Business Law II BA 304-01: N/A
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Chapter 38 - Third Parties in Agency - Review

<< Back to Chapter 38 - Third Persons in Agency

1) The liability of an agent to a third person depends on the existence of authority and the manner of executing the contract.

2) If an agent makes a properly authorized contract with a third person on behalf of a disclosed principal, the agent has no personal liability on the contract.

3) When a person purports to act as an agent for a principal, an implied warranty arises that such person has authority to do so.

4) If an agent's act causes loss to the third person, that third person may generally hold the agent liable for the loss.

5) An agent making a proper contract with a third person on behalf of a disclosed principal has no personal liability on the contract.

6) If the third person knew that the agent was acting beyond the authority given by the principal, this following is a defense to an action against an agent for breach of the implied warranty of authority.

7) When a person makes a contract as an agent for another but lacks authority to do so, the contract does not bind the principal.

8) Agents may intentionally make themselves liable on contracts with third persons.

9) John Smyth is an agent for L. T. Adams. To avoid becoming a party to any contract that Smyth signs for Adams, Smyth should sign L. T. Adams, per John Smyth.

10) If a contract is ambiguous regarding whether the agent has signed in a representative or an individual capacity parol evidence is admissible to establish the character in which the agent was acting.

11) An agent who commits a tort or crime is liable for both torts and crimes.

12) The agent of a disclosed principal is liable for harm caused third persons by fraudulent acts of the agent, or by malicious acts of the agent.

13) A partially disclosed principal is liable for a simple contract made by an authorized agent.

14) Apparent authority has the same effect asApparent authority has the same effect as actual authority.

15) A third person dealing with the agent of a disclosed principal ordinarily intends to make a contract with the principal, not the agent.

16) In the partially disclosed principal situation, the agent is considered a party to the contract.

17) Agent's may intentionally make themselves liable on contracts with third persons.

18) If the principal is not disclosed, the agent is necessarily the other contracting party and is bound to the contract.

19) Parol evidence is allowed to show whether an agent has signed in a representative or an individual capacity.

20) Agents are themselves liable for harm caused third persons by the agents' fraudulent, intentional, or negligent acts.

21) A principal may be liable to a third person for an agent's unauthorized contracts.

22) Subject to certain limitations, a third person, on learning of the existence of an undisclosed principal, may sue the principal.

23) When a fact is known to the agent of a seller, but the seller actually is uninformed of such fact, the sale deemed made by the seller with knowledge of that fact.

24) The rule of law imposing vicarious liability on an innocent employer for the wrong of an employee is known as the doctrine of respondeat superior.

25) The same rules of law govern the vicarious liability of principals and employers.

26) An undisclosed principal cannot sue or be sued if the contract is based upon commercial paper that the principal's name or description does not appear upon.

27) Payment to an authorized agent is payment to the principal.

28) Statements or declarations of an agent will bind the principal if the statements were made by an agent while transacting business within the scope of authority.

29) When an employee knows that an illegal action has occurred through corporate actions, such knowledge is imputed to the corporate employer.

30) Modern decisions hold the principal liable for fraudulent acts and misrepresentations actions of the agent.

31) When a tort or crime is committed by an employee, vicarious liability could be imposed on the employer if the act was committed within the course of employment.

32) The owner of property when the tort is committed by an independent contractor is not liable for torts.

33) When a business owner uses an independent contractor to perform nonhazardous work, the owner ordinarily is: not liable for harm to third persons or their property, not bound to contracts made by the independent contractor, and not liable for the negligence of employees of the independent contractor.

34) Vicarious liability will not be imposed on a principal unless the agent was acting within the scope of the agent's authority.

35) An owner ordinarily is not liable for harm caused a third person by the negligence of an employee of an independent contractor.

36) A customer who has given a purchase order to a salesperson is not bound by any contract until the employer of the salesperson approves the order.

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