Formation by contract: was there a contract that formed a principle-agent relationship, agency contract, principles of contract apply. All the elements of a contract must be present. Should set out nature and extent of authority to act: agency contracts longer than one year must be in writing in some jurisdictions under. Has to be under seal when there is a problem with consideration but you still want the contract to be valid, therefore put it under seal- because there is no consideration usually used among family members. Basic contract principle say when a person becomes incapacitated mentally or physically, their decisions are not valid. Condition precedent: this contract is not valid until something happens until i become incapacitated, my son doesn"t have power of attorney . Authority of agents: actual authority agency agreement sets out limits of agent"s authority. Express (actual) authority - when clearly stated (be very specific) Implied (actual) authority conveyed by actions of principal.