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BUSINESS ORGANIZATIONS OUTLINE RESTATEMENT OF THE LAW THIRD- AGENCY Agency: §1.01- Agency is the fiduciary relationship that arises when one person (A “principal”) manifests assent to another person (an “Agent”) that the agent shall act on the principal’s behalf and subject to the principals control, and the agent manifests assent or otherwise so to act. Manifestation: § 1.03- A person manifests assent or intention through written or spoken words or other conduct. Actual Authority § 2.01- An agent acts with actual authority when at the time of taking action that has legal consequences for the principal, the agent reasonably believes, in accordance with the principal’s manifestations to the agent, that the principal wishes the agent so to act. Scope of Actual Authority § 2.02- 1. An agent has actual authority to take action designated or implied in the principal’s manifestations and acts necessary or incidental to achieving the principal’s objectives, as the agent reasonably understands them when the agent determines how to act. 2. An agent’s interpretation of the principal’s manifestations is reasonable if it reflects any meaning known by the agent to be ascribed by the principal and, in the absence of any meaning known to the agent, as a reasonable person in the agent’s position would interpret the manifestations in light of the context, including circumstances of which the agent has notice and the agent’s fiduciary duty to the principal. 3. An agent’s understanding of the principal’s objectives is reasonable if it accords with the principal’s manifestations and the inferences that a reasonable person in the agent’s position would draw from the circumstances creating the agency. Apparent Authority- Apparent Authority is the power held by an agent or other actor to affect a principal’s legal relations with THIRD PARTIES, when a third party reasonably believes the actor has authority to act on behalf of the principal and that belief is traceable to the principal’s manifestations. FOUR DOCTRINES There are 4 doctrines commonly used to hold that the officer has bound the corporation: 1. Express actual authority 2. Implied actual authority 3. Apparent authority 4. Ratification Express actual authority- Authority that usually comes into existence by an explicit grant of authority to the officer to act on behalf of the corporation This explicit grant generally comes from either the corporations:
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1. Bylaws or; 2. In the form of a resolution adopted by the board of directors Implied actual authority- Authority “which is inherent in the office. There are 2 common ways in which implied actual authority can come into existence; 1. Inherent in post: Authority may be measured by common understanding of business people. Ex.
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This note was uploaded on 04/17/2008 for the course LAW ? taught by Professor Harmon during the Spring '08 term at Touro NY.

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