1. What are the three ways in which an agency relationship can be found?
    • Expression (by appointment)
    • Implication (by principal's conduct)
    • Misinterpretation (by a third party via principal's fault)
  2. What are the four things that must occur for there to be an agency relationship?
    Principal manifests assent or intent to agent

    Agent acts on principal's behalf

    Agent is subject to principal's control

    Agent manifests assent or otherwise consents to act on the principal's behalf.
  3. For there to be an agency relationship, a principal must relinquish control over to an agent. What level of control is needed to establish an agency relationship?
    This control need not be particularly firm—it suffices that the agent’s activities are occurring pursuant to the overall direction of the principal.

    The fact that a principal lacks the right to control the full range of an agent’s actions, or fails to exercise the right to control the agent, does not affect the existence of an agency relationship.
  4. Who may act as a principal?
    Any individual or entity (e.g., a government, corporation, partnership) which has the legal capacity to possess rights and incur obligations can be a principal.

    Does NOT include unincorporated associations.
  5. Who may act as an agent?
    Anyone with minimal capacity. This means that an agent does not have to have the legal capacity to form contracts (including minors and incompetents).
  6. What is a master? How does it differ from an individual principal?
    Special type of principal who controls—or has a right to control—the physical conduct of the agent’s performance. In this context, the agency in referred to as a “servant” (employee).

    The more control a master exerts over a servant’s actions, the more likely the master-servant relationship exists.
  7. How do you determine whether a master-servant relationship exists or whether a mere employer-employee relationship exists? (five factors)
    Whether a “master-servant” relationship exists between an employer and its employees depends on the following factors:

    • i) Employer exercises significant control over the details of the worker’s day-to-day activities;
    • ii) Employer supplies the tools at the place of employment;
    • iii) Employer pays workers on a structured pay period;
    • iv) Worker’s skill level is not specialized; and
    • v) Employer directs completion of the work.
  8. What is a gratuitous agent?
    A gratuitous agent is an agent who does not receive compensation. This does not prevent creation of an agency relationship.

    Example: A and B are good friends. B has a new job starting in a week, but does not want to drive her new sports car from Ohio to California. A offers to drive B’s car to California for free. An agency relationship exists between A and B. B is the principal, and A is the (gratuitous) agent.
  9. What is a general agent?
    One with broad authority over a wide variety of tasks involving a continuity of service in a particular kind of business, without express direction from the principal. General agents include store managers and purchasing agents.
  10. Whose agent is the trustee of a trust?
    Trustee is an agent of the settlor of the trust.
  11. What is a special agent?
    Special agents generally have limited authority regarding a specific transaction, or string of repetitious acts. Common titles include real estate agents, subagents, insurance agents, commission merchants, and bailees.
  12. What is a subagent?
    A special agent appointed by an agent to perform the agent's duties. The agent must have authority to appoint a subagent.

    The agent is liable to the principal for the conduct of the subagent. Subagent has a duty of loyalty both to the principal and to the appointing agent.

    • When an appointing agent hires employees, they are presumed to be subagents of the appointing agent, acting on behalf of the appointing agent’s principal.
    • Example:
    • Employees of an advertising firm working on the account of a customer of the firm are presumed to be subagents, of the firm.
  13. If a subagent engages in misconduct, will the appointing agent be liable for any losses incurred by the principal?
  14. Do a subagent's decisions and acts have the same level of binding effect on the principal as those of an agent?
    Yes. A principal is bound by the subagent’s acts to the same extent as if the agent had undertaken the same acts. Notice received by a subagent is treated as notice to the principal; knowledge possessed by the subagent is imputed to the principal.
  15. May an agent work for more than one principal where there is a conflict between the principals?
    No, the agent's duty of loyalty requires that he not work for both.
  16. Will an agent be liable for tortious acts committed by a subagent? Will a principal be liable?
    An agent who appoints a subagent may be subject to vicarious liability for torts committed by the subagent. Additionally, a principal may be liable for torts committed by authorized subagents.
  17. What is a person who helps someone trying to buy property?
    A Broker! Has a duty of care and loyalty to the buyer.
  18. What is a person who helps someone trying to sell property?
    A seller's agent
  19. What is a person who helps someone trying to sell or rent property by listing it as "for sell" or "for rent?"
    A listing agent
  20. What is a dual agent?
    One who acts both as a buyer's and a seller's agent in the same transaction
  21. What is a designated sales agent?
    Utilized when a real estate broker represents several parties in the same transaction. A designated sales agent takes over some of the brokers duties.
  22. What is a tenant's agent?
    Helps someone find a property to rent
  23. What is a landlord's agent?
    Helps a landlord finad a tenant
  24. What is a broker's agent? Is a broker's agent a subagent?
    • A broker's agent is an agent of:
    • 1. listing agent,
    • 2. tenant's agent, or
    • 3. buyer's agent.

    A broker's agent is not a subagent of the broker, just the agent of the above three.
  25. What are the license requirements for brokers in NY?
    Must be 20 years old, a US citizen of legal alien, not convicted of felony or sex offence, and be in compliance with any child support orders.
  26. Who may terminate an agency relationship? Must it be a mutual decision?
    Either party has the right to terminate the agency relationship. This right may be exercised without regard to the implied covenant of good faith and fair dealing, at least where the agent is not an employee.
  27. When does a terminated agency relationship actually end?
    Once the non-terminating party receives notice.
  28. After what amount of time do agency relationships automatically terminate?
    They last for a "reasonable amount of time" unless other arrangements are made.
  29. What are the four instances in which agency relationships terminate by operation of law?
    1) Death of the principal or agent - no notice required unless between a customer and his bank or if the dead person was in the military and an agent held a written power of attorney.

    2) Principal's loss of capacity - no notice required, and effective immediately upon adjudication as incapacitated. Exception: does not apply where agent has a durable power of attorney.

    3) Principal organization loses capacity

    4) Agent breaches a fiduciary duty
  30. What are the three requirements of a durable power of attorney, which allows an agency relationship to persist even after the principal has been adjudicated incapacitated?
    • Must be:
    • 1) In writing
    • 2) Evidences appointment as agency
    • 3) Details that agency will not lose agent status upon incapacity
Card Set
The Principal and the agent