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Chapter 33

LEGL 217 Chapter Notes - Chapter 33: Notary Public, W. M. Keck Observatory, Transact


Department
Legal Assistant/Paralegal
Course Code
LEGL 217
Professor
David Brown
Chapter
33

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SCOPE OF AGENT’S AUTHORITY
The liability of a principal to third parties with whom an agent contracts depends on if the
agent had the authority to enter into legally binding contracts on the principal’s behalf.
Express Authority: authority declared in clear, direct, and definite terms (orally or in writing)
The Equal Dignity Rule:
requires that if the contract being executed must be in writing (or already is), so
must the agent’s authority. Otherwise, it is a mere offer which can be accepted in
writing
failure to comply makes the contract voidable at the option of the principal
exceptions:
an executive officer of a corporation may conduct ordinary business without
obtaining written authority
the equal dignity rules does not apply when the agent acts in the presence of
the principal
when the agent’s signature is a mere formality, authority in writing is not
required
Power of Attorney:
one holding power of attorney is called an attorney-in-fact
requires the formation of a written document and a notary public
special: permits the agent to perform only specified acts
general: permits the agent to transact all business for the principal
power of attorney terminates on the incapacity or death of the person giving the
power
Implied Authority:
an agent has implied authority to do what is reasonably necessary to carry out
express authority and accomplish agency duties
authority may be implied by custom or inferred from the position the agent occupies
Ex. a store manager has implied authority to hire employees, purchase
merchandise, and advertise products sold within reason
implied authority cannot contradict express authority
if a principal limits express authority, the fact that there would customarily be
implied authority is irrelevant
Apparent Authority:
an agent has apparent authority if the principal, by words or action, causes a third
party to believe that the agent has authority to act despite no express or implied
authority existing
a principal’s pattern of conduct over time can create apparent authority
ex. the principal is aware of and does nothing to stop an agent from
exercising nonexistent authority
the doctrine of agency by estoppel may be applied if the third party honestly relies
on the principal’s representation to their detriment. The principal will be prevented
from denying the agent had authority.

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Emergency Powers:
the agent obtains emergency power when an unforeseen emergency demands
action by the agent to protect or preserve the property or rights of the principal and
they cannot be reached
Ratification:
the principal affirms or accepts responsibility for an agent’s unauthorized act and
becomes bound by it
requirements for ratification:
agent must have acted on behalf of the principal who then affirms the action
the principal must be aware of all material facts at the time the action is
affirmed
the principal must affirm the agent’s act in its entirety
the principal must have the legal capacity to affirm the agent’s actions at the
time they are perform as well as when they are actually affirmed. The third
party must also have the legal capacity to engage in the transaction
The ratification must occur before the third party withdraws from the
transaction
the same formalities that would have been initially required for authorization
must be followed
LIABILITY FOR CONTRACTS
Principal classifications:
Disclosed Principal: principal whose identity is known to the third party at the time
the contract is made
Partially Disclosed Principal: principal whose identity is not known by the third party.
However, the third party is aware that the agent is acting or may be acting for a
principal at the time the contract is made
Undisclosed Principal: principal whose identity is entirely unknown to the third party.
The third party has no knowledge that the agent is acting in agency capacity at the
time the contract is made
Authorized Acts:
Disclosed or Partially Disclosed Principal
liable to the third party for any contract formed by the agent.
if disclosed, the agent has no contractual liability for nonperformance of the
principal or third party.
if partially disclosed, the agent is treated as a party to the contract and can be
held liable for contractual non-performance by the third party
Undisclosed Principal
when the fact of an agency relationship is not disclosed, the undisclosed
principal is bound to perform just as if the principal had been fully disclosed
at the time the contract was made
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