16 terms

Chapter 4 Section 1 - Agency

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Agency
Relationship in which one party may legally bind the other by words or actions
Principal
Person authorizing another to act in his or her place
Agent
Person authorized to act for another
independent contractor
Neither an agent nor an employee. Agree only to provide a result.
Express Authority
The terms are spelled out clearly for both parties
Power of Attorney
A written agency authorization
General Power of Attorney
Allows the agent to do anything legally necessary to conduct the principal's affairs
Limited Power of Attorney
Allows the agent to carry out only specific transactions or may limit the agent to a set period of time
Implied Authority
Authority to do whatever is reasonably necessary to carry out specified transactions, whether in writing or stated orally.
Employer
Pays another person to do work under its control and direction
Employee
Does work for another for pay
Apparent Authority
The appearance of authority to contract for another
Duties of the Agent to the Principal
Be Obedient
Be Loyal
Keep Agency Funds and Property Separate
Use Reasonable Care and Skill
Duties of the Principal to the Agent
Compensate
Reimburse
Pay for Liabilities to Third Parties
Adhere in Good Faith to the Contract
Gratuitous Agency
Exists when the agent receives no payment
Ordinary Agency
Expires at the time provided in the contract that created it.
Terminates upon death, insanity, or bankruptcy of the principal or the agent
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