Class Two:
Agency and Employment - One
Agency and its Relations to Others
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Last week we spoke about:
• Class Procedures
• Are you a sailboat or a submarine?
• The Textbook – Anderson’s Business Law
• The Class Content:
1. Agency;
2. Partnerships and personal business entities;
3. Corporations;
4. Public Authorities;
5. Limited Liability Companies;
6. Insurance; and
7. Bankruptcy
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Tonight:
We will begin with:
The Wonderful World of Agency
aka “show me the money”
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Remember: Every wonderful adventure
starts with a good book?
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An Adventure in the Law
For the very first step on our Adventure we need to know:
What is the “Law”?
We need to find out, we need to discover this answer.
And just how do we do that?
Well good law students,
like good adventures and explorers,
love books.
Books are the treasure trove of answers.
Adventures in the Law – So Just What is the Law?
That is why every really wonderful adventure
starts with a good book
Adventures in the Law – So Just What is the Law?
So Let’s Start with Black’s
• Black’s Law Dictionary
is the Gold Standard
of Legal Definitions.
• If we need to know a term
in the law, a legal definition,
we should start with Black’s.
• And so,
What is the “Law”?
• The “Law” has been defined by Black’s Law Dictionary as follows:
•
•
•
•
“That which is laid down, ordained, or established.
A rule or method according to which a phenomena or actions co-exist or
follow each other.
Law, in its generic sense, is a body of rules of action or conduct proscribed
by controlling authority, and having binding legal force. …
Law is a solemn expression of the will of the supreme power of the state.”
• Perhaps the simplest description of the Law, however, is that:
“Law is the Rules by which civilization is ordered.”
The Chief Elements / Components of the Law are:
1. Rules
2. Pronounced, laid down and/or issued
by a controlling authority;
3. That are consistent and lasting; and
4. That are enforceable and followed
by the governed.
• Early laws were simply directives from a king or sovereign.
Modern Laws Include:
 Constitutions: Both Federal and State
 Statutes: Enacted by Elected Legislative Bodies
(Such as Congress or State Legislature)
 Case Law: Also known as “The Common Law”
(Case Decisions delivered by Courts)
 Regulations: Promulgated by government (Executive) agencies
(Agency pronouncements designed to amplify or clarify their
authority as provided in statute or constitution)
 Executive Orders: Issued by Executive (President or Governor)
(Instructions by the Executive to their agencies directing them
how to execute a procedure or law)
The United States of America
A Representative, federal, Republic.
Pursuant to our United States Constitution,
our laws come from our government
and our government comes from the people.
This system is set up by our
United States Constitution
which is the Rule Book
for our Government
and its Laws.
The United States of America
A Representative, federal, Republic.
Articles IV and VI of the United States Constitution
expressly provide:
The United States shall guarantee to every State in this
Union a Republican Form of Government … and
This Constitution, and the Laws of the United States
which shall be made in Pursuance thereof;
and all Treaties made, or which shall be made,
under the Authority of the United States,
shall be the supreme Law of the Land;
and the Judges in every State shall be bound thereby,
any Thing in the Constitution or Laws of any state
to the Contrary notwithstanding.
As a result of this representative, federal, republic:
Laws are made pursuant to the following construct:
Federal Government (For All National Laws – Supreme but Limited Powers)
President (Executive)
Congress (Legislative)
Federal Courts (Judicial)
State Government (For All State Laws – Subservient but Unlimited Powers)
Governor (Executive)
State Legislature (Legislative)
State Courts (Judicial)
Federal Government (Separation of Powers and Checks and Balances)
President (Executive)
Congress (Legislative)
Federal Courts (Judicial)
Supreme Court
US Senate
US House of Representatives
US Court of Appeals
US District Court
State Government (Pursuant to State Constitution – Similar Checks and Balances)
Governor (Executive)
State Legislature (Legislative)
State Courts (Judicial)
NYS Court of Appeals
NYS Senate
NYS Assembly
Appellate Division of NYS Supreme Court
NYS Supreme Court
Priority of Laws:
1. Constitution:
Established by Convention of Elected Delegates to
provide governmental framework and protections of individual rights, they are
supreme to all other laws as interpreted by the Courts
2. Statute:
Laws passed (enacted) by an elected legislative body (Congress or
State Legislature) and signed into law by the Executive (President or Governor).
3. Regulation:
Promulgated by government (Executive) agencies to amplify
or clarify their authority as provided in statute or constitution.
4. Executive Order: Issued by Executive (President or Governor) as an
instruction to their agencies on how to execute a procedure or law.
 Case Law or Common Law Decisions issued by courts which provide legal rules by:
1. Interpretation of a Constitution, Statute, Regulation or Executive Order, or
2. Clarifying or creating law pursuant to past court decisions.
This is a class on the Law of Business Organizations
One can not have a true understanding the Law of Business
and the Organizations which are its vehicle to accomplish its
goals, unless they have a true understanding of the Law.
Moreover to truly understand the Law of Business, we need
to understand these Organizations as the vehicle which
delivers the needs of Commerce.
That requires us to have an understanding of the Law which
governs the rules of the road upon which we drive that vehicle.
So Let’s Start with Black’s
• Black’s Law Dictionary
is the Gold Standard
of Legal Definitions.
• If we need to know a term
in the law, a legal definition,
we should start with
Black’s.
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Black's Law Dictionary – 8th Edition (Thompson West 1999)
Defines the term Agency as follows:
• “A fiduciary relationship
created by express or implied contract or by law,
in which one party (the agent)
may act on behalf of another party (the principal)
and bind that other party
by words or actions.”
Ok… What does this tell us?
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The Elements of the Agency Relationship:
1. A fiduciary relationship
2. Created:
a. by express contract;
b. by implied contract; or
c. by law,
3. In which one party (the agent) may act
4. On behalf of another party (the principal)
5. and bind such principal (via their authority)
6. by words or actions
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Agency In General – Agents you can think of
Real Estate
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Agency In General – Agents you can think of
Insurance
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Agency In General – Agents you can think of
Sports
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Agency In General – Agents you can think of
Theatrical
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Agency In General
 Contract Liability
The Agency Relation Arises From Contract
• Contract Liability
Contract liability in agency
refers to the legal relationship
whereby one party (called an agent)
is authorized to represent
the other party (called a principal)
in business dealings with third parties.
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Agency In General
 Contract Liability
The Agency Relation Arises From Contract
• Scope of Appointments
A principal may appoint an agent
to do any act
EXCEPT an act
which by its nature, by public policy, or by contract,
requires personal performance
by the principal.
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Agency In General:
 Nature of the Agency Relationship:
• An agency relationship is created
by an express or implied agreement,
whereby one person, the agent,
is authorized to make contracts
with third persons,
on behalf of, and subject to
the control of,
another person - the principal.
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Agency In General:
 Purpose of Agency:
• The effect of a proper exercise of authority
by an agent is to bind the principal and third
person to a contract.
• The agent, not being a party to the contract,
is not liable, in any respect, under the contract.
deals with third person
and makes contracts on
behalf of principal
Parties to
the contract(s)
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Agency In General:
 Classification of Agents:
• Special Agents:
A special agent is authorized by the principal to handle a specific
business transaction.
• General Agents:
A general agent is authorized by the principal to transact all business
affairs of the principal at a certain place.
• Universal Agents:
A universal agent is authorized by the principal to perform all acts that
can be legally delegated to a representative.
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CREATION OF THE AGENCY RELATIONSHIP - Continued
 Elements of the Creation an Agency Relationship
• Capacity
There must exist the capacity to enter into the agency agreement
• Formalities
There must exist the formalities of a contractual relationship:
Consent must exist, but No Consideration and No Written Contract Required
• Modes of Creation
There must a contractual relationship established:
a. By Act of the Parties
● Actual Authority
● Apparent Authority
● Inherent Authority
● Ratification
b. By Operation of Law
● Estoppel
● Statute
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CREATION OF THE AGENCY RELATIONSHIP - Continued
 Elements of the Creation an Agency Relationship
1. Capacity
A threshold (condition precedent)
to the creation of an agency relationship
is that the respective parties must have CAPACITY.
• Capacity is defined as:
1. “The power to create or enter into a legal relationship
under the same circumstances in which a normal person
would have the power to create or enter into such relationship.”
2. “The satisfaction of a legal qualification,
such as legal age or soundness of mind,
that determines ones ability to enter into a binding contract.”
Note: The degree of capacity required for a principal differs from that
required for an agent.
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CREATION OF THE AGENCY RELATIONSHIP - Continued
 Elements of the Creation an Agency Relationship
1. Capacity – Continued:
A condition precedent to the creation of an agency relationship
is that the respective parties must have capacity.
a.Principal Must Have Contractual Capacity
Generally, one who has contractual capacity may be a principal and enter
into a contract through an agent.
b. Agents Generally Need Not Have Contractual Capacity
As a general rule, any person may be an agent, even if they have no
contractual capacity. But there are limitations to this rule.
c. Disqualification of Agents
A person, however, can be disqualified from being an agent.
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CREATION OF THE AGENCY RELATIONSHIP - Continued
 Elements of the Creation an Agency Relationship
1. Capacity – Continued:
a. Principals: Must Have Contractual Capacity
Generally, one who has contractual capacity may be a
principal and enter into a contract through an agent.
1) Minors
As a general rule, a minor cannot bind himself absolutely in contract; therefore, his
appointment of an agent as well as the agent's actions are voidable and can be disaffirmed.
2) Incompetents
An incompetent's appointment of an agent as well as the agent's actions may be disaffirmed
by the incompetent or his committee or personal representative.
3) Unincorporated Organizations
Unincorporated not-for-profit organizations such as churches and clubs CANNOT be
principals.
- However, members of such organizations may be held jointly liable as principals
if they have authorized or assented to the act giving rise to the litigation.
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CREATION OF THE AGENCY RELATIONSHIP - Continued
 Elements of the Creation an Agency Relationship
1. Capacity – Continued:
b. Agents Generally Need NOT Have Contractual Capacity
As a general rule, any person may be an agent, even if they
have no contractual capacity.
But there are limitations to this rule.
1) Minors
Minors may validly be appointed as agents.
2) Incompetents
Individuals incompetent to enter into a valid contract on their own behalf may still act as
another's agent.
3) Exceptions
Courts nonetheless, have held that a minimal age and mental capacity is usually required.
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CREATION OF THE AGENCY RELATIONSHIP - Continued
 Elements of the Creation an Agency Relationship
1. Capacity – Continued:
c. Disqualification of Agents
A person, however, can be disqualified from being an agent.
1) Representation of Both Parties
An agent cannot represent both parties unless both parties are fully advised
of the facts and agree to the dual representation.
2) Self-Dealing
The agent may not secretly act for her own account.
3) Not Licensed
If the law requires the agent to have a license, he cannot act as an agent without one
(such as certain brokers, real estate agents, or insurance agents).
In practice, this means that the unlicensed agent cannot recover commissions for their work.
[N.Y. Real Prop. Law §442-d]
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CREATION OF THE AGENCY RELATIONSHIP - Continued
 Elements of the Creation an Agency Relationship
2. Formalities:
a. Consent
As the relationship is a contract, consent must be manifested by both the
principal and the agent to create an agency relationship.
b. No Consideration Required
Unlike a standard contract, however, consideration is not necessary for the
creation of an agency relationship.
c. Writing – No Written Contract Required
1. General Rule-No Writing Required
Another exception to this contractual relationship is that normally, the existence of the
agency DOES NOT have to be evidenced by a writing.
Note: This is true even where the Statute of Frauds requires the agreement that the
agent is entering on behalf of the principal to be in writing.
2. Conveyance of Real Estate
An exception to this exception, however is where a party relying on a written contract
of sale of an interest in realty greater than one year must show that the agent's authority
to sign was in writing or that the principal has ratified the signing.
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[See N.Y.S. General Obligations Law §5-703, §5-1111]
CREATION OF THE AGENCY RELATIONSHIP - Continued
 Elements of the Creation an Agency Relationship
3. Modes of Creation of the Agency Relationship
a. By Act of the Parties (By Appointment, Conduct or Ratification)
1. Actual Authority
2. Apparent Authority
3. Inherent Authority
- Incidental Authority
- Customary Authority
4. Ratification
b. By Operation of Law
1. Estoppel (Courts)
2. Statute
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CREATION OF THE AGENCY RELATIONSHIP - Continued
 Elements of the Creation an Agency Relationship
3. Modes of Creation of the Agency Relationship Continued
a. By Act of the Parties
There are four ways in which the parties may create an agency relationship.
They are as follows:
1. Actual Authority
The principal may, by direct communication to the agent, orally or in writing,
actually appoint and authorize the agent to act on the principal's behalf.
2. Apparent Authority
The principal may, by communication to the third party, orally or in writing,
indirectly authorize the agent to act on the principal’s behalf.
3. Inherent Authority
The principal, by actually authorizing the agent to act, may be liable for acts
performed by the agent, even if such acts are in violation of the principal's orders.
4. Ratification
An agency relationship may be created by the principal's later, subsequent
affirmation (ratification) of the actions of one who purported to be acting on behalf
of the principal. Basically, a ratification affirms a previously unauthorized act. 38
CREATION OF THE AGENCY RELATIONSHIP - Continued
 Elements of the Creation an Agency Relationship
3. Modes of Creation of the Agency Relationship Continued
b. By Operation of Law
Under certain circumstances, the law may impose an agency relationship.
They are as follows:
1. Estoppel
In certain instances, the law may impose an agency relationship under the doctrine
known as estoppel. Under these circumstances the principal is legally estopped
from denying the existence of the agency under a theory of equitable relief.
Note: There is little difference recognized in law between estoppel and apparent authority
as they both depend on a third person's reliance on a communication from the principal.
The former is merely an equitable remedy to prevent unjust enrichment, while the latter
gives rise to a contract with its accompanying rights and obligations.
2. Statute
In other instances an agency may be created by statute. Such statutes are usually,
however, designed to accomplish or address a limited purpose.
Example: Certain statutes will designate the Secretary of State as an agent for the limited
purpose of receiving service of process. [See N.Y.S. Vehicle and Traffic Law §2531] 39
CREATION OF THE AGENCY RELATIONSHIP Continued
AGENCY BY
APPOINTMENT
AGENCY BY
CONDUCT
Express authorization — appointed to act
for or on behalf of another
Actual Authority (Such as Power of Attorney)
Conduct of principal as to agent and
third person consistent with the existence
of an agency relationship
Apparent Authority
AGENCY BY
RATIFICATION
AGENCY BY
OPERATION OF LAW
With knowledge of an agent’s act, the
principal accepts or retains the benefit of
the act, or brings an action to enforce
legal rights based on the act, or defends
the action, or fails to repudiate the act.
Statutes or Courts create or find an
agency when none would otherwise exist.
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TYPES OF AGENCY AUTHORITY
Actual Authority
No Authority
Express
Authority
Incidental
Authority
Customary
Authority
Apparent
Authority
Express Authority: Principal tells
agent to perform a certain act
Incidental Authority: An act reasonably
necessary to perform the act expressly
authorized by the principal
Buy new office furniture and sell
specified used furniture
Buy furniture on credit when funds are
not made available to pay for items.
Customary Authority: An act that,
according to the custom of similar
businesses in the community, usually
accompanies the act performed under
express authority.
Issue receipts for used furniture sold
Apparent Authority: Principal leads
third party to believe that the agent has
authority to serve as an agent.
Principal was present when third party
purchased furniture from agent and did
not stop the unauthorized transaction.
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TYPES OF AGENCY AUTHORITY
 Elements of Agency Authority
1. Actual Authority – The Three Part Test:
In determining whether a prospective agent has actual authority, it must be determined:
a. Whether the requisite formalities, if any, have been complied with;
b. What type of actual authority (express or implied) is present; and
c. Whether the authority has been terminated.
A. Types of Actual Authority
Actual or real authority is that authority the agent reasonably thinks they possess.
It does not depend upon knowledge of, or reliance by, the third party.
There are two basic types of real authority:
1. Express Authority
2.
That authority contained within the "four comers" of the agency agreement.
It is the authority contained in the communication, whether written or oral,
from the principal to the agent. Generally, the grant is, but need not be, in writing.
Implied Authority (Includes Incidental and Customary)
Implied actual authority is authority that the agent (not the third party) reasonably
believes they have as a result of the actions of the principal.
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TYPES OF AGENCY AUTHORITY
 Elements of Agency Authority
A. Types of Actual Authority Continued
1. Express Authority Continued
This is the authority contained within the "four comers" of the agency agreement.
It is the authority contained in the communication, whether written or oral,
from the principal to the agent. Generally, the grant is, but need not be, in writing.
a. Construction of Authority
In general, the grant of authority given to an agent will be interpreted in a fashion similar to
interpretation of offers under contract law (i.e., reasonable person standard).
(1) Extravagant Language:
Grants of authority often contain "extravagant" language that give extremely broad powers
to the agent, e.g., "to conduct any business on principal's behalf." Courts generally tend
to limit application of such broad grants to what appears to actually be intended by the parties.
(2) Specific vs. General Language
Specific language in the grant of authority will prevail over general language.
(3) Reasonable Belief of Agent
The agent is free to act upon the grant of authority as they reasonably believe the principal
intended. In construing the intent of the principal, the agent may look to the principal's words
and acts when he conveyed authority.
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TYPES OF AGENCY AUTHORITY
 Elements of Agency Authority
A. Types of Actual Authority Continued
1. Express Authority Continued
This is the authority contained within the "four comers" of the agency agreement.
It is the authority contained in the communication, whether written or oral,
from the principal to the agent. Generally, the grant is, but need not be, in writing.
b. Express Authority Granted Mistakenly
Express authority may exist even though the principal did not intend to convey
such authority but did so by mistake. Mistakes may involve:
(i) Mistake as to Person: A mistake as to the person to whom the authority is given; or
(ii) Mistake as to Subject Matter: A mistake as to the subject matter of the agency.
Notes: Art wishes Bob to enter into a transaction on his behalf, but mistakenly tells Catherine to
do it. Catherine has actual express authority to act on Art's behalf.
Art wishes Catherine to buy a piece of real estate (Whitestone Manor) on his behalf.
Mistakenly, he tells Catherine to purchase Blackstone Manor instead. Mary has actual
express authority to purchase Blackstone Manor.
c. Express Authority Granted Because of Misrepresentation
The fact that an agent induces the principal to grant authority by misrepresentation
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will not affect the extent of the authority actually granted.
TYPES OF AGENCY AUTHORITY
 Elements of Agency Authority
A. Types of Actual Authority Continued
2. Implied Authority
Implied actual authority is authority that the agent (not the third party)
reasonably believes they have as a result of the actions of the
principal. Implied authority may arise in the following ways:
a. Implied from Express Authority
b. Implied from Custom and Usage
c. Implied by Acquiescence
d. Implied Because of Emergency or Necessity
e. Implied Because of Litigation
f. Specific Situations
(1) Authority to Delegate
(2) Authority to Purchase
(3) Authority to Sell
(4) Authority to Manage Investments
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TYPES OF AGENCY AUTHORITY
 Elements of Agency Authority
A. Types of Actual Authority Continued
2. Implied Authority Continued
Implied actual authority is authority that the agent (not the third party) reasonably
believes they have as a result of the actions of the principal. Implied authority may
arise in the following ways:
a. Implied (incidental) from Express Authority
Express authority granted to an agent to accomplish a particular result necessarily
implies authority to use all means reasonably necessary for its accomplishment.
Note: Alex hires Bill to manage her apartment building. The express grant of authority states
quite simply that Bill is "to manage”. Nothing more is conveyed in the grant. To manage
the building, Bill must employ a janitor, purchase fuel for heating, arrange for the painting
and repair of screens as needed, and occasionally redecorate an apartment. The authority
of Bill to do these things, while not expressly granted, is implied because these acts are
necessarily and incidental to the proper management of the building.
b. Implied (customary) from Custom and Usage
Unless specifically directed otherwise, an agent has implied authority to act in
accord with general custom or usage. However, the agent must have knowledge of
the custom or usage.
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TYPES OF AGENCY AUTHORITY
 Elements of Agency Authority
A. Types of Actual Authority Continued
2. Implied Authority Continued
c. Implied by Acquiescence
Authority by acquiescence is implied authority resulting from the principal's
acceptance of, or failure to object to, a series of unauthorized acts (i.e., a series of
ratifications), that reasonably leads the agent to believe that they have the
authority to do the same act in the future.
Note: Mary, the office manager for Peter's company, has regularly bought its office supplies
without previous authorization. Peter has never objected. Mary has implied authority
by acquiescence to continue these purchases.
d. Implied Because of Emergency or Necessity
When the agent has no specific instructions on what to do in case of an emergency,
they have implied authority to take reasonable measures that are necessary until
they can contact her principal.
Note: In case of a railroad accident, the highest ranking trainman can bind the railroad to
pay for emergency medical expenses.
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TYPES OF AGENCY AUTHORITY
 Elements of Agency Authority
A. Types of Actual Authority Continued
2. Implied Authority Continued
e. Implied Because of Litigation
An agent's authority may be implied because of litigation.
Note: A stipulation of settlement made by counsel in open court will bind his client even
where it exceeds his actual authority. A party may be relieved from the consequences
of a stipulation entered into during litigation only where there is cause to invalidate
the attorney-client contract (e.g., fraud, collusion, mistake, or accident).
f. Specific Situations
(1) Authority to Delegate
The principal will be held to have impliedly consented to a delegation of authority by the
agent in the following cases:
(a) Ministerial Acts
(b) Delegation Required by Circumstances
(c) Custom
(d) Impossibility
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TYPES OF AGENCY AUTHORITY
 Elements of Agency Authority
A. Types of Actual Authority Continued
2. Implied Authority Continued
f. Specific Situations
(1) Authority to Delegate
In general, an agent's authority will not be construed to permit them to delegate any of their
authority. The courts reason that an agency relationship is a consensual relationship, and
the principal has not consented to someone else performing the agent's functions. However,
the principal will be held to have impliedly consented to a delegation of authority by the
agent in the following cases:
(a) Ministerial Acts
An agent may employ a subagent to execute ministerial acts.
(b) Delegation Required by Circumstances
Often circumstances may indicate that the employment of a subagent would be
necessary. If so, authority to delegate will be implied.
(c) Custom
An agent may delegate to a subagent when it is the custom of a particular business.
(d) Impossibility
A principal will be held to have impliedly consented to subdelegation where those acts
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being performed could not, by definition, be performed by the agent .
TYPES OF AGENCY AUTHORITY
 Elements of Agency Authority
A. Types of Actual Authority Continued
2. Implied Authority Continued
f. Specific Situations
(2) Authority to Purchase
Authority to purchase on behalf of the principal generates certain implied authority.
(a) Authority to Pay
An agent is deemed to have authority to pay for the goods he is authorized to purchase.
He may do this either out of the principal's funds or on credit if such funds are unavailable.
(b) Authority to Accept Delivery
An agent with authority to purchase goods is also deemed to have authority to accept delivery
of the goods.
(3) Authority to Sell
An agent with authority to sell the principal’s property will have certain implied authority.
(a) Authority to Warrant
An agent with authority to sell personal property may give general warranties for quality and
quantity; as to real property the agent may grant the customary covenants.
(b) Authority to Collect
i. Only If Agent Has Possession of Goods
ii. Can Collect Only Cash
(c) Authority to Deliver
An agent having authority to sell the principal's property generally is deemed to have authority
to deliver possession of such property upon receipt of proper payment.
(4) Authority to Manage Investments
An agent having authority to manage investments will have their authority construed in
accordance with a "prudent investor" standard. Also, when the agent is investing for the
principal, the agent should take title to investments in the principal's name. If title is taken
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in the agent's name, their position as agent must be clearly designated.
TYPES OF AGENCY AUTHORITY
 Elements of Agency Authority
B. Termination of Actual Authority
Once having determined that the requisite formalities exist and that
there is express or implied actual authority, you should ask whether
the authority has been terminated.
Termination of actual authority may occur in the following ways:
1) By Lapse of Time
a) Specified Time
b) Time Not Specified
2) By Happening of Event
3) By Breach of Agent's Fiduciary Duty
4) By Change of Circumstances
a) Destruction of the subject matter of the authority;
b) A drastic change in business conditions;
c) A change in relevant laws; and
d) Insolvency of the agent or principal, if relevant.
5) By Unilateral Act of Principal or Agent
6) By Operation of Law
a) Death
b) Incapacity of Principal
c) Dissolution of Corporation or Partnership
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TYPES OF AGENCY AUTHORITY
 Elements of Agency Authority
B. Termination of Actual Authority
Once having determined that the requisite formalities exist and that there is express or
implied actual authority, you should ask whether the authority has been terminated.
Termination of actual authority may occur in the following ways:
1) By Lapse of Time
a) Specified Time
If the agency relationship is to last for a set period of time, the agent's authority will terminate
upon expiration of this period.
b) Time Not Specified
If there is no set period of time specified in the agreement between the principal and agent, the
courts will imply termination within a reasonable time period.
2) By Happening of Event
The agency agreement may specify that it is to last until a specified event happens. When that
event takes place, authority will be terminated.
Note: Zamira is hired to work on public relations for the space exploration program until an
astronaut has successfully been landed on Mars. With the first landing of an astronaut on
Mars, the agency relationship terminates.
3) By Breach of Agent's Fiduciary Duty
A breach of a fiduciary duty by the agent terminates the agent’s authority.
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TYPES OF AGENCY AUTHORITY
 Elements of Agency Authority
B. Termination of Actual Authority Continued
Termination of actual authority may occur in the following ways:
4) By Change of Circumstances
A change of circumstances that should cause an agent to realize the principal would not want the
agent to exercise her authority terminates her authority. A change of circumstances sufficient to
bring about termination would include the following:
a) Destruction of the subject matter of the authority;
b) A drastic change in business conditions;
c) A change in relevant laws; and/or
d) Insolvency of the agent or principal, if relevant.
5) By Unilateral Act of Principal or Agent
Either the principal or the agent can unilaterally terminate the agency relationship.
Note: Communication of a declaration that the agency is at an end is sufficient. It is important to
note that the power to unilaterally terminate the relationship exists even though the party
who exercises that power may be in breach of the agency contract when they do so (i.e.,
the parties have the power, but may have to face the legal and financial consequences of
such a termination). Accordingly, the breaching party could therefore be liable for damages.
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TYPES OF AGENCY AUTHORITY
 Elements of Agency Authority
B. Termination of Actual Authority Continued
Termination of actual authority may occur in the following ways:
6) By Operation of Law
An agency relationship may be terminated by operation of law without regard to the parties wishes.
a) Death
(1) In General
The death of either the principal or the agent terminates the agency relationship at the time of death, with or
without knowledge of the surviving party.
(a) Power of Attorney
A power of attorney (i.e., a written instrument authorizing an agent to perform specific acts), not
involving a principal in the military service, terminates upon the death of either party.
(2) Exceptions
(a) Bank Transactions
The Uniform Commercial Code ("U.C.C.") provides that a bank may pay or collect the commercial
paper of a customer until it receives notice of death and has a reasonable opportunity to act on it.
Even with knowledge of the customer's death, a bank may for 10 days after the date of death pay
or collect commercial paper drawn on or prior to the date of death. [See U.C.C. §4-405]
(b) Military Employees
The death of a principal who is a member of the armed forces does not terminate a written power
of attorney if the attorney-in-fact does not have actual knowledge or notice of the principal's death
and acts pursuant to the power in good faith. [N.Y.S. General Obligations Law §3-501]
54
TYPES OF AGENCY AUTHORITY
 Elements of Agency Authority
B. Termination of Actual Authority Continued
Termination of actual authority may occur in the following ways:
6) By Operation of Law Continued
b) Incapacity of Principal
(1) Adjudicated
If the principal is formally adjudicated an incompetent, the prior authority possessed by his agent is
immediately terminated and any transaction by the agent with third parties is void.
(a) U.C.C. Exception
U.C.C. section 4-405 provides that a bank may continue to honor transactions for a customer's
account until it learns of the adjudication of incapacity and has a reasonable time to act.
(2) No Adjudication
(a) Knowledge
If an agent enters into a transaction with a third party and the third party has knowledge of the
principal's incapacity at the time of the transaction, the transaction is void.
(b) No Knowledge
If an agent enters into a transaction with a third party and the third party has no knowledge of the
principal's incapacity other than death at the time of the transaction, the agreement is valid.
(c) Statute - Power of Attorney
N.Y.S. General. Obligations Law § 5-1505 authorizes a principal to provide in a written power of
attorney (called durable) that the power shall not be affected by the subsequent incompetence or
disability of the principal. If this authorization is given, all acts done by the attorney-in-fact during
the subsequent disability or incompetence of the principal would have the same effect as if the
principal were competent and not disabled. If a committee s appointed for the principal, then the
attorney is accountable to the committee rather than to the principal. The committee may revoke,
suspend, or terminate the power to the same extent as the principal were he was competent.
c) Dissolution of Corporation or Partnership
55
Generally, the dissolution of a corporation or partnership terminates any agency relationship.
TYPES OF AGENCY AUTHORITY
 Elements of Agency Authority
C. Irrevocable Agencies Continued
There are two types of agencies that may not be unilaterally terminated by the principal:
- Subject Matter: where the agent has an interest in the subject matter of the agency,
- Security: Where the agent has a power given for security.
1. Definitions
a) Agency Coupled with an Interest
This is where an agent has an "interest" when she has been given immediately exercisable
rights in the property.
Note: Dawn owes Edgar $20,000. Dawn gives Edgar a written power of attorney authorizing Edgar to sell her
her farm Black Rock, and to remit to Dawn any money received in excess of $20,000. Edgar accepts
this as a discharge of Dawn’s debt. Dawn cannot revoke Edgar's power to sell Black Rock.
b) Power Given as Security
A power given as security is normally exercisable by the agent only upon a subsequent
default by the principal. These transactions normally involve a loan to the principal with the
principal posting collateral and giving the agent authority to sell in the event of a default.
Note: Powers given as security involve a principal-agent relationship where the agent is really acting for
their own benefit. Therefore, even though agency is involved, the agent has their own interest in the
subject matter of the agency power.
c) Agency Status
Strictly speaking, the above are not agencies at all because the first is technically an
assignment for purposes of securing a loan, and in the second the agent is not acting under
the control of the principal or for the principal, but as the principal where default occurs.
56In
addition, unlike other agency relationships, these do not terminate by operation of law .
TYPES OF AGENCY AUTHORITY
 Elements of Agency Authority
C. Irrevocable Agencies Continued
There are two types of agencies that may not be unilaterally terminated by the principal:
- Subject Matter: where the agent has an interest in the subject matter of the agency,
- Security: Where the agent has a power given for security.
2) Restatement View
The Restatement (Third) of Agency ("Restatement") does not distinguish between these two
types of interests-it treats them both as powers given as security. Under the Restatement view,
the power is absolutely irrevocable other than in accord with the agreement. Pursuant to this
view, there are two other requirements that must be met.
a) Purpose of Grant
The grant of authority must have been given to protect a debt, other duty, or title of the
agent or third person.
b) Consideration
The grant must be supported by consideration.
Note: Clark lends $2,000 to Bert in exchange for Bert's promissory note. Two weeks later, at Clark’s request,
Bert secures his obligation to repay Clark the $2,000 by giving Clark a security interest in his car. The
security interest provides that Clark may sell the car upon Bert’s default on the promissory note. Clark’s
authority to sell the car upon Bert's default is revocable because at the time Bert gave Clark the security
interest there was no consideration.
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TYPES OF AGENCY AUTHORITY
 Elements of Agency Authority
2. Apparent Authority
A. Apparent Authority (also known as Ostensible Authority) Defined
Generally speaking, a person is not responsible for the act of another who assumes to
represent him, unless he has made the other his representative and conferred upon her
the powers that she purports to possess. The mere assertion by an agent of her powers
is not sufficient to bind the principal because an agent cannot "bootstrap" her own
authority. A third party must ascertain at his peril the authority of the agent.
There is no presumption of agency.
a. Basic Theory
Where the principal "holds out" another as possessing certain authority, thereby inducing
others reasonably to believe that authority exists, the agent has apparent authority to act, even
though as between herself and the principal such authority has not been granted.
Note: Apparent authority differs from actual authority in that apparent authority arises out of
reasonable beliefs of third parties, whereas actual authority arises out of reasonable beliefs
of agents.
58
TYPES OF AGENCY AUTHORITY
 Elements of Agency Authority
2. Apparent Authority
A. Apparent Authority (also known as Ostensible Authority) Defined
a. Basic Theory Continued
1. "Holding Out" by Principal
a) Affirmative Action
The "holding out" may be by word or conduct on the part of the principal.
Note: Pat tells Tom that Anne is Pat's agent and has the power to contract for Pat. In fact, Anne has no
actual authority to contract for Pat. If Anne contracts with Tom on Pat's behalf, then Pat will be
bound under the doctrine of apparent authority.
b) Inaction
The "holding out" may also be by inaction on the part of the principal. Accordingly, when it
comes to agency, there must be some duty to act, (i.e., to disclose) or apparent authority
will attach.
Note: Anne, in Pat's presence, tells Tom that she is Pat's agent when in fact she is not. Under these
circumstances, Pat has a duty to correct A's representation; if he does not, Anne will have apparent
authority to act on Pat's behalf.
2. Reasonable Reliance by Third Party
In addition to the requirement that some "holding out" must be traceable to the principal, the
third party must reasonably rely on the "holding out."
Note: Payment to the attorney for a claimant after settlement or judgment discharges the debtor's obligation.
The attorney has at least apparent authority to collect. If the attorney absconds with the money, his client
may not thereafter compel the debtor to pay a second time.
3. Negligence on Part of Principal
Where the principal's negligence was the proximate cause of the acts of an unauthorized
person, the principal may be estopped from disclaiming liability to third parties.
Note: Alex, president and treasurer of Yelraf Motors Corp., leaves the corporation checks and the corporation
signature stamp on his desk, in plain view, overnight. While cleaning up that night, without authorization
,
the janitor executes several of the corporation checks and cashes them early the next morning.
Alex, having negligently allowed this to occur, is liable on the checks cashed by the janitor .
[See U.C.C. §3-406]
59
TYPES OF AGENCY AUTHORITY
 Elements of Agency Authority
2. Apparent Authority
B. Types of Apparent Authority (a/k/a as Ostensible Authority):
1. Where Agent Has No Actual Authority of Any Type
There are certain situations in which, at the time the agent acts, they have no actual authority to do
anything at all for the principal, yet nonetheless, the principal may be bound by the agent's act.
a. Impostors
Where the principal negligently permits an impostor to be in a position where the impostor
appears to have authority to act for the principal, the principal will be held liable for the
impostor's act undertaken with such authority.
Note: Hampex Inn, a hotel corporation, employs one person as a night clerk. While the night clerk is away from
the desk, a stranger goes behind the desk, poses as the clerk, accepts valuables for placement in the
hotel safe from a guest who is registering, and absconds with them. Hampex Inn would be held liable to
the guest for the stolen valuables.
b. Lingering Apparent Authority
(1) General Rule--Notice May Be Necessary
An agent's actual authority terminates when she knows or should have known of the
termination. What about a third party who has had a pattern of dealing with the agent while
they had actual authority? If the principal knows of the dealings between their past agent and
the third party, such principal must give notice to the third party that the agent's actual
authority has been terminated. If the principal fails to do so and if the third party did not know
nor reasonably should have known of the termination of the agent's actual authority, then the
60
agent will continue to have apparent authority.
TYPES OF AGENCY AUTHORITY
 Elements of Agency Authority
2. Apparent Authority
B. Types of Apparent Authority (a/k/a as Ostensible Authority):
1. Where Agent Has No Actual Authority of Any Type Continued:
There are certain situations in which, at the time the agent acts, they have no actual authority to do
anything at all for the principal, yet nonetheless, the principal may be bound by the agent's act.
b. Lingering Apparent Authority Continued
(2) Writing Manifesting Agent's Authority
If the principal has given the agent a writing manifesting her authority that is meant to be
shown to third parties, the agent's apparent authority will not be terminated with respect to
third parties who see and rely on the writing after termination of her authority.
(3) Death or Incompetency
Death or incompetency of the principal terminates all authority of the agent without notice to
either the agent or third parties. This rule has been changed with respect to banks by U.C.C.
section 4-405, which provides that a bank can continue to honor transactions for a
customer's account until it learns of his death or adjudication of incompetency and has had
a reasonable time to act. Even with knowledge, a bank can continue for 10 days after death
to pay or certify checks drawn on or prior to the date of death unless ordered to stop
payment by a person claiming an interest in the account.
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TYPES OF AGENCY AUTHORITY
 Elements of Agency Authority
2. Apparent Authority
B. Types of Apparent Authority (a/k/a as Ostensible Authority):
2. Where Agent Has Some Present Actual Authority
There are situations in which the agent exceeds her authority to act on behalf of the
principal, yet the principal is still bound by the agent's acts.
a. Prior Acts
Where the principal has previously allowed the agent to act beyond her authority and the
principal knows that a third party is aware of this fact, the principal will be bound by the agent's
unauthorized act.
Note: Adam, a janitor in Paul's employ, has no authority to employ other people for Paul. On two prior
occasions, however A dam hired Ted, a painter, to do some painting in Paul's building. Paul
subsequently paid Tom's invoices without protest. If Adam hires Tom to do another paint job, Paul would
be found liable to Tom for his services.
b. Position
(1) In General
Where the principal places the agent in a position that carries with it certain customary
responsibilities, the principal is liable for the agent's acts that come within these customary
responsibilities, even though the agent had no actual authority to perform the acts.
Note: Dark Pines Golf Club, a country club, hires Jack to be the food service manager with the
understanding that Jack will personally pay for all expenses of the dining room and will split the profits
with Dark Pines Golf Club. Jack orders $10,000 worth of food from Ted’s Fish Fry and House of
Clams, but Jack does not pay upon delivery. If Jack does not pay Ted’s, Dark Pines Golf Club would
62
be held liable for the food so purchased.
TYPES OF AGENCY AUTHORITY
 Elements of Agency Authority
2. Apparent Authority
B. Types of Apparent Authority (a/k/a as Ostensible Authority):
2. Where Agent Has Some Present Actual Authority
There are situations in which the agent exceeds her authority to act on behalf of the
principal, yet the principal is still bound by the agent's acts.
b. Position
(2) General vs. Special Agent
In determining whether the agent's position customarily includes the act that they have
performed, courts often rely on the distinction between a general and special agent.
- General Agent: A general agent is one who is authorized to engage in
(i) a series of transactions
(ii) involving a continuity of service.
- Special Agent: A special agent is authorized to engage in one or more transactions not
involving a continuity of service.
A general agent's apparent authority is considerably broader than a special agent's.
c. Secret Limiting Instructions
Where a principal secretly limits the actual authority of his agent to act, and the agent, when
dealing with a third party, acts beyond the scope of the limitation, the principal will be bound by
the agreement made between the third party and agent.
Note: David owns an antique store. A shipment of antique clocks arrives from London. David tells Jenn, his
sales associate, not to sell a special grandfather clock because the value has not been determined.
David goes to lunch, and misunderstanding her instructions, Jenn enters into a sales contract with
Edward for the grandfather clock. David is bound on the sales contract even if the value of the clock
63 is
greater than the sales price.
TYPES OF AGENCY AUTHORITY
 Elements of Agency Authority
3. Inherent Authority
A. Inherent Authority Defined
1. Inherent Authority
Inherent authority or inherent agency power, is an equitable doctrine, and results
in the principal being bound by the agent's acts in certain situations even when the
agent has no actual or apparent authority.
a. Basic Rationale
The principal will sometimes be held liable on inherent authority grounds due to balancing interests.
Courts normally tend to want to protect innocent third persons as opposed to a principal, who in
fact gave some actual authority to the agent. In effect, the principal that turned the agent loose on
the world, should have some responsibility for their misdeeds.
b. Examples
1. Respondeat Superior
The principal is held liable for the torts of an employee committed within the scope of employment
even though there is no actual or apparent authority.
2. Conduct Similar to that Authorized
Where a general agent exceeds their actual authority but the act performed is similar to the act
authorized, the principal will be held liable.
3. Improper Disposition of Goods-Apparent Ownership
One recurring problem is the improper disposition of goods by a person to whom they
have been entrusted.
a) General Rule-Mere Possession Insufficient
Generally, the fact that the agent has possession of the principal's goods does not entitle the agent to
sell them or transfer good title.
b) Indicia of Ownership
Where the principal transfers possession of property to the agent and gives the agent some document
of title or other indicia of ownership, the agent has the power to transfer good title even though the
transfer is unauthorized.
c) Dealer in the Goods
Under the U.C.C., where a dealer in goods of the type sold improperly sells the principal's goods to a
third party in the ordinary course of business, the third party takes good title. [See U.C.C. §2-403]
64
TYPES OF AGENCY AUTHORITY
 Elements of Agency Authority
4. Ratification
A. Generally
There are situations where an individual Prospective Agent will purport to act on behalf of a Prospective
Principal without any type of authority. In such a situation, may still be bound by such Prospective
Agent’s act if such Prospective Principal subsequently ratifies such Prospective Agent's act.
1. Effect of Ratification
a. "P" Bound
When "P" ratifies an unauthorized transaction by "A," "P" becomes bound on the contract.
b. "A" Relieved of Liability for Breach of Warranty
Generally, when a prospective agent acts without authority he breaches his implied warranty of authority. Such
prospective agent’s authority is relieved of this liability if the prospective principal ratifies.
c. Contract Given Retroactive Effect
If ratified, a transaction will be treated as if it had been entered into with authority. However, there are several
situations in which the ratification is considered effective on the date of ratification and does not relate back.
1) Incapacity
If "P" has capacity at the time of the ratification, but did not have capacity at the time that "A" entered into
the unauthorized transaction, then there will be no retroactive effect. The contract will be considered valid
from the time of the ratification.
2) Intervening Rights
Ratification will not have retroactive validity where its operates to the prejudice of third persons who have,
in the meantime, acquired rights that would be jeopardized if the transaction were valid retroactively.
Note:: Prospective agent Art, without authority, contracts to sell prospective principal Paul’s automobile to
Tom for $2,500. Paul without knowledge of Art’s purported transaction, contracts to sell the car to
Kevin for $2,000. Subsequently finding out about Art's transaction at the higher price, Paul decides
to affirm it. Kevin's intervening rights in the subject matter of the transaction will prevent this.65
TYPES OF AGENCY AUTHORITY
 Elements of Agency Authority
4. Ratification
A. Generally
There are situations where an individual Prospective Agent will purport to act on behalf of a Prospective
Principal without any type of authority. In such a situation, may still be bound by such Prospective
Agent’s act if such Prospective Principal subsequently ratifies such Prospective Agent's act.
2. What Constitutes Ratification
a. Prerequisites
1) The Prospective Principal Must Know Material Facts
There can be ratification only where the Prospective Principal has or reasonably should have
knowledge of the material facts at the time of the alleged affirmance..
2) The Prospective Principal Must Accept Entire Transaction
Ratification must be of the entire transaction. The Prospective Principal may not merely
ratify a portion of the transaction (unless, of course, the transaction[s] is severable).
3) The Prospective Principal Must Have Capacity
The Prospective Principal must be competent and of legal age in order to ratify.
4) No Consideration Needed
Ratification is a unilateral act of the Prospective Principal and requires no consideration.
66
TYPES OF AGENCY AUTHORITY
 Elements of Agency Authority
4. Ratification
A. Generally
There are situations where an individual Prospective Agent will purport to act on behalf of a Prospective
Principal without any type of authority. In such a situation, may still be bound by such Prospective
Agent’s act if such Prospective Principal subsequently ratifies such Prospective Agent's act.
2. What Constitutes Ratification Continued
b. Methods of Ratifying
1) Express Affirmance
A transaction may be expressly affirmed by the Prospective Principal.
2) Implied Affirmance
Conduct on the part of the Prospective Principal that would be consistent with approval of the
heretofore unauthorized act may be taken as a ratification.
a) Acceptance of Benefits
If the Prospective Principal accepts the benefits of the transaction when it is still possible
to decline, he will be deemed to have ratified.
Note: A Prospective Principal Peter’s, part-time gardener, Prospective Agent Alan contracted with Fred,
without authority," to have Peter's trees pruned. Peter is not deemed to have accepted the benefits
because there is no way Peter could reject or return them.
b) Silence
If a Prospective Principal is silent where he would otherwise have a duty to disaffirm the
transaction, his silence will act as a ratification.
c) Lawsuit
If a Prospective Principal brings a lawsuit involving the transaction, it will be construed
67 as
a ratification.
TYPES OF AGENCY AUTHORITY
 Elements of Agency Authority
4. Ratification
A. Generally
There are situations where an individual Prospective Agent will purport to act on behalf of a Prospective
Principal without any type of authority. In such a situation, may still be bound by such Prospective
Agent’s act if such Prospective Principal subsequently ratifies such Prospective Agent's act.
3. What May Be Ratified
a. General Rule
Anything a Prospective Principal could have legally done can be ratified. Accordingly, as long as
a Prospective Agent’s act could have legally been performed or authorized by a Prospective
Principal at the time a Prospective Agent acted, then the Prospective Principal may ratify.
Note: On June 1, Prospective Agent, without any authorization, contracts on Prospective Principal's behalf to
establish an off-track betting parlor. On July1, the legislature legalizes off-track betting. Prospective
Principal may not ratify after July1 because Prospective Agent’ s original act was illegal.
b. Exceptions
1) Performance Illegal
If contract performance would be illegal at the time of the ratification, it may not be ratified.
Note: Assume same off-track betting example as above, except that offtrack betting was legal on June 1
and outlawed on July 1. Accordingly, the Prospective Principal may not ratify after July 1.
2) Withdrawal by Third Party
If, prior to ratification, the third party indicates that she will not be bound by the contract, the
Prospective Principal may not ratify.
3) Material Change of Circumstances
Where there has been a material change of circumstances so that it would not be equitable
to hold the third party to the contract, there can be no ratification.
Note: Prospective Agent sells Prospective Principal’s house to Ken. Before ratification, the house is 68
destroyed by fire. Prospective Principal may not ratify.
TYPES OF AGENCY AUTHORITY
 Elements of Agency Authority
4. Ratification
A. Generally
There are situations where an individual Prospective Agent will purport to act on behalf of a Prospective
Principal without any type of authority. In such a situation, may still be bound by such Prospective
Agent’s act if such Prospective Principal subsequently ratifies such Prospective Agent's act.
4. Who May Ratify
a. General Rule
The general rule is that a Prospective Principal alone can ratify. A Prospective Principal may
not elect to treat the contract as her own.
Note: On June 1, Prospective Agent Art, without any authorization, contracts on Prospective Principal Paul's
behalf to establish an off-track betting parlor. On July1, the legislature legalizes off-track betting. Paul
may not ratify after July 1 because Art’s original act was illegal.
b. No Ratification by Undisclosed Principal
Because the act must be entered into by Prospective Agent Alex on behalf of Prospective
Principal Pam, an undisclosed principal cannot ratify because the third party never relied upon
her existence. (Compare with ratification in tort situations, however. There it is not necessary
that the third party have knowledge of Pam as long as Alex intended to act on his behalf.)
69
THE FUNDAMENTALS OF AGENCY
 General Review
A. Creating the Agency
• Agencies can be created by express conduct;
• Agencies created by conduct create apparent authority;
• A person, who is not an agent, who attempts to do an unauthorized act,
may create an agency where the principal later approves (ratification).
• In such cases there needs to be an Intention to Ratify.
• Conditions of Ratification include:
• Where the Agent purported to act on behalf of the principal;
• Where the Principal is capable of authorizing the act; and
• Where the Principal has full knowledge of material facts.
• Effect of Ratification is the creation of an agency relationship.
70
THE FUNDAMENTALS OF AGENCY
 General Review
B. Scope of the Agent’s Authority
• The usual method of creating an agency is by express authorization;
• Apparent Authority: agency relationship is be found to exist when the
principal causes or permits a third person to reasonably believe that an agency
relationship exists;
• The third person cannot claim that apparent authority existed when that
person knows that the agent’s conduct is adverse to the interests of the principal
or that the agent is exceeding the limits of his authority;
• An unauthorized transaction by an agent for a principal may be ratified by the
principal, giving it enforceability;
• An agent acting with authority has the power to bind the principal;
• The scope of an agent’s authority may be determined from the express
words of the principal to the agent; this is called express authority; and
• An agent has incidental authority to perform any act reasonably necessary to
execute the authority given the agent.
71
THE FUNDAMENTALS OF AGENCY
 General Review
B. Scope of the Agent’s Authority Continued
• An agent’s authority may be implied so as to enable the agent to perform any
act in accordance with the general customs or usage's in a business or an
industry;
• This authority is often referred to as customary authority;
• A third party has a duty to ascertain the agent’s authority;
• When an Agent acts adverse to their principal, third parties should ask the
principal what are the limitations on Agent’s Authority;
• “Obvious” Limitations CAN be held against third parties.
72
THE FUNDAMENTALS OF AGENCY
 General Review
C. Termination of Agencies
• An agency relationship can be terminated by act of either the principal or the
agent.
• The terminating party may be liable for damages to the other if the termination
is in violation of the agency contract.
• An agency is automatically terminated upon:
(1) the death of the principal or agent;
(2) insanity of the principal or agent;
(3) bankruptcy of the principal or agent;
(4) impossibility of performance; or
(5) war.
• When the law requires the giving of notice in order to end the power of the
agent to bind the principal, individual notice must be given or mailed to all
persons who had prior dealings with the agent.
• Notice to the general public can be given by publishing the announcement in a
newspaper of general circulation in the affected geographic area.
• An Agency is revoked when agent receives notification, whereupon the Agent
looses the right to bind the principal.
•Termination is effective without giving notice to third persons, but the Agent may
73
still have apparent authority.
The Case of the U-Haul Fall
Michael Maurillo et al. v. Park Slope U-Haul et al.
74
Thank you for Coming
• Bonus Questions of the Day
• For next time – Read Chapters 39 and 40
We are a hot bench.
• Questions.
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