Creation of Agency Relationship

These flashcards cover key terms and definitions related to the creation of agency relationships, responsibilities, and legal concepts important for understanding agency law.

Agency

A legal relationship where one person (the principal) allows another (the agent) to act on their behalf.

Principal

The person or entity who authorizes another to act on their behalf in an agency relationship.

Agent

The person or entity who acts on behalf of the principal.

Capacity

The ability of the principal to enter into a legal contract; must be competent (not a minor or mentally incompetent).

Consent

Agreement between the principal and agent to form an agency relationship.

Power of Attorney

A written authorization for an agent to act on behalf of the principal.

Duty of Loyalty

The agent's obligation to act solely in the interest of the principal.

Duty of Obedience

The agent's obligation to follow all reasonable directions of the principal.

Fiduciary Duty

A legal obligation of one party to act in the best interest of another; applicable to agents regarding their principals.

Actual Authority

Authority that an agent reasonably believes they possess due to the principal's communications.

Apparent Authority

Authority that third parties reasonably believe an agent has based on the principal's behavior.

Ratification

When a principal accepts the actions of an agent even if the agent acted without authority.

Tort

A wrongful act, which includes negligent or intentional acts, for which an injured party can seek damages.

Respondeat Superior

Doctrine holding an employer liable for the actions of an employee performed within the scope of employment.