LAW 603 Study Guide - Midterm Guide: Limited Liability Partnership, Fiduciary, Sole Proprietorship
11 Apr 2014
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Chapter 20: agency & other methods of carrying on business. Requires an agent to take reasonable care in the performance of its responsibilities. If duty is breached, agent must compensate principal for any loss. If the agent was incompetent, the principal may be denied recovery. When is the agent liable: when an undisclosed principal exists: the agent does not reveal they are acting on behalf of a principal. The third party can then hold the agent or the principal liable: breach of warranty of authority: occurs when an agent indicates that it is authorized to act for a principal when it is not. Contract: principal is bound to a contract created through apparent and actual authority. principal should use an agency agreement to state what agent can and cannot do to mitigate risk. Sole proprietorship: exclusively responsible for performing all contracts, exclusively responsible for all torts committed.
