Agency Law: Authority and Liability in Business Transactions

Agency

Legal relationship where one acts on behalf of another.

Authority

Agent's power to act for the principal.

Actual Authority

Authority granted by principal's explicit communication.

Apparent Authority

Authority perceived by third parties based on principal's actions.

Vicarious Liability

Principal's liability for agent's actions within scope.

Tort Liability

Legal responsibility for wrongful acts causing harm.

Direct Liability

Agent's personal responsibility for their own torts.

Respondeat Superior

Employer liable for employee's actions in employment scope.

Fully Disclosed Principal

Principal's identity is known to third parties.

Partially Disclosed Principal

Principal's existence is known, but not identity.

Undisclosed Principal

Principal's existence and identity are unknown to third parties.

Estoppel to Deny Authority

Prevents principal from denying authority due to reliance.

Termination of Authority

Ending an agent's power to act on behalf of principal.

Lingering Authority

Authority that continues despite termination without proper notice.

Negligence in Hiring

Liability for failing to properly vet an agent.

Negligence in Supervision

Liability for inadequate oversight of an agent's actions.

Contract Damages

Compensation for losses due to breach of contract.

Manifestation of Authority

Principal's indication of intent to grant authority.

Legal Rights

Entitlements enforceable by law for individuals or entities.

Bureaucratic Actions

Administrative tasks performed on behalf of the principal.

Confidence in Agents

Trust third parties place in agents' representations.

Scope of Employment

Range of activities an employee is authorized to perform.

Principal-Agent Relationship

Dynamic between the person delegating authority and the agent.

Apparent Authority

Authority perceived by third parties based on principal's conduct.

Actual Authority

Authority explicitly granted by the principal to the agent.

Principal (P)

The party granting authority to the agent.

Agent (A)

The party authorized to act on behalf of the principal.

Third Party (3P)

An outside party interacting with the agent.

Vicarious Liability

Principal's liability for agent's actions under authority.

Restatement (Third)

Current legal framework governing agency relationships.

Restatement (Second)

Previous legal framework, included inherent authority concept.

Inherent Authority

Authority not derived from principal's manifestation, now obsolete.

Contract Liability Rules

Guidelines determining binding nature of contracts.

Remedies Issues

Concerns regarding enforcement and compensation in contracts.

Interpretation of Intent

Determining liability based on parties' contractual intentions.

Degree of Disclosure

Extent to which third parties know principal's identity.

Re(3) §2.01

Defines actual authority in agency relationships.

Re(3) §2.03

Defines apparent authority in agency relationships.

Re(3) §1.04(2)

General definitions section of the Restatement.

Contract Enforcement

Legal validation of agreements made by agents.

Principal's Instructions

Guidelines given by the principal to the agent.

Undesirable Contracts

Agreements made by agents that principals may reject.

Consequences of Authority

Legal effects of agent's actions on principal.

Estoppel

Legal principle preventing denial of authority based on conduct.

Negotiation Representations

Statements made by agents during contract discussions.

Basic Contract Rules

Fundamental principles governing agent and principal relationships.

Agent

A person authorized to act on behalf of another.

Principal

The party for whom an agent acts.

Undisclosed Principal

A principal whose existence is unknown to the third party.

Fully Disclosed Principal

A principal whose identity is known to the third party.

Partially Disclosed Principal

A principal whose identity is partially revealed to the third party.

Vicarious Liability

Liability imposed on one party for another's actions.

Estoppel

Prevents a party from denying facts due to previous actions.

Restatement (Third) of Agency

Legal principles governing agency relationships.

Notice

Awareness of facts that influence reasonable inferences.

Texas Gulf Sulfur Case

Landmark case in federal securities regulation.

Great Ore Strike

Massive mineral discovery by Texas Gulf Sulfur.

Professional Misconduct

Unethical behavior by a lawyer under ABA rules.

Rule 8.4(c)

Prohibits lawyers from dishonesty or misrepresentation.

Contract Voidable

A contract that can be annulled by one party.

Apparent Authority

Authority an agent appears to have to third parties.

Liability of Agent

Agent's responsibility in contracts made on behalf of principal.

Liability of Principal

Principal's responsibility for agent's actions.

Third Party

The individual or entity dealing with the agent.

Concealment of Identity

When a principal hides their identity in contracts.

Illustration 10

Example in Restatement discussing contract terms.

Re(3) §6.11(4)

Rule addressing agent's denial of principal's existence.

Re(3) §6.03

Rule regarding enforceability of contracts with agents.

Estoppel

Prevents denying an agency relationship under certain conditions.

Agency Relationship

A legal relationship where one party acts on behalf of another.

Third Party

An individual affected by a transaction involving two others.

Detrimental Change in Position

A negative alteration in a party's situation due to reliance.

Manifestation of Authority

An indication that an agent has the right to act.

Intentionally Caused Belief

Deliberately creating a false impression of authority.

Carelessly Caused Belief

Negligently allowing a false impression of authority.

Reasonable Steps

Actions taken to correct a misunderstanding or false belief.

Purported Principal

The individual believed to be represented by an agent.

Apparent Authority

Authority perceived by third parties based on conduct.

Liability to Third Party

Responsibility for damages to someone not directly involved.

Expectation Damages

Compensation based on expected benefits from a contract.

Reliance Interest

Compensation based on losses incurred from reliance.

Partnership by Estoppel

Liability created through perceived partnership without formal agreement.

Illustration 2

A case example involving an imposter in a transaction.

Trier of Fact

The entity responsible for determining the facts in a case.

Cash Transaction

A payment made immediately in exchange for goods.

Imposter

An individual falsely claiming to have authority.

Salesperson Authority

The perceived power of a salesperson to sell goods.

Furniture Emporium

A retail store selling furniture, as in the case.

Absence of Surveillance

Lack of oversight over employees' actions.

Co-Agents

Multiple agents acting on behalf of the same principal.

False Representation

Misleading claims about authority or capabilities.

Agency Authority

Legal power of one party to act for another.

Actual Authority

Authority explicitly granted by a principal.

Express Authority

Clearly defined authority stated by the principal.

Implied Authority

Authority inferred from actions or position.

Disclosed Principal

Principal whose identity is known to third parties.

Constructive Notice

Legal presumption that information is known if recorded.

Specific Performance

Court order to fulfill contract obligations.

FHA Approval

Required consent from Federal Housing Administration for sales.

Corporate Officer

Individual holding a position of authority in a corporation.