What is the type of authority which an agent has in an agency created by agreement?
To what extent is a principal bound in contract by the actions of the agent?A principal is generally bound to third parties pursuant to the contracts entered into by the agent on behalf of the principal. This means that the principal is responsible for any obligations incurred by the agent that are within her authority. An agent has varying sources of authority when dealing with third parties: Actual Authority, Implied Authority, and Apparent Authority. Show
Next Article: Agent Liability to Third Parties Back to: AGENCY LAW What is Actual Authority?Actual authority is the express authority from the principal allowing the agent to enter into obligations (contracts) on her behalf. It can be specific instructions to do so or generally included in her job duties.
What is Implied Authority?Implied authority concerns the authority to enter into obligations that a reasonable person would imply from the agent's position, title, or past course of dealings. If an employee has the title of vice president, it implies a great deal of authority to act on behalf of the business. Further, if an employee entered into a previous contract on behalf of the principal, it may imply that she can enter into similar contracts in the future.
What is Apparent Authority?Apparent authority arises from the reasonable representations of the agent to third parties. That is, when the agent represents that she has authority to enter into a contract on behalf of the principal, her actions will bind the principal if a reasonable person would believe those representations. The 3rd party's belief must generally result from some action or inaction by the principal.
What is Ratification?While an agent may bind the principal to the extent of her authority, the principal is also bound if she ratifies the conduct of the agent that is beyond her express, implied, or apparent authority. That is, if the principal accepts or takes advantage of the agent's actions, she impliedly ratifies those actions as taken on her behalf. In such a situation, this expands the implied and apparent authority of the agent when undertaking future actions.
In each of the above situations, a disclosed principal is liable to third parties dealing with the agent. If the agent exceeds her express authority, the third party may still have the ability to back out of the contract. The third-party is generally bound by the contract if the principal ratifies the agent's conduct before the third-party finds out about the lack of authority and withdraws. Related Topics
Discussion QuestionHow do you feel about the doctrines of implied and apparent authority? Should an agent have the ability to bind an agent in a contract when the agent does not have actual authority to do so? Why or why not? Should the standard be different for limited and general agents? Why or why not? Should the onus be on the employer to protect itself by informing third parties of the limited authority of the agent, or should the onus be on the third-parties to verify the authority of the agent? What is your justification for this opinion? Practice QuestionKristy is an operations manager for ABC Corp. She has the authority to enter into agreements for operational supplies. She does not, however, have the authority to enter into sales agreements with retailers of ABC Corp products. In a couple of instances, she is called upon to assist in putting together custom sales orders for large retailers. In these situations, Kristy was the primary point of contact with the retailers. 123 Corp learns about ABC Corps products through one of the retailers who previously worked with Kristy. 123 Corp contacts Kristy about putting together a custom sales package. What is Kristy's authority to deal with 123 Corp.? If Kristy enters into an unauthorized agreement with 123 Corp, under what theory might ABC Corp be bound by the contract? Why?
Academic ResearchWhat type of authority is found in the agent contract?Express authority is the authority that an agent has in writing in the contract with the insurer that the agent represents. Express authority spells out in contract form the activities that the agent has the power to perform on behalf of the insurer.
What are the 4 types of agent authority?Key Takeaways. Know the difference between a specific, general, and universal agent.. Know the 4 types of agency authorities – actual, apparent, implied, and inherent.. Know when an agency relationship exist.. What are the agents authority?An agent, having an authority to do an act, has authority to do every lawful thing which is necessary in order to do such act. An agent having an authority to carry on a business, has authority to do every lawful thing necessary for the purpose, or usually done in the course, of conducting such business.
What is express and implied authority?An authority is said to be express when it is given by words spoken or written. An authority is said to be implied when it is to be inferred from the circumstances of the case; and things spoken or written, or the ordinary course of dealing, may be accounted circumstances of the case.
|