Exam 3 Review

Exam 3 Review - Exam 3 Review Ch 28 29 30 32 Agency and...

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Exam 3 Review Ch. 28, 29, 30, 32 - Agency and Principal Law o Duties that an Agent owes to a Principal Duty of Loyalty – agent has a fiduciary duty to act loyally for the principal’s benefit in all matter connected with the agency relationship Duty to Obey Instructions – agent must obey her principal’s instructions, unless the principal directs her to behave illegally or unethically Duty of Care – agent has a duty to act with reasonable care Gratuitous Agent – held to a lower standard because they are doing the principal a favor Duty to Provide Information – agent had a duty to provide the principal with all information in her possession that she has reason to believe the principal wants to know. o Duties of a Principal to an Agent Duty to Reimburse – principal must indemnify (that is reimburse) the agent for any expectations she has reasonably incurred. Reimbursable expenses fall into three categories. Payments made by the Agent While Carrying out His Duties – must reimburse your agent for any expenses for damages reasonably incurred in carrying out his agency responsibilities. Torts Committed by the Agent – principal must indemnify an agent for tort claims brought by a third party if the principal authorized the agent’s behavior and the agent did not realize he was committing a tort. Contracts Entered into by an Agent – principal must indemnify the agent for any liability she incurs from third parties as a result of entering into a contract on the principal’s behalf, including attorney’s fee and reasonable settlements. Duty to Cooperate – principal must furnish the agent with the opportunity to work. Principal cannot unreasonable interfere with the agent’s ability to accomplish his task Unless the agency contract provides otherwise, the principal is allowed to compete with her agent Principal must perform his/her part of the contract o Termination of the Principal/Agent relationship
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Term Agreement – principal and agent can agree in advance how long their relationship will last Achieving a Purpose – principal and agent can agree that the agency relationship will terminate when the principal’s goals have been achieved Mutual Agreement – principal and agent can always change their minds if the decisions is mutual Agency at Will – if they make no agreement in advance about the term of the agreement, either principal or agent can terminate at any time. o Principal’s liability for contracts entered into by their Agent Principal is bound by the acts of an agent if (1) the agent has authority, or (2) the principal, for reasons of fairness, is estopped from denying that the agent had authority, or (3) the principal ratifies the acts of the agent Authority – there are three types of authority: express, implied, and apparent Express Authority – grants express authority by words or conduct that, reasonably interpreted, because the agent to believe the principal desires her
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This note was uploaded on 08/22/2011 for the course FIN 3055 taught by Professor Cgiles during the Spring '08 term at Virginia Tech.

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Exam 3 Review - Exam 3 Review Ch 28 29 30 32 Agency and...

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