Key Terms
Agency
A fiduciary relationship — created by express contract or implied actions — in which the agent has authority to act on b
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.
Fiduciary relationship
One party is under a duty to act for the benefit of the other on matters within the scope of the relationship. Requires
Other fiduciary relationships (for context)
Doctor-patient, attorney- client, accountant-client, trustee-beneficiary, guardian-child. Agents fall into this same cat
Disclosed principal
Most common. Examples: employee on employer's premises, wearing a uniform, or answering the phone with the employer's na
Partially disclosed
Third party knows there's a principal behind the agent but doesn't know who. Example: a realtor representing a celebrity
Undisclosed
Third party believes the agent is acting on their own behalf. Used when revealing the principal could raise prices, attr
General agents
Authority to transact ALL of a principal's business of a particular kind or in a particular place. Examples: partners, m
Special agents
Authority only for a SPECIFIC transaction or act.
Examples
Realtors, athlete's agents, employment recruiters.
Authority
The right or permission to act legally on another's behalf.
Actual authority (also called real authority)
Principal intentionally confers authority on agent.
Apparent authority
Authority a third party REASONABLY BELIEVES an agent has, based on the third party's dealings with the principal. The pr
Example of apparent authority
Principal fires an agent but fails to notify third parties. The former agent can still bind the principal through appare