actual agency arising from the conduct by the principal that implies an
intention to create an agency relationship. Cf. express agency. [Cases: Principal and Agent 99.
C.J.S. Agency §§ 153–164.]
special agency.An agency in which the agent is authorized only to conduct a single
transaction or a series of transactions not involving continuous service. [Cases: Principal and
Agent 94. C.J.S. Agency § 172.]
AGENCY IS A FIDUCIARY LEGAL RELATIONSHIP
WHERE ONE PERSON REPRESENTS ANOTHER
IN DEALING WITH THIRD PERSONS
1.
PARTIES TO AN AGENCY; §1328
EXPRESS
IMPLIED
2.
OTHER USES OF THE TERM "AGENCY" §1329
RIGHT OF AGENCY
AGENCY MAY BE DEFINED DIFFERENTLY UNDER DIFFERENT QUESTIONS OF LAW
TAX LIABILITY TO THE ENTERPRISE
CONTRACT LAW
TORT LAW
3.
AGENCY DISTINGUISHED FROM OTHER RELATIONSHIPS §1331
EMPLOYEE
IS NOT HIRED TO REPRESENT AN EMPLOYER
IN DEALING WITH THIRD PERSONS
INDEPENDENT CONTRACTOR AS AGENT
CONTROLLED AGENT IS EMPLOYER
MAKES MANAGEMENT DECISIONS
OR CONTROLS OPERATIONS OF THE WORK
BAILEE
A BAILMENT EXISTS WHEN THE PERSONAL PROPERTY
IS DELIVERED TO ANOTHER UNDER AN AGREEMENT TO
RETURN THE PROPERTY OR DELIVER IT TO A THIRD PERSON
THE PERSON RECEIVING THE PROPERTY (THE BAILEE)
IS NOT AN AGENT; HE HAS NO AUTHORITY TO CONTRACT
ON BEHALF OF THE OWNER - BAILOR.
INDEPENDANT CONTRACTOR
CONTRACTS TO DO SOMETHING
ACCORDING TO HIS OWN METHODS
NOT SUBJECT TO THE CONTROL
THE THE EMPLOYER EXCEPT AS TO RESULTS
REAL ESTATE BROKER
MIDDLEMAN; SEEKS TO LOCATE BUYER OR SELLER
NOT A TRUE AGENT; NO AUTHORITY TO MAKE A
CONTRACT WITH THIRD PERSONS THAT WILL
BE BINDING ON HIS CLIENT
AGENCY INVOLVES THE
RESPONSIBILITY OF THE PRINCIPAL
FOR ACTS OF THE AGENT
actual agency.An agency in which the agent is in fact employed by a principal. [Cases:
Principal and Agent 96, 99. C.J.S. Agency §§ 148–149, 153–164.]
agency in fact.An agency created voluntarily, as by a contract. • Agency in fact is
distinguishable from an agency relationship created by law, such as agency by estoppel. [Cases:
Principal and Agent 8. C.J.S. Agency §§ 36–40.]
NOTICE TO AGENT IS NOTICE TO PRINCIPAL
B. CREATION OF AGENCY §1338
AGENCY CAN BE CREATED BY AGREEMENT,
BY CONDUCT OF THE PARTIES,
BY ESTOPPEL, BY RATIFICATION, OR
BY OPERATION OF LAW
1.
CAPACITY OF THE PARTIES
a. CAPACITY OF PRINCIPAL
ANYONE WITH LEGAL CAPACITY TO CONTRACT
b. CAPACITY OF AGENT
ANYONE WHO UNDERSTANDS LEGAL
IMPORTANCE OF CONTRACTS; EVEN A MINOR
2.
CREATION OF AGENCY BY AGREEMENT
ORAL AUTHORIZATION
EQUAL DIGNITIES
CONSIDERATION
3.
AGENCY CREATED BY CONDUCT OF PARTIES; IMPLIED AGENCY
INFERENCES OR DEDUCTIONS MADE
FROM WORDS OR CONDUCT OF
PRINCIPAL & AGENT
4.
CREATION OF AGENCY BY ESTOPPEL
APPARENT AUTHORITY
PRINCIPAL BY WORDS OR BY ACTIONS, OR BY LACK
THEREOF, CAUSES A THIRD PERSON TO BELIEVE
REASONABLY THAT AN AGENCY RELATIONSHIP EXISTS
OR THAT AN AGENT HAS AUTHORITY TO ACT WHERE
NO AGENCY RELATIONSHIP EXISTS
agency by estoppel.An agency created by operation of law and established by a principal's
actions that would reasonably lead a third person to conclude that an agency exists. — Also
termed apparent agency; ostensible agency; agency by operation of law. [Cases: Principal and
Agent 25(3), 137. C.J.S. Agency §§ 61, 157, 211.]
5.
AGENCY CREATED BY RATIFICATION
WHEN PRINCIPAL ACCEPTS BENEFITS FROM THE ACTS OF A
PURPORTED AGENT, EVEN WHEN UNAUTHORIZED, AGENCY
MAY BE CREATED BY RATIFICATION
6.
AGENCY CREATED BY OPERATION OF LAW
agency of necessity.An agency arising during an emergency that necessitates the agent's
acting without authori-zation from the principal; the relation between a person who in exigent
circumstances acts in the interest of another without being authorized to do so. • It is a
quasi-contractual relation formed by the operation of legal rules and not by the agreement of the
parties. — Also termed agency from necessity; agency by necessity. See NEGOTIORUM
GESTIO. [Cases: Principal and Agent 14(1), 99. C.J.S. Agency §§ 20, 53, 153–164; Architects §
21.]
undisclosed agency.An agency relationship in which an agent deals with a third party who
has no knowledge that the agent is acting on a principal's behalf. • The fact that the agency is
undisclosed does not prohibit the third party from seeking redress from the principal or the agent.
[Cases: Principal and Agent 138–146. C.J.S. Agency §§ 166, 369–371, 385, 387–388, 393,
412–419, 448–451.]
C. TERMINATION OF AGENCY
AN AGENCY MAY BE TERMINATED BY ACTS OF THE PARTIES
OR BY OPERATION OF LAW
1.
TERMINATION BY ACTS OF PARTIES
a. MUTUAL AGREEMENT
b. EXPIRATION OF THE CONTRACT
c. REVOCATION OF AUTHORITY
PRINCIPAL MAY REVOKE AUTHORITY OF AGENT AT ANY TIME
2. DEFINITE CONTRACT PERIOD
REVOCATION MAY RESULT IN DAMGES FOR BREACH OF CONTRACT
1. INDEFINITE TIME
REVOKED AT ANY TIME BY EITHER PARTY
d. REVOCATION BY AGENT
e. REVOCATION BY OPTION
2.
TERMINATION BY OPERATION OF LAW
a. DEATH OF PRINCIPAL
b. DEATH OF AGENT
c. MENTAL INCOMPETANCY
d. BANKRUPTCY
e. IMPOSSIBILITY
f. WAR
g. CHANGE IN BUSINESS CONDITIONS
3.
NOTICE IS REQUIRED TO TERMINATE!
D. IRREVOCABLE AGENCY
agency coupled with an interest.An agency in which the agent is granted not only the power
to act on behalf of a principal but also a legal interest in the estate or property involved. • This
type of agency is irrevocable before the interest expires, unless the parties agree otherwise when
creating the interest. The agency survives even if the principal becomes insane or dies. See power
coupled with an interest under POWER(3). [Cases: Principal and Agent 34, 43(2). C.J.S. Agency
§§ 114–119, 136.]
exclusive agency.The right to represent a principal — esp. either to sell the principal's
products or to act as the seller's real-estate agent — within a particular market free from
competition. • Strictly speaking, an exclusive agency merely excludes all other brokers, but not the
owner, from selling the products or property. — Also termed exclusive agency to sell; exclusive
franchise; sole selling agency. Cf. EXCLUSIVE RIGHT OF SALE.
“Contracts involving the element of exclusive agency generally fall into three classes: (1)
where the contract does not prevent the principal from making direct sales but deprives him of the
right to appoint other agents; (2) where the agent is the only one with any right to sell; and (3)
where the exclusive agency is accompanied with a stipulated right to commissions on all sales
whether made through the agent or not.” 3 Am. Jur. 2d Agency § 268, at 768 (1986).
express agency.An actual agency arising from the principal's written or oral authorization of a
person to act as the principal's agent. Cf. implied agency. [Cases: Principal and Agent 96. C.J.S.
Agency §§ 148–149.]
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