Duties and Liabilities of Principals and Agents

 

1. Read the Agency Handout in the Learning Resources for this module. Identify the duties a principal owes to their agent and the duties an agent owes to their principal.
2. Research the Equal Dignity Rule online. When must an agent’s authority exist in writing?
3. Describe when an agent could have apparent authority in the eyes of a third party.
4. Explain how a principal could ratify an agent’s authority.
5. What is the difference between a disclosed agency/principal, partially disclosed agency/principal, and an undisclosed agency/principal?
6. Briefly describe the “Frolic and Detour” exception to the Respondeat Superior Doctrine.

 

Sample Solution

An agency relationship requires two parties. The first is the principal, which is the party who gives legal authority to another to act on his or her behalf in a business transaction. The second party is an agent, which is the party who is legally authorized to act on behalf of the principal in the principal`s business transaction. The terms of an agency may be laid out in the agency agreement. Generally, a principal owes the following duties to the agent: duty to compensate, duty to reimburse, and duty to indemnify the agent. Agents generally have the following duties to the principal: loyalty, care, obedience, and accounting.

 

 

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