ADMS 2610 Lecture Notes - Fiduciary, Apparent Authority, Estoppel

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Published on 10 Oct 2012
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Where one individual (a principal ) expressly or impliedly uses the services of another (an agent) to
carry out a specific task on his or her behalf
An agent has Express authority to enter into a contract with the third party on the principal’s behalf.
Therefore an agent can effect a contract with a third party for the principal and his job is to effect
contracts with third parties for his employer.
An agent can have Ostensible or Apparent Authority when the principal holds the agent out as
having the authority to act on the principal’s behalf making the third party believe that the
agent/employee has the authority to effect a contract with the third party.
An agency by Estoppel may arise when an agency relationship is inferred from the actions of a
principal, or actions that convey the impression to another that he has conferred authority on a
particular person as an agent. Always accompanies an argument of a contract being formed between
teh principal and the third party where the agent has apparent or ostensible authority
Agency by ratification can occur If the principal likes a contract that an unauthorized agent created,
the principal can ratify it and the contract will become binding between TP and P
To determine if there is a contract between the principal and TP:
1. Did the agent have express authority to enter into the contract with TP I
(yes = contract; no= move on to # 2)
2. Did the agent have apparent or ostensible authority to enter into the contract with the Tp
(yes= go on to #3; no= no contract)
3. Did the TP know that the agent did not have the authority to enter into the contract
(yes=no contract; no=contract))
NOTICE - If the principal does not give notice to all his/her/its customers and suppliers then if an agent
decides to enter into a contract with a TP it will be BINDING
Liability of Agent
- Tort committed by an agent based on fraudulent misrepresentation Tort of Deceit
- Where the agent enters into a contract on behalf of the principal with a TP and does not have
express authority, the principal can sue the agent in damages amounting to the value of the
contract with the TP
Fiduciary Duty agents have a duty to act in good faith and best interests of the principal. Agent who
breaches will not get paid and will be sued for damages
1. Performance
2. Before performance terms of contract NOTICE
3. Before performance no terms of contract reasonable notice of termination