Business law
The Agency Authority
Trace the authority to its source: the principal's words to the agent make it actual, the principal's words to the third party make it apparent.
How the exam words it
- -An agent binds a principal and it asks whether actual, apparent, or no authority existed.
- -Authority was never granted but the principal accepts the benefit, raising ratification.
- -It asks whether a disclosed, partially disclosed, or undisclosed principal (or the agent) is liable on the contract.
- -An employee causes harm and it asks whether respondeat superior makes the employer liable.
The playbook
- 1Split authority by audience: actual authority (express or implied) flows from the principal to the agent, while apparent authority flows from the principal's manifestations to the third party.
- 2Even without authority a principal can ratify by accepting the benefits with knowledge of the material facts, which binds the entire contract.
- 3Contract liability follows disclosure: a disclosed principal is bound and the agent is not, but an undisclosed or partially disclosed principal and the agent can both be liable.
- 4Tort liability under respondeat superior attaches when an employee acts within the scope of employment, but generally not for an independent contractor.
The trap
Finding apparent authority from what the agent said. Apparent authority comes only from the principal's manifestations to the third party, never from the agent's own claims.
How the exam varies it
The same pattern, re-skinned along these axes:
Actual versus apparent authority versus ratificationContract liability (disclosure) versus tort liability (respondeat superior)Employee versus independent contractor
Drill this pattern
8 questions of The Agency Authority from across the AUD topics. Clear it by getting 5 right with a streak of 3.