 Agency -relationship in which one person represents another in making contracts.
 Principal -one who authorizes an agent to make contracts
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Agent -the person authorized to alter a legal relationship
Third Party - a person who works through an agent to reach an agreement that binds a principal.
Scope of Authority -the range of acts authorized by the principal.
 Fiduciary Duties -require that the agent serve the best interests of the principal.

 Minors and others who lack contractual capacity.
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Warranty of the Principal’s Capacity
-a warranty imposed by law on the agent so that if the principal injured the third party, the third party could recover from the agent.

 Minors and others who lack contractual capacity.

 Four Ways:
 1) Express grant of authority
 2) Implied grant of authority
 3) Apparent authority
 4) Ratification

Gratuitous Agency -agency relationship in which the agent receives no consideration.
Express Authority -the oral or written power to do anything directly communicated by the principal to the agent.
Power of Attorney -any writing that appoints someone as an agent..
Implied Authority -the power to do anything that is reasonably necessary or customary to carry out the duties expressly authorized.
Apparent Authority -created when a principal leads the third party to reasonably believe that a particular person has agency authority.
Ratification -Approval of a voidable contract; also, approval of a previously unauthorized act `

 1) Loyalty and Obedience
 2) Reasonable Care and Skill
 3) Confidentiality
 4) Accounting

Duty of Loyalty -Requires that agents must place the interests of their principal’s above the interests of all others.
Duty of Obedience -the agent must obey the instructions of the principal.
Duty of Reasonable Care and Skill -requires the agent to exercise the degree of care and skill that a reasonably prudent person would use in a similar situation.
Duty of Confidentiality -requires the agent to treat information about the principal with great caution.
Duty of Accounting -requires an agent must account to the principal for all money and property of the principal that comes into the agent’s possession.
Commingling -mixing the funds or property of the agent with those of the principal.

 A principal owes many of the same obligations to an agent that an employer owes to an ordinary employee.

 1) Contractual Liability to the Third Person
 2) Liability for Fraud, Torts, and Crimes

 1) Agent Acts Outside the Scope of
Authority
 2) Principal Lacks Capacity
– Undisclosed principal-a principal whose identity is kept secret from the third party by the agent