Question

BUSINESS LAW

14. Tell me

a) four ways an agency relationship can be created, and then

b) define, as it relates to agency relationships, actual authority, apparent authority and implied authority.

Answer 1

Agency by agreement- It is the most common way and in this type of agreement both of the sides agree on certain conditions. There is no need to form a contract and, thus only an agreement just by a formal conversation or handshake.

Agency by ratification- when the party agrees to be an agent through the third party. It may be oral or written and cannot be rescinded, is applied back to the original date the contract was made.

Agency by estoppels- there are times when your function represents the third party and the other person is your agent. if the third party believes this is correct, the court will prevent you from denying that the agency exists. It is also known as detrimental reliance.

Agency by operation of law- agency recognized by courts for example – family relation, emergency situations. Sometimes court steps in and deems a person to be an agent if nor agency agreement exists. The court does this to prevent the party from injustice.

Actual authority-when specific powers, conferred by a principal to an agent to act on his behalf. This may be broad, general, or special power.

Implied authority- the actual authority that is conferred by custom, inferred from the position the agent occupies and inferred as being necessary to carry out the express authority.

Apparent authority- when a principal by actions or either by words, causes the third party to believe that that agent has authority to act,even the agent don,t have the implied authority to act with regard to the matter.