UBE BAR-MEE Refresh - Agency,
Corporations, & Partnerships
Questions and Answers.
What is an agency relationship? - Answer An agency relationship is created when a principal
authorizes an agent to act on its behalf.
How does an agency relationship arise? - Answer An agency relationship may arise by
mutual assent or by law.
Define. Actual Agent Authority - Answer An agent has actual authority if the agent
reasonably believes, based on the principal's manifestations to the agent, that the principal
wishes the agent to act in that manner on the principal's behalf.
Define. Apparent Agent Authority - Answer An agent has apparent authority if, based on the
principal's words and conduct, a third party reasonably believes that the agent has actual
authority to take a particular action.
When does apparent authority terminate? - Answer When it is no longer reasonable for a
third-party to believe that the agent has authority.
In what four ways does actual authority terminate? - Answer (1) the death of the principal or
upon a loss of capacity;
(2) revocation of the agency relationship;
(3) the occurrence of circumstances, such as a specified event or a fixed period of time, that
should reasonably cause the agent to conclude that the principal would no longer manifest
assent; or
(4) any other circumstances specified by statute.
Define. Disclosed Principal - Answer A principal is disclosed if a third party dealing with the
agent knows or has reason to know of the agency relationship and the principal's identity.
When is a disclosed principal liable for contracts the agent enters into with either actual or
apparent authority? - Answer A disclosed principal is liable for contracts the agent enters
with actual or apparent authority. An agent isn't personally liable for contracts entered on
behalf of a disclosed principal unless the agent agrees to be liable.
When is a principal directly liable for the actions of his agent? - Answer Direct liability arises
if: (1) the agent's tortious conduct is within the scope of the agent's actual authority; (2) the
Corporations, & Partnerships
Questions and Answers.
What is an agency relationship? - Answer An agency relationship is created when a principal
authorizes an agent to act on its behalf.
How does an agency relationship arise? - Answer An agency relationship may arise by
mutual assent or by law.
Define. Actual Agent Authority - Answer An agent has actual authority if the agent
reasonably believes, based on the principal's manifestations to the agent, that the principal
wishes the agent to act in that manner on the principal's behalf.
Define. Apparent Agent Authority - Answer An agent has apparent authority if, based on the
principal's words and conduct, a third party reasonably believes that the agent has actual
authority to take a particular action.
When does apparent authority terminate? - Answer When it is no longer reasonable for a
third-party to believe that the agent has authority.
In what four ways does actual authority terminate? - Answer (1) the death of the principal or
upon a loss of capacity;
(2) revocation of the agency relationship;
(3) the occurrence of circumstances, such as a specified event or a fixed period of time, that
should reasonably cause the agent to conclude that the principal would no longer manifest
assent; or
(4) any other circumstances specified by statute.
Define. Disclosed Principal - Answer A principal is disclosed if a third party dealing with the
agent knows or has reason to know of the agency relationship and the principal's identity.
When is a disclosed principal liable for contracts the agent enters into with either actual or
apparent authority? - Answer A disclosed principal is liable for contracts the agent enters
with actual or apparent authority. An agent isn't personally liable for contracts entered on
behalf of a disclosed principal unless the agent agrees to be liable.
When is a principal directly liable for the actions of his agent? - Answer Direct liability arises
if: (1) the agent's tortious conduct is within the scope of the agent's actual authority; (2) the
