Chapter 38 - Third Persons in Agency

Chapter 38 - Third Persons in Agency - Chapter 38 Third...

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Chapter 38 – Third Persons in Agency I. Liability of Agent to Third Person a. Action of Authorized Agent of Disclosed Principal i. If an agent makes a contract with a third person on behalf of a disclosed principal and has proper authority to do so, the agent has no personal liability on the contract b. Unauthorized Action i. If the agent’s act causes loss to the third person, that third person may generally hold the agent liable for the loss 1. No defense for the agent in such a case the he acted in good faith or misunderstood the scope of authority a. Not liable for conduct in excess of authority when the third person knows that he is acting beyond the authority given by the principal c. Disclosure of Principal i. Disclosed Principal: 1. When the agent makes known the identity of the principal and the fact that the agent is acting on behalf of that principal a. Third party is making a contract with the principal, not the agent ii. Partially Disclosed Principal: 1. When the agent makes known the existence of a principal but not the principal’s identity a. Third party is making the contract with the agent, and the agent is therefore a party to the contract iii. Undisclosed Principal: 1. When the third person is not told or does not know that the agent is acting as an agent for anyone else a. The third person is making the contract with the agent, and the agent is a party to that contract d. Assumption of Liability
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i. Agents may intentionally make themselves liable on contracts with third
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This note was uploaded on 04/24/2011 for the course MGMT 354 taught by Professor Staff during the Spring '08 term at Purdue.

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Chapter 38 - Third Persons in Agency - Chapter 38 Third...

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