Exam 31: Agency Formation and Duties

A principal who causes a third person to believe that another person is the principal's agent can be estopped from denying the agency relationship.

Fact Pattern 31-2A Quinn employs Roy as his authorized business agent on April 1. Quinn's son Stan peti?tions a court to declare Quinn mentally incompetent. The court grants Stan's request on May 1. -Refer to Fact Pattern 31-2A. Roy enters into a contract on Quinn's be?half on April 15. After May 1, the contract, which has not been performed, is

A principal can ratify an agreement made without authorization on his or her behalf by one who is not his or her agent.

An independent contractor may act in the capacity of an agent.

Regional Investment Corporation (RIC) hires Sam, a real estate agent, to locate investment properties for RIC. Sam learns of a warehouse avail?able for $100,000, buys it himself, and offers it to RIC for $200,000. Most likely, Sam

Building subcontractors are not independent contractors.

Generally, a principal has a duty to pay an agent for services rendered.

Fact Pattern 31-2A Quinn employs Roy as his authorized business agent on April 1. Quinn's son Stan peti?tions a court to declare Quinn mentally incompetent. The court grants Stan's request on May 1. -Refer to Fact Pattern 31-2A. Roy enters into a contract on Quinn's be?half on May 15, before Roy knows of the court's action. The contract is

If an agency relationship is contractual, the agent may have a right to specific performance.

Arnold is the chief executive officer of Beta Corporation. Arnold's re?sponsibilities include decisions on product development, marketing, and other significant business directions. Arnold is subject to the approval and oversight of Beta's board of directors. Carol is a Beta manager whose duties include the firm's day-to-day hiring, firing, purchasing, and sell?ing. Dave is a Beta salesperson, whose daily activities are con?trolled by Carol. Erin writes technical manuals for Beta products ac?cording to Arnold's instructions and subject to Beta's control, but has no dealings with Beta custom?ers or sup?pliers. Fred edits the manuals on a contract-per-manual basis and is not otherwise subject to Beta's control. Who is a principal? Who is an agent? Who is an employee? Who is an independent contractor?

An employee may act in the capacity of an agent.

Internet Services, Inc., employs Joe as an agent. During the agency, Joe acquires new skills. After the termination of the relationship, Joe uses those skills in a new job. Joe has breached

An agency relationship may not occur by operation of law in a family.

Agency relationships exist only outside employment relationships.

Employees who deal with third parties are agents of their employers.

If a principal breaches a duty owed to an agent, an agent may withhold performance and demand an accounting.

If an agent breaches the agency agreement, the principal may avoid the contract.

An agent can take advantage of an agency relationship to make a "secret" profit.

An independent contractor's physical conduct is controlled, or subject to control, by his or her employer.

Dizzy is not Edwina's agent but enters into a contract with Frida on Edwina's behalf. Edwina later contacts Frida to approve the contract. This is