Law of Agency: Final Report

FINAL REPORT ON AGENCY LAW
1-CHAPTER 1.........................................................................9
1.1 Introduction..................................................................9
1.11 Background...............................................................................9
1.12 Nature of Relation....................................................................9
1.13 Creation of Agency...................................................................9
1.14 Termination of Agency..........................................................10
1.2 Scope..........................................................................10
1.21 Employer and Employees......................................................10
1.22 Principal and Agent...............................................................10
1.23 General and Special Agents.................................................11
1.24 Franchising and other relationships...................................11
1.25 Independent Contractor........................................................11
1.26 Real Estate Brokers...............................................................12
1.27 Bailees......................................................................................12
1.28 Required Act...........................................................................12
1.3 Capacity of Parties.......................................................12
1.31 Capacity to Act as Principal..................................................12
1.32 Unincorporated Associations as Principals........................13
1.33 Capacity to Act as Agent.......................................................13
1.4 Authority to Bind Principal............................................13
1.41 Authorization..........................................................................13
1.42 Express Authority...................................................................14
1.43 Implied Authority...................................................................14
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1.44 Apparent/Ostensible Authority....................................14
1.5 Ratification..................................................................14
1.51 Agency by Ratification..........................................................14
1.52 Intention to Ratify..................................................................15
1.53 Conditions for Ratification....................................................16
1.54 Effect of Ratification..............................................................16
2-CHAPTER 2.......................................................................17
2.1 Disclosed or Partially Disclosed Principal.......................17

2.11 Liability of Agent of Disclosed Principal.............................17
2.12 Liability of Agent of Partially Disclosed Principal.............17
2.13 Execution of Writings.............................................................18
2.2 Undisclosed Principal...................................................18
2.21 Nature and Relation of Liability............................................18
2.22 Rights to the Third Person.....................................................18
2.23 Scope of a Liable of Undisclosed Principal.........................18
2.24 Rights of Undisclosed Principal............................................19
2.3 Liability on Special Transactions...................................19
2.31 Basis of Liability......................................................................19
2.32 Liability for Agent's Representation....................................19
2.33 Liability for Agent’s Warranties...........................................20
2.34 Liability for Payment to Agent..............................................20
2.35 Liability for Credit Contracted by Agent.............................20
2.36 Liability on Negotiable Instruments....................................20
2.4 Notice to or Knowledge of Agent...................................21
2.41 Effect of Notice to Agent........................................................21
2.42 Knowledge of Agent................................................................21
2.43 Limitations on the Rule..........................................................21
2.5 Liability for Acts of Subagent.......................................22
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2.51 Appointment of Subagents....................................................22

2.52 Liability of Principal for Acts of Subagents........................22
2.6 Liability for Torts and Crimes........................................23

2.61 Agents who are Employees...................................................23
2.62 Scope of the Employment......................................................23
2.63 Liability for Torts of Professional Agent.............................23
2.64 Liability for deceit of an Agent.............................................24
2.65 Intentional Torts......................................................................24
2.66 Tort Liability is Joint and Several.........................................24
2.67 Crimes.......................................................................................24
3-CHAPTER 3.......................................................................25
3.1 Liability of Agent to Third Person..................................25

3.11 Action of Authorized Agent of Disclosed Principal............25
3.12 Unauthorized Action...............................................................25
3.13 No Principal with Capacity.....................................................25
3.14 Disclosure of Principal............................................................26
3.141 Disclosed Principal.....................................................26
3.142 Partially Disclosed Principal.....................................26
3.143 Undisclosed Principal................................................26
3.15 Wrongful Receipt of Money..................................................26
3.16 Assumption of Liability.........................................................26
3.17 Torts and Crimes....................................................................26
4-CHAPTER 4.......................................................................27
4.1 Agent’s Authority.........................................................27

4.11 Scope of Agent’s Authority....................................................27
4.111 Express Authority.......................................................27
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4.112 Incidental Authority...................................................27

4.113 Customary Authority.................................................27
4.114 Apparent Authority....................................................28
4.12 Duty to Ascertain Extent of Agent’s Authority..................28
4.121 Authority dependent on an Event...........................28
4.122 Agent’s Act Adverse to Principal.............................28
4.123 Death of Third Person...............................................29
4.13 Limitation on Agent’s Authority...........................................29
4.131 Apparent Limitations.................................................29
4.132 Secret Limitations......................................................29
4.14 Delegation of Authority by Agent.........................................29
4.2 Duties and Liabilities of Principal and Agency................30
4.21 Duties and Liabilities of Agent during Agency...................30
4.211 Loyalty.........................................................................30
4.212 Obedience and Performance....................................30
4.213 Reasonable Care.........................................................30
4.214 Accounting..................................................................30
4.215 Information.................................................................31
4.22 Duties and Liabilities of Agent after termination of
Agency.................................................................................................31
4.23 Enforcement of Liability of Agent..........................................31
4.24 Duties and Liabilities of Principal to Agent........................31
4.25 Employment according to Terms of Contract.....................31
4.26 Compensation..........................................................................32
4.261 Advance Payment......................................................32
4.262 Repeating Transactions............................................32
4.263 Post Agency Transactions........................................32
4.27 Reimbursement.......................................................................32
4.28 Indemnity..................................................................................32
5-References.......................................................................33
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INTRODUCTION
Background
Agency law grew out of the desire of people to extend their activities beyond the physical
limits of their own bodies. In simple societies this desire was primarily for additional
labor through slaves or servants, but leaders also deputized others to transact business for
them. As commerce grew in importance, merchants and leaders also began to transact
business through others.
Brokers and factors began to play a prominent role in business in England by the latter
part of the 17th century. Such persons are now typical examples of agents but were
originally treated by the English courts as servants. It was not until the 19th century that
the law began to distinguish between servants and agents.
Nature of Relation
An agency relationship is based upon the mutual consent of the two parties. Once the
relationship is found to exist, the law defines the rights and liabilities of the parties with
respect to each other and to third persons. The fact that the agent is acting without
compensation and there is no enforceable contract of agency does not substantially affect
those rights and duties nor the validity of contracts negotiated by the agent in the name of
the principal.
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Creation of Agency
The agency relationship arises when two people consent that one shall act for the benefit
of the other and under the latter’s direction. Whether an agency exists is a question of
fact. If from all of the circumstances it appears that one person is acting for the benefit
and under the control of another, courts will hold that an agency relationship exists. The
legal relationship of agency may be created without either party being aware of its
existence and even though the parties have expressly stated that they do not intend to
create it.
No formality is required except in a few instances. For example, in many states authority
given to an agent to sell or otherwise act for the principal in transactions involving real
estate must be in writing. However, it is desirable in order to avoid later disputes that an
express agency agreement is entered into and that it is reduced to writing.
[2] Part 4; Chapter No.16; Page No.285-286
Termination of Agency
Although termination of an agency may involve a breach of contract, generally either
party has the power to terminate it at will. Unless notice is given to third parties who have
dealt with the agent, liability of the principal for the agent’s acts may continue, on the
ground of apparent agency, after termination of the agency. An agency based on express
contract will be terminated in accordance with its conditions, or upon its full
performance. In other cases, agency is terminated by the principal revoking the authority
given. Agency is also terminated by operation of law in a number of situations including
the death, insanity or bankruptcy of either party.
[1] Part 5; Chapter No.24; Page No.858
SCOPE
Differences in the nature of the services rendered and the degree of control that the
dominant person in the relationship is entitled to exercise have led to classifications of
parties that are sometimes confusing.
Employer (Master) and Employees (Servant)

It has been common to distinguish agents from employees according to the nature of the
services rendered: agents are empowered to change the legal relationships of the principal
(e.g. when they buy or sell for the principal), while employees perform physical acts such
as operating a machine or using a tool. If the dominant person has the right to control the
subordinate’s physical activities, then the subordinate is an employee.
Example
The driver of a milk delivery truck is an agent, as well as an employee. He is an agent
while making contracts between the milk company and its customers. But is only an
employee with respect to the work of delivering milk.
Principal and Agent
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The term agency may, in its broadest legal sense, include an employee who does nothing
but manual labor. However, it is usually applied to one who conducts business
transactions for his/her principal. Such an agent may be one who is an employee of a
corporation or a person who is an independent business person, perhaps employing other
people. Agents of the latter type are sometimes called professional agents.
Example
Manufacturers’ representatives, realtors, stockbrokers, auctioneers, and attorneys fall into
this category. With respect to these agents the principal’s control is limited to determining
the objectives and limitations of the agent’s authority in the business the agent is
transacting for the principal, and the principal has no right to control the agents’ physical
acts. Whether the agent travels by automobile or airplane or takes three hours for lunch is
not within the realm of control by the principal.
General and Special Agents

Agents are often further classified as general or special agents.
A general agent is a person who acts for the principal in a number of transactions over a
period of time. This person may be given authority to act for the principal in a rather wide
range of matters, such as the manager of a business, or may be authorized to handle all
transactions of a certain class for the principal, such as a general purchasing agent.
A special agent, on the other hand, is one who is authorized to act either in a single
transaction or a limited series of transactions.
Franchising and Other Relationships

The terms agent and agency are sometimes used to refer to relationships which do not
come within the law of agency.
Example
For example, a merchant who has a franchise to sell the products of the Ford Motor
Company is often referred to as a Ford agent, and the business is referred to as a Ford
agency; but the merchant is not an agent of the Ford Motor Company, and the relationship
between the Ford Motor Company and the merchant is not that of agency. The franchisee
is an independent contractor dealing in the franchisor’s (Ford Motor Company) products.
Independent Contractor
The term independent contractor is used in contrast to that of employee (or servant). An
independent contractor includes an individual, or a partnership or corporation, who
contracts to do something for another but who is not an employee. The distinction
between employee and independent contractor is based upon the degree of control over
the physical conduct of the one performing the service, and the principal is generally not
liable for the torts of an independent contractor. The relationship is especially common in
the building trades.
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Whether a person is acting as an independent contractor is often a difficult question of

fact.
Example
If Ahmed needs a new machine, he may build it in his own shop, in which case those
persons who build the machine will be Ahmed’s employees. Ahmed may submit the
specifications for the machine to Bashir, who will contract to build the machine according
to the specifications and for an agreed price. In this case, Bashir will not be an employee
of Ahmed, since Bashir has contracted to produce a result and is free to proceed by
whatever method he may wish in producing that result. Bashir’s physical conduct is not
under the control of Ahmed. Bashir is an independent contractor. The employee is subject
to the direction of his/her employer; the independent contractor is obligated to produce a
result and is free to pursue self-chosen methods in the performance of the work.
Real Estate Brokers
A real estate broker is generally not an agent with authority to make a contract with a
third person which will bind the broker’s client. Typically, the broker’s authority is
limited to locating a seller or buyer and bringing the parties together but does not extend
to making a contract. Even when the third person and the broker sign a “contract”, it is
generally only an offer by the third person which does not become a binding contract
until accepted by the client of the broker.
Bailees
When personal property is delivered to another under an agreement that the property will
be returned to the deliverer or transferred to a third person, a bailment arises. The person,
to whom the property is delivered, the bailee, is not an agent because the bailee has no
authority to act for or make any contract on behalf of the bailer.
Example
Situations commonly arise, however in which the same person is both an agent and a
bailee. A salesperson, who is loaned a company car, is a bailee with respect to the car; but
with respect to making sales contracts, is an agent.
Required Act
The mere fact one person requires another person to do an act does make the latter person
the agent of the former.
Example
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When a bank directs a borrower to obtain the signature of another person in order to
obtain a bank loan, the borrower is not the agent of the bank in contracting the other
person and procuring the required signature.
CAPACITY OF PARTIES
Capacity to Act as Principal

A person of limited legal capacity, such as minor or insane person, cannot enlarge his/her
legal powers by acting through an agent. The minor or insane person who authorizes an
agent to act for him is bound only to the extent he/she would have been bound by taking
the action in person. Business organizations such as corporations and partnerships may
appoint agents, and, of course, a corporation can act only through an agent. In a
partnership each partner acts as the agent of all copartners in transacting partnerships
business.
Unincorporated Associations as Principals

Under the common-law rule, an unincorporated association is not recognized as an entity
having legal capacity. It cannot, as a general rule, sue, be sued, own property, or enter
into a contract. Under special statutes, however, such associations generally have been
made subject to suit and their assets are subject to execution. This is especially true of
labor unions. If an unincorporated association is not liable to suit under the provisions of
a statute, its members who have legal capacity mat be held liable.
Capacity to Act as Agent

A person may have capacity to act as an agent even though he/she does not have the
capacity to contract. In the transaction of business through an agent, the principal is the
party obligated to perform, not the agent. The agent’s capacity is immaterial so long as
the agent has sufficient ability to carry out the principal’s instructions. Both corporations
and partnerships can act as agents.
Example
A husband or wife may act as the agent of the spouse, but there is no agency merely by
virtue of the marital relationship. The liability of a husband for the necessities purchased
by his wife is an aspect of the marital relationship itself and does not constitute the wife
an agent for her husband. The same would apply to the wife’s liability under statutes
imposing liability on her for family expenses.
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AUTHORITY TO BIND PRINCIPAL
Authorization
An agent is authorized to act for a principal when the principal’s representations or
conduct make it manifest to the agent that the principal intends the agent to act for the
principal. The extent of the authority of the agent to bind the principal is also based upon
the representations and conduct of the principal
In analyzing the power of an agent to bind the principal, the courts and writers have not
been consistent in the terms used. This analysis shall follow a three-part classification:
(1) express authority

(2) implied authority (also referred to as incidental authority)
(3) apparent authority (also referred to as ostensible authority and similar to
“authority by estoppel”)
(1) Express Authority

Express authority is that authority which is explicitly conferred on the agent by the
principal. It may be conferred either orally or in writing, but in either event the principal
must express to the agent the acts the agent is to perform.
Example
For example, if the principal instructs the agent, either orally or in writing, to draw a
check payable to Tucker for a stated sum and to sign the check in the principal’s name
and deliver it to Tucker, the agent will have express authority to draw, sign and deliver
the check.
(2) Implied Authority

Unless the principal limits the authority of the agent by express instructions or by clear
implication, the agent is authorized to transact or to do those acts that are reasonably
necessary to accomplish the objective of the agency. This authority is in addition to
whatever authority is expressly granted. Such authority is generally termed “implied
authority” or “incidental authority”.
Example
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Most of the cases which established the doctrine of implied authority arose out of the
marriage relationship, and extended to a wife the implied authority to incur expense on
behalf of the husband for household goods.
The doctrine, however, extends to any existing relationship, so that an employee will have
implied authority to do what is reasonably necessary in the course of employment.
(3) Apparent/ Ostensible Authority

Apparent or ostensible authority is derived from the appearance of authority, where a
principal allows a third party to believe that an apparent agent has authority.
Example
The principal employed a manager to run a jewellery shop, in the course of which
employment the manger ordered stock for the shop. After the employment was
terminated, the ex-manager again ordered jewellery and disappeared with it. The principal
was held liable to pay for the goods, despite the termination of the contract between
himself and the agent, because prior events had led the supplier to believe that the
manager had authority and no notice had been given that the authority had ended.
RATIFICATION
Agency by Ratification
An agent may attempt on behalf of the principal to do an act which was not authorized.
Or a person who is not the agent of another may attempt to act as such an agent.
Generally, in such case, the principal for whom the agent claimed to act has the choice of
ignoring the transaction or of ratifying it. Ordinarily any unauthorized act may be ratified.
Intention to Ratify
Ratification is a question of intention. Just as in the case of authorization, where there is a
question of whether or not the principal authorized the agent, so there is a question
whether or not the principal intended to approve/ratify the action of the unauthorized
agent.
The intention to ratify must be expressed in words or it may be found in conduct
indicating an intention to ratify, such as paying for goods ordered by the agent or
performing the contract which the agent had made and accepting payments for such
performance.
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[5] http://www.google.com/images
Example
Ratification of an earlier loan transaction is shown when the principal executes a renewal
note and papers which make an extension of the earlier loan.
The receipt, acceptance, and deposit of a check by the principal with knowledge that it
arises from an unauthorized transaction is a common example of ratification of the
unauthorized transaction by conduct.
Conditions for Ratification

For the intention to take effect as ratification formally, the following conditions must be
satisfied.
(1) The agent must have intended to act on behalf of or as agent for the identified
principal.
(2) The principal must have been capable of authorizing the act both at the time of
the act and at the time when it was ratified.
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(3) A principal must ratify the entire act of the agent.

(4) The principal must ratify the act before the third person withdraws.
(5) The act to be ratified must generally be legal.
(6) The principal must have full knowledge of all material facts.
Effect of Ratification
When an unauthorized act is ratified, the effect is the same as though the act had been
originally authorized. Ordinarily, this means that the principal and the third party are
bound by the contract made by the agent. Conversely, when the principal ratifies the act
of the unauthorized person, such ratification releases that person from the liability which
would otherwise be imposed for having acted without authority.
[8] http://books.google.com.pk/books
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DISCLOSED OR PARTIALLY DISCLOSED

PRINCIPAL
Liability of Agent of Disclosed Principal

A principal is disclosed when both the existence of the agency and the identity of the
principal are known to the third person. If the agent is acting for a disclosed principal, the
third person will, as a general rule, intend to contract with the principal, not the agent.
Any agent may make a contract in his or her name, in which event the agent is one of the
contracting parties and is liable on the contract; the agent may join the principal as joint
obligor in the making of the contract, in which case the agent is jointly liable with the
principal; or the agent may guarantee the performance of the contract by the principal in
which the event the agent is liable as surety. The mere fact the agent, is negotiating
contract, uses such expressions as “I will see” or “I will build “when it is not clearly not
understood that he or she is acting for and in the name of the principal.
Liability of Agent of Partially Disclosed Principal

A principal is partially disclosed when the existence of the agency is known to the third
person but the identity of the principal is not known. The agent for the partially disclosed
principal will, in the usual situation, be a party to the transaction he or she is negotiating.
Since the identity of the principal is unknown to the third person, such third person will
not, as a general rule, be willing to rely wholly on the credit and the integrity of the
unknown party.
The third party will desire the promise of the agent either as a guarantor or as a
compromiser. In such a situation, both the principal and the agent is liable to the third
person. The agreement may, however, expressly state the agent is not liable and the third
person will look solely to the principal for performance.
Execution of Writings
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An agent for the disclosed or partially disclosed principal need not sign an informal
writing in any particular manner in order to make the writings binding on the principal. In
the event the writing is drafted and signed in such a manner that it is not clear who the
party to the contract are, the courts will admit parol evidence to clear up the ambiguity
good business practices, however, dictate that the principal should be named in a body of
the writing, and the agent should sign it in such a way as clearly to indicate that he or she
is executing the writing for the principal in a representative capacity.
Only person whose name appears on negotiable instruments can be held as parties to
them. Therefore, the principal who is not disclosed on the instrument will not be liable on
it.
UNDISCLOSED PRINCIPAL
Nature and Relation of Liability
A principal is undisclosed if both the existence of the agency and the identity of the
principal are unknown to the third person. Under the law of agency, the undisclosed
principal is held liable as if a party to the contract provided the agent intends, in
negotiating the transaction, to the act for the undisclosed principal and has acted within
the scope of his or her powers. The liability of undisclosed principal is imposed by
operation of law.
Rights to the Third Person

Since, in the case of an undisclosed principal, the agent is contracting party, he or she is
liable on the contract. If the third person discovers that an agency exists and learns the
identity of the principal, the third person has the right to recognize the agency and hold
the liable principal or to pursue his or her rights on the contract against the agent. The
third person must make an election to hold the either the principal or the agent liable; they
are not both liable.
Just when the third person has made n election as to whether to his or her rights under the
contract and hold the agent liable or recognize the agency and hold the undisclosed
principal liable will depend, primarily, on the circumstances of each case. Obviously, the
third person cannot make an election until he or she learns of the existence of the agency
and knows the identity of principal.
Scope of a Liable of Undisclosed Principal

The liability of undisclosed principal for the authorized transactions of the agent is the
same as that of disclosed principal. However, an undisclosed principal runs a greater risk
that the agent will bind him or her transactions exceeding the agents authority because the
principal is unable to put third person on notice of limitations on the authority of the
agent. If the agent is a general agent, the undisclosed principal is liable for the facts done
on his account if usual or necessary in conducting the business entrusted to the agent even
if the facts are forbidden by the principal. For example, if Prindle does not wish to be
disclosed and appoints Adams to manage a retail food business, Adams will bind Prindle
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on groceries purchased on credit from Terman even though Prindle instructed Adams to
buy only for cash and specifically not from Terman.
Rights of Undisclosed Principal

The undisclosed principal is given substantially the same rights in transactions negotiated
by an agent as is given an assignee or beneficiary of a contract. The undisclosed principal
takes such rights subject to all the outstanding equities as they exist at the time the third
person learns of the existence of agency and the identity of the principal. That is, he takes
the transactions subject to all defenses, such as setoff, counterclaims, and payment, which
the third would have against the agent and the agent brought suit on the contract at the
time the third person learned of the agency and the identity of the principal.
LIABILITY ON SPECIAL TRANSACTIONS
Basis of Liability
In transactions negotiated by an agent, the basis of the principal’s liability is the authority
of the agent. It is sometimes difficult to determine the scope of the authority, even though
it is set out in writing. The nature of the business entrusted to the agent, standard practices
in business,, and the circumstances surrounding the transaction will be considered in
determining the scope of an agent’s authority, both implied and apparent. The third
person is bound by notice or knowledge of limitations on the agent’s authority and has the
burden of proving that the agent had authority to bind the principal.
Presumptions as to an agent’s authority or the lack of authority in relation to certain
common types of transactions have been developed by the courts. Such presumptions
apply in the absence of credible evidence as to the agent’s actual authority or lack of
authority.
Liability for Agent’s Representations

In the ordinary course of transacting business statements and representations relative to
the business at hands will be made by negotiators. An agent has implied authority to make
such statements and representations as are reasonably necessary to accomplish the
objective of the agency, and has apparent authority to make such statements and
representations as are usual and customary in the transaction of the business entrusted to
the agent.
The principal may be liable on representation by the agent even after instructing the agent
not to make certain statements or informing the agents of defects in goods. However,
liability would be imposed only if the third person has no notice or knowledge of the
limitations on agent’s authority or of the violations by the agents of the instructions. A
third person has the right to rescind a contract into which he or she has entered in reliance
on false representations made by the agent.
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Liability for Agent’s Warranties

A principal is liable for warranties made by his or her agent in a sale of goods if such a
warranty is customarily made on such goods in the market in which the goods are sold.
The principal is also liable on warranties made by the agent which are no more extensive
that those implied by law. The principal is not liable on an unauthorized warranty which
is unusual or extra ordinary in nature. The third person is bound by any limitations or
instruction given the agent of which the third person has knowledge or notice.
Liability for Payment to Agent

The fact that an agent has negotiated a transaction does not, as a matter of law, confer on
the agent an authority to collect. Such authority arises when it is usual and reasonable
incident of the business to be transacted. As in the other cases it may be shown that the
agent expresses, implied, or apparent authority to collect; but as a general rule, authority
to sell does not confer on the agent authority to receive payment. A sales agent who has
authority to solicit orders for future delivery does not thereby have the authority to collect
the purchase price of the goods. However it is generally held that id the selling agent has
the possession of the goods, he has implied authority to collect the purchase price of good
sold. Also it is generally held that an agent making over the counter sales have authority
to collect. Usage of trades, course of dealing or the acts of principal may confer on the
agent authority to collect.
Liability for Credit Contracted by Agent

The agent, in the absence of express authority, will not have authority to purchase on
principal’s credit. This rule is not absolute. If the agency is general, and if, in order to
carry out the purpose of the agency, it becomes necessary for the agent to borrow money
or purchase goods on the principal’s credit, the principal will be bound. Also, if the
principal has held the agent out as having authority to borrow money or purchase goods
on his or her credit, the principal will be bound.
If the agent is giving money by the principal to purchase goods and third person accepts
the agents personal checks without knowledge that the principal has furnished funds to
pay for the goods the third person cannot recover from the principal if the check is not
honored. If the agent is authorized to purchase the goods but is not furnished the money
with which to pay for the goods, the agent will have implied authority to purchase on
credit of the principal.
Liability on Negotiable Instruments

The negotiable instrument is given a separate and distinct place in the business world.
The nature of the negotiable instrument and the liability of the parties to it are such that
the authority to sign or to indorse and negotiate, or to cash such instruments is sparingly
conferred on an agent.
Express authority to sign or indorse negotiable instruments is strictly construed and will
not be enlarged by interpretation. The authority to sign or indorse negotiable instrument
will not be implied unless the nature of the business entrusted to the agent is such that it
cannot be effectively carried on without the signing or indorsing negotiable instruments.
An authorization “to transact any and all business” does not expressly or impliedly
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authorize the agent to sign or indorse negotiable instrument unless such acts are essential
to the carrying on the business entrusted to him or her.
Only in exceptional cases will the courts hold that an agent has apparent authority to sign
or indorse negotiable instruments. The fact is that an agent is given a special title, such as
president or secretary, treasurer, general manager, or cashier of cooperation. A member of
a partnership has the authority, under partnership law, to sign or indorse negotiable
instruments in the partnership name, unless such authority is withheld by the terms of the
partnership agreements.
NOTICE TO OR KNOWLEDGE OF AGENT
Effect of Notice to Agent

Generally notice to the agent is notice to the principal if the information acquired by the
agent related to the business that the agent is transacting for the principal. The duty to
communicate to the principal with respect to matters coming to the agents notice that are
within the scope of the agency and material to the principal for protection or guidance is
imposed on the agent by the law for reasons of public policy. If the agent fails to perform
duties, the principal rather than the third person should bear any resulting loss because the
principal selected the method of doing business and the agent. the agent is not required to
communicate to the principal every rumor or detailed facts which comes to the agent’s
notice, regardless of the reliability of the source. Notice toe the agent of matters not with
in the scope of agency is not binding on the principal unless the agent does in fact
communicate it to the principal.
Knowledge of Agent
Knowledge of the agent includes gained in transaction for the principal and knowledge
which by the exercise of reasonable prudence, the agent should have obtained.
Knowledge of facts to the agency gained during the transaction of business unrelated to
the agency may be imputed to the principal if it was present in the mind of an agent and
used to the advantage of principal during the agency. Of course the agent has no duty to
disclose confidential information obtained while serving another principal. Knowledge
gained by the agent after the termination of the agency is not binding on the principal
unless the agency is a continuing one. In such a case principal will be bound by notice
given to the agent by the third person who has dealt with the agent during the agency and
at the time of third person gave the notice was unaware of the termination of the agency.
Limitations on the Rule

The rule does not apply in those situations in which it is clear that agent would
communicate the knowledge to the principal. The courts have held that if the agent’s
interest will be furthered by not communicating a fact to the principal, the principal will
not be bound by the knowledge of the agent. if, however, an innocent third person will be
injured if the principal is not bound by the communicated knowledge of the agent, the
19
courts will hold that the principal is bound. If the agent and the third person is collusively
or fraudulently withhold knowledge from the principal, the principal will not be bound.
Under this rule the knowledge of agent is imputed to the principal; hence the principal’s
knowledge is constructive, not actual. Therefore, the principal will not be held liable for a
crime for which actual knowledge is essential element.
LIABILITY FOR ACTS OF SUBAGENTS
Appointment of Subagents
The liability of a principal for the torts or contracts of subagents or sub employee will
depend upon the relation between the appointing agent and the principal. The agent may
have express, implied, or apparent authority to appoint agents or employees for the
principal. Either to perform tasks delegated by agent or to do other tasks for the principal.
In such cases the agent or employee is the agent or employee of the principal. This is, of
course, the only way agents and employees of corporation are appointed. A professional
agent such as stock broker may have the authority from the principal to appoint subagents
who are employee of the agents, not employee of the principal, but who will have the
authority to bind the principal on certain kinds of contracts.
Liability of Principal for Acts of Subagents

If an agents have act within the scope of his or her authority in appointing an agent or
employee of the principal, the principal is liable for the contracts made or torts committed
by such persons to the same extent as if the principal had made the appointment.
The circumstances may be such that the agent will be authorized to select agents and
employees and to delegate certain acts required in the performance of agent’s duties to the
principal. Such appointees are the agents and employees of the original agent and as such
are under his control, and he is liable for their acts. However, the original principal is
liable indirectly for their acts which are done at the direction of or are delegated to them
by the original agent, provided such acts are within the scope of authority of the original
agent.
Example
For example, suppose Ali is the agent of perfect insurance company and he appoint
Tanweer as his agent, authorizing him to prepare and execute insurance policies in
fulfillment of applications for insurance which Ali has approved. If Tanweer prepares and
delivers a policy of insurance in the name of perfect insurance company which is issued
within scope of Ali’s authority, perfect insurance company will be liable on the policy.
But suppose Tanweer, when on his way to deliver the policy, operates his automobile in a
negligent manner and injures pedestrian, since Tanweer is not an employee of perfect
insurance company.
20
LIABILITY FOR TORTS AND CRIMES
Agents Who Are Employees

Today most agents are employees, and thus the principal (employer), as well as the
employee, is liable for the employee’s torts committed within the scope of employment
under the doctrine of “respondeat superior”. The meaning of this very old doctrine is “let
the master answer”, and it imposes liability on the employer without fault on his part. The
employer cannot escape liability by proving that he exercised the greatest of care in the
selection of the employee, that the employer trained the employee in safely measure or
that the employer gave the employee specific instruction not to do the act or to make the
representation with tortious. Since the employer liability is derivative, if the employee is
not liable neither is the employer.
Scope of the Employment

Whether or not tort committed by an employee was committed within the scope of
employment is frequently a difficult question of fact. Several factors are examined in
making the determination. One factor is whether the tort was committed within time and
space limits of the employment. A second factor is whether was actuated, impart at least,
by the purpose of serving the employer. A third is whether the act is the same general
nature as the incidental to the authorized conduct.
As a general rule, an employer is not liable for the torts committed by an employee who
has abandoned his or her employment temporarily. The courts have distinguished
between degrees of digression form the employment. The employer remains liable for the
torts committed during the mere deviation from the employment.
Example
If the truck driver while making deliveries takes a one or two block detour and stop only
briefly at the home of a friend, the employer would be liable for damages due to injuries
suffered by the pedestrian resulting from negligent driving of the truck just before the
trucker reaches the friends house they decided to go fishing and they have started off in
the employer’s truck in a new direction towards a lake at the time of pedestrian is struck,
the employer would not be liable.
There is considerable diversity in the decision as to when the employee has turned to his
employment after a temporarily abandonment. In the fishing trip example, some courts
would hold that the driver has returned to his employment as soon as he started towards
the next deliver. Others would hold that he had not returned until he was at or near a point
on his original route.
Liability for Torts of Professional Agent

A professional agent, such as a manufacturer representative or stock broker, is not an
employee of the contractor. A professional agent is an agent with respect to those
transactions for which he is employed by his principle the principle is not liable for the
torts of professional agents which results from misconduct in respect of physical act, such
21
as negligence in driving his or her automobile, but the principle may be liable for other
torts committed in the course of negotiation of the principle’s business.
Liability for Deceit of an Agent
The trends of court decision has been towards holding the principal liable for fraudulent
representations when it is usual in a trade for agents to make representations or when the
agent commits the deceit while apparently acting with in his or her authority unless the
reliance upon the representation by the third party was unreasonable.
Example
A number of cases have been held banks liable for fraudulent schemes of their officer,
such as the sale of stolen negotiable bonds, perpetrated on customer of the bank even
though the bank had no material connection with the scheme except for the position of
officers and wrongful use of its name. There is, of course, no doubt the principal is liable
for any deceit which he or she directs, causes, or participates in. Likewise, if the principal
ratifies an unauthorized transaction in which a tortious act occurred, the principal is liable
for the tort (assuming the principal has knowledge of the tort).
Intentional Torts
In the past, the employer was generally held not liable for an intentional physical act of
an employee which was tortious, such as striking or shooting a third person, unless the
employer authorized the act. However, courts today are much more likely than earlier to
find an employer liable for the intentional tort. If use of force is foreseeable by the
employer, this is generally sufficient for liability, and some courts let the question of
scope of employment go to the jury without regard to foresee ability.
Tort Liability is Joint and Several

The employer and employee are jointly and severally liable for the torts of agent or
employee. That is, the principal and the agent may be joined in the same action, or they
may each be sued in separate actions. However, the injured party is entitled to only one
satisfaction. When the injured party has been compensated for injuries, whether recover is
made from the principal or from the agent there is no further right for actions.
Crimes
The older view was that an employer could not be liable for crimes committed by an
employee unless the employer directed or participated in the crime at least to the extent of
being an accessory. Recently updated criminal codes and some recent court decisions
have held the employer guilty of crimes requiring intent where the person who did have
requisite intent was a decision making managerial employee. Where no intent is required,
and particularly in case of crimes defined by statute such as in antitrust laws, the statutory
penalties may be imposed on the principal for the criminal act of the employee or agent.
22
LIABILITY OF AGENT TO THIRD PERSON

The liability of the agent to the third person depends upon the manner in which the
transaction was conducted.
Action of Authorized Agent of Disclosed Principal

The agent of a disclosed principal is not liable to the third person unless otherwise agreed.
An agent is a party to a contract negotiated for an undisclosed principal, and, generally,
the agent is a party to the contract if he or she is acting for a partially disclosed principal.
If an agent makes a contract with a third person on behalf of a disclosed principal and has
proper authority to do so and if the contract is executed properly, the agent has no
personal liability on the contract. Whether the principal performs the contract or not, the
agent cannot be held liable by the third party. Thus an insurance agency arranging for the
insuring of a customer with a named company is not liable on the policy which the
company issues to the insured. If the agent lacks authority, however, or if certain other
circumstances exist, the agent may be liable.
Unauthorized Action
If a person makes a contract as agent for another but lacks authority to do so, the contract
does not bind the principal. When a person purports to act as agent for a principal, an
implied warranty arises that such person had authority to do so. If the agent lacks
authority there is a breach of this warranty and if the agent’s act causes loss to the third
person, that third person may generally hold the agent liable for the loss.
No Principal with Capacity

A person intending to act as agent impliedly warrants that there is an existing principal
and that the principal has legal capacity. If there is no principal or if the principal lacks
legal capacity, the person acting as an agent is liable for any loss caused to the third
person.
23
Disclosure of Principal
There are three degrees to which the existence and identity of the principal may be
disclosed or not disclosed. An agent’s liability as a party to a contract with a third person
is affected by the degree of disclosure.
(a) Disclosed principal

When the agent makes known the identity of the principal and the fact that the agent
is acting on behalf of that principal, the principal is called a disclosed principal.
(b) Partially disclosed principal

When the agent makes known the existence of the unknown principal but not the
principal’s identity, the principal is a partially disclosed principal.
(c) Undisclosed principal

When the third person is not told or does not know that the agent is acting as agent for
anyone else, the unknown principal is called an undisclosed principal.
Wrongful Receipt of Money

If an agent obtains a payment of money from the third person by the use of illegal
methods, the agent is liable to the third person.
If the third person makes an overpayment to the agent or a payment when none is due, the
agent is also usually liable to the third person for the amount of such overpayment or
payment. If the agent has acted in good faith and does not know that the payment was
improperly made, however, the agent is liable to the third person only so long as the agent
has possession or control of the overpayment. If the agent has remitted the overpayment
to the principal before its return is demanded by the third person, the agent is not liable to
the third person.
Assumption of Liability
Agents may intentionally make themselves liable upon contracts with third persons. This
situation frequently occurs when the agent is a well-established local brokerage house or
other agency and the principal is located out of town and is not known locally.
Torts and Crimes

Agents are liable for harm caused to third persons by the agent’s fraudulent, malicious, or
negligent acts. The fact that they were acting as agents at the time or that they had acted
in good faith under the directions of a principal does not relieve them of liability.
Example
If an agent is guilty of fraud, the third person may avoid the transaction, without regard to
whether the circumstances are such that principal would be liable for damages.
24
An agent has no fixed right to remuneration for services performed. The ability to claim
such payment will depend upon the terms, express or implied, of the agency arrangement.
The principal is, however, obliged to reimburse the agent for the express incurred in
performing the agency, provided, of course, the agent has acted within authority.
AGENT’S AUTHORITY
The facts that one person is the agent of another does not dispose of all questions. It is
necessary to determine the scope of the agent’s authority.
Scope of Agent’s Authority:

(1) Express authority:
If the principal tells the agent to perform a certain act, the agent has express authority to
do so. The express authority can be indicated by conduct as well as words. Accordingly,
when the agent informs the principal of intended plans and the principal makes no
objection to them, authorization may be indicated by such silence.
(2) Incidental authority:

An agent has implied incidental authority to perform any act reasonably necessary to
execute the express authority given to the agent. If the principal authorized the agent to
purchase goods without furnishing funds to the agent to pay for them, the agent has
implied incidental authority to purchase the goods on credit.
(3) Customary authority:

An agent has implied customary authority to do any act which, according to the custom of
the community, usually accompanies the transaction for which the agent is authorized to
act. For example, an agent who has express authority to receive payments from third
persons has implied authority to issue receipts. One authorized to act as a general
25
manager has the power to make any contract necessary for the usual and ordinary conduct
of business.
An agent with express authority to receive checks in payment does not have implied
authority to cash them. An employee’s authority to indorse checks payable to an
employer does not includes authority to indorse and those checks into the employee’s
personal bank account. Authorization to a lawyer to settle a client’s claim does not
authorize the lawyer to indorse the clients name on a check given in settlement of the
claim.
(4) Apparent authority:

A person has apparent authority as an agent when the principal by words or conduct leads
a third person reasonably to believe that such person has that authority and the third
person relies on that appearance.
The mere possession of property does not given rise to any apparent authority of the
possessor to act with respect to the property.
Duty to Ascertain Extent of Agent’s Authority:

A thirds person who deals with a person claiming to be agent cannot rely on the
statements made by the agent concerning the extent of authority. If the agent is not
authorized to perform the act or is not even the agent of the principal, the transaction
between the alleged agent and the third person will have no legal effect between the
principal and the third person.
When the third person should realized that the agent is merely a soliciting agent of an
insurance company with no greater authority than to obtain an application from third
persons and transmit it to the insurance company, the insurer is not bound by an
agreement which such agent makes with an applicant by which the applicant had been
promised unlimited medical expenses coverage, whereas the policy as delivered contained
a maximum limitation on such coverage.
(1) Authority dependent on an event

If the authority of an agent is contingent upon the happening of some event, one may not
ordinarily rely upon the statement of the agent that the event has happened.
An exception to this rule is made in cases in which the happening of the event is
peculiarly within the knowledge of the agent and cannot be ascertained easily, if at all, by
dealing with the agent. As an illustration, if the agent of a railroad issue a bill of lading
for goods without actually receiving the goods, the railroad as principal, is liable to one
who takes the bill in good faith and for value. This exception is justified because,
although the authority of the agent to issue bill of lading is dependent upon receiving
goods, subsequent person taking bills of lading have no way of determining whether the
agent in fact did receive the goods.
(2) Agent’s act adverse to principal

The third person who deals with an agent is required to take notice of any that are adverse
to the interest of the principal. Thus, if the agent is obviously making use of funds of the
principal for the agent’s personal benefits, person dealing with the agent should recognize
26
that the agent may be acting without authority and that they are dealing with the agent at
the peril.
(3) Death of third person

The extent of the agent’s authority becomes particularly significant when the third person
dies after the transaction with the agent but before any action has been taken by the
principal. If the had authority to contract on behalf of the principal, the agent’s agreement
with the third person would give rise immediately to a binding contract and the third
persons subsequent death would ordinarily not affect that contract. In contrast, if the
agent did not have authority to contract but only to transmit an offer from the third
person, the death of the third person before the principal had accepted the offer would
work a revocation of the offer and the principal could not create a contract by purporting
to accept after the death of the third person.
Limitation on Agent’s Authority:

A person who has knowledge of a limitation on the agent’s authority cannot disregard that
limitation. When the third person knows that the authority of the agent dependent upon
whether financing has been obtained, the principal is not bound by the act of the agent if
the financing in fact was not obtained.
If the agent informs the third person that authority is lacking to do a particular act but that
the agent will endeavor to obtain authority from the principal, the third person cannot
successfully claim that the agent has apparent authority. If third person enter into a
contract on the assumption that the will be able to obtain authorization, the third person
takes will not be able to do so.
(1) Apparent limitation

In some situations, it will be apparent to third persons that they are dealing with an agent
whose authority is limited. When third persons knows that they are dealing with an
officer of a private corporation or a representative of a governmental agency, they should
recognized that such person will ordinarily not have unlimited authority and that a
contract made with the officer might not be binding unless ratified by the principal.
(2) Secret limitations

If the principal has clothed an agent with authority to perform certain acts but the
principal gives secret instructions that limit the agent’s authority, the third person is
allowed to take the authority of the agent at its face value and is not bound by the secret
limitations of which the third person has no knowledge.
Delegation of Authority by Agent

As a general rule, an agent cannot delegate to another the authority obtained from the
principal. In other words, unless the principal expressly or impliedly consents, an agent
cannot appoint subagents to carry out the agent’s duties. The reason for this rule is that
since an agent is usually selected because of some personal qualifications, it would be
unfair and possibly injurious to the principal if the authority to act could be shifted by the
agent to another. This is particularly true when the agent was originally appointed for the
performance of a task requiring discretion or judgment.
27
For example, an agent who is appointed to adjust claims against an insurance company
cannot delegate the performance of that duty to another.
Agents however may authorize others to perform their work for them in the following
circumstances.
1. When the act to be done involve only mechanical or ministerial duties.
2. When a well known custom recognizes such appointment.
3. When the appointment is justified by necessity or sudden emergency and it is
impractical to communicate with the principal, and the appointment of a subagent
is reasonably necessary for the protection of the interests of the principal entrusted
to the agent.
4. When it is contemplated by the parties that subagents would be employed.
DUTIES AND LIABILITIES OF PRINCIPAL AND

AGENCY
The creation of the principal agent relationship gives rise not only to powers but also to
duties and liabilities.
Duties and Liabilities of Agent during Agency

(1) Loyalty
An agent must be loyal or faithful to the principal. The agent must not obtain any secret
profit or benefit from the agency. If the principal is seeking to buy or rent property, the
agent cannot secretly obtain the property and then sell or lease it to the principal at a
profit.
(2) Obedience and performance

An agent is under a duty to obey all lawful instruction the agent is required to perform the
services specified for the person and the way in the way specified. An agent who does not
is liable to the principal for any harm caused.
If the agent violates instruction, it is immaterial that the agent acted in good faith or
intended to benefit the principal. It is the fact that the agent violated the instructions and
thereby caused the principal a loss which imposes a liability on the agent. In determining
whether the agent has obeyed instructions, they must be interpreted in a way that a
responsible person would interpret them.
(3) Reasonable Care

It is the duty of an agent to act with the care that a responsible person would exercise
under the circumstances. In addition, if the agent possesses a special skill, as in the case
of a broker or an attorney, the agent must exercise that skill.
(4) Accounting
An agent must account to the principal for all property or money belonging to the
principal that comes into the agent’s possession. The agent should, within the responsible
28
time, give notice of collections must made and render an accurate account of all receipts
and expenditures. The agency agreement may state at what intervals or on what dates
such accountings are to be made.
(5) Information
It is the duty of an agent to keep the principal informed of all facts relating to the agency
which are relevant to protecting the principal’s interests. In consequence, a principal’s
promise to pay a bonus to an agent for information secured by the agent in the course of
duty is not enforceable because the principal was entitled to that information anyway. The
promise of the principal is unenforceable because it is not supported by consideration.
Duties and Liabilities of Agent after Termination of

Agency
When the agency relationship ends, the duties of the agent continue only to the extent
necessary to perform prior obligations.
For example the agent must return to the former principal any property which had been
entrusted to the agent for the purposes of the agency. With the exception of such
“winding up” duties the agency relationship is terminated and the former agent can deal
with the principal as freely as with a stranger.
[7] http://www.leg.wa.gov/lawsandagencyrules/
Enforcement of Liability of Agent
When the agent’s breach of causes harm to the principal, the amount of the loss may be
deducted from any compensation due the agent or may be recovered in an ordinary
lawsuit.
When the handles money for the principal, the contract of employment may provide that
the amount of any storage in the agent’s accounts may be deducted from the
compensation which the agent would otherwise be entitled.
Duties and Liabilities of Principal to Agent

The principal is under certain duties to the agent. The principal must perform the contract,
compensate the agent for the services make reimbursement for proper expenditures, and
under certain circumstances must indemnify the agent for loss.
(a) Employment According to Terms of Contract

When the contract is for a specified time, the principal is under the obligation to permit
the agent to act as such for the term of the contract, in the absence of any just cause or
contract provision which permits the principal to terminate the agency sooner. If the
principal gives the agent an exclusive right to act as such, the principal cannot give
anyone else the authority to act as agent nor may the principal do the act to which the
exclusive agent’s authority relates.
(b) Compensation
29
The principal must pay the agent the compensation agreed upon. If the parties have not
fixed the amount of the compensation by their agreement but intended that agent should
be paid, the agent may recover the customary compensation for such services. If there is
no established compensation, the agent may recover the reasonable value of the service
rendered.
(1) Advance payment

(2) Repeating transactions
(3) Post agency transactions
(1) Advance payment

When agents are compensated on a basis of a percentage of the price of goods they
sell or contracts they make, it is customary to allow them to draw a stated amount
weekly or monthly subject to adjustment at the end of some longer accounting
period in the event that the commissions actually earned should be greater than the
sums paid from the drawing accounts.
(2) Repeating transactions
In certain industries third persons make repeated transactions with the principal. In
such cases the agent who made the original contract with the third person commonly
receives a certain compensation or percentage of commission on all subsequent
renewal or addition contracts. In the insurance business, for example, the insurance
agent abstaining the policy holder for the insurer receives a substantial portion of
the first years premium and then receives a smaller percentage of the premium paid
by the policyholder in the following years.
(3) Post agency transactions
An agent is not entitled to compensation in connection with transaction, such as
sales or renewals of insurance policies, occurring after the termination of the
agency, even through the post-agency transactions are the results of the agent’s
former activities. Some contracts between a principal and an agent expressly give
the agent the right to post-termination compensation, however, or may expressly
deny the agent such compensation.
(c) Reimbursement
The principal is under a duty to reimburse the agent for all disbursements made at the
request of the principal and for all expenses necessarily incurred in the lawful discharge
of the agency for the benefit of the principal.
(d) Indemnity
It is the duty of the principal to indemnify the agent for any losses or damages suffered on
account of the agency which were not caused by the agent’s fault. When the loss
sustained is not the result of obedience to the principal’s instructions but of the agent’s
misconduct, or of an obviously illegal act, the principal is not liable for indemnification.
30
Books
[1] Business, Law and Society by Andrew Terry and Bes Guigni
[2] Business Law: Principles and Cases by Lusk, Hewitt, Donnell and
Barnes, 4th UCC edition 1978, ISBN: 0-256-02021-3
[3] Business Law Principles and Cases by Ronald A. Anderson in

contribution with Ivan Fox and David P. Twomey, 7th edition-UCC,
South Western publishing Co, ISBN: 0-538-12430-x
[4] Legal aspects of business by Akhileshwar Pathak, 2nd edition, the

McGraw-Hill Companies, ISBN: 0-07-061633-7
Websites
[5] http://www.google.com
[6] http://www.enwikipedia.org
[7] http://www.leg.wa.gov/lawsandagencyrules/Pages/default.aspx
[8] http://books.google.com.pk/books
[9] http://www.scribd.com
31

Law of Agency: Final Report

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FINAL REPORT ON AGENCY LAW

1.44 Apparent/Ostensible Authority....................................14

2.1 Disclosed or Partially Disclosed Principal.......................17

2.51 Appointment of Subagents....................................................22

2.6 Liability for Torts and Crimes........................................23

3.1 Liability of Agent to Third Person..................................25

4.1 Agent’s Authority.........................................................27

4.112 Incidental Authority...................................................27

Employer (Master) and Employees (Servant)

Principal and Agent

General and Special Agents

Franchising and Other Relationships

Whether a person is acting as an independent contractor is often a difficult question of

Capacity to Act as Principal

Unincorporated Associations as Principals

Capacity to Act as Agent

AUTHORITY TO BIND PRINCIPAL

(1) express authority

(1) Express Authority

(2) Implied Authority

(3) Apparent/ Ostensible Authority

Conditions for Ratification

(3) A principal must ratify the entire act of the agent.

DISCLOSED OR PARTIALLY DISCLOSED

Liability of Agent of Disclosed Principal

Liability of Agent of Partially Disclosed Principal

Rights to the Third Person

Scope of a Liable of Undisclosed Principal

Rights of Undisclosed Principal

LIABILITY ON SPECIAL TRANSACTIONS

Liability for Agent’s Representations

Liability for Agent’s Warranties

Liability for Payment to Agent

Liability for Credit Contracted by Agent

Liability on Negotiable Instruments

NOTICE TO OR KNOWLEDGE OF AGENT

Effect of Notice to Agent

Limitations on the Rule

LIABILITY FOR ACTS OF SUBAGENTS

Liability of Principal for Acts of Subagents

LIABILITY FOR TORTS AND CRIMES

Agents Who Are Employees

Scope of the Employment

Liability for Torts of Professional Agent

Tort Liability is Joint and Several

LIABILITY OF AGENT TO THIRD PERSON

Action of Authorized Agent of Disclosed Principal

No Principal with Capacity

(a) Disclosed principal

(b) Partially disclosed principal

(c) Undisclosed principal

Wrongful Receipt of Money

Torts and Crimes

Scope of Agent’s Authority:

(2) Incidental authority:

(3) Customary authority:

(4) Apparent authority:

Duty to Ascertain Extent of Agent’s Authority:

(1) Authority dependent on an event

(2) Agent’s act adverse to principal

(3) Death of third person

Limitation on Agent’s Authority:

(1) Apparent limitation