Key Terms
Agent
The person authorized to act for or in place of another.
Principal
The person who authorizes another to act on his, her, or its behalf. Agency: a fiduciary relationship created by express
Fiduciary relationship
A relationship in which one person is under a duty to act for the benefit of the other on matters within the scope of th
Examples of fiduciary relationships
Doctor-patient, attorney-client, accountant-client, trustee-beneficiary, guardian-child. Agents are also fiduciaries of
General agents
Authority to transact all the principal's business of a particular kind or in a particular place. Examples: partners, ma
Special agents
Authority limited to a particular transaction or specific act. Examples: realtors, athlete's agents, employment recruite
Authority
The right or permission to act legally on another's behalf.
Actual authority (also called real authority)
Principal intentionally confers authority on the agent.
Apparent authority
Authority a third party reasonably believes an agent has, based on the principal's words or actions — even if the princi
Three elements required for apparent authority
1. Principal's words or actions led others to believe the agent had authority.
Ratification
A disclosed principal adopts or confirms a contract entered into by an agent who did not have authority at the time.
Definition
Employer is liable for torts of an employee if the employee was acting within the scope of employment. This is vicarious
Most common method
Mutual agreement between principal and agent. This includes an employee quitting, a contract expiring, or completion of