Study guide
Agency: Formation, Actual and Apparent Authority, and Ratification
California Bar Exam Exam
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1 Exam Format and Core Skills
California Bar Exam Blueprint: Subjects, Components, and Recent Changes Exam Format, Scoring, and the 1390 Passing Score Essay Strategy: Issue Spotting and IRAC Core Written Skills and Timing Strategy
2 Civil Procedure
Subject Matter Jurisdiction: Federal Question, Diversity, Supplemental, Removal Personal Jurisdiction, Long-Arm, Minimum Contacts, and Service of Process Venue, Transfer, and Forum Non Conveniens The Erie Doctrine and Choice of Law Pleadings, Rule 11, Amendments, and California Demurrers / Anti-SLAPP Joinder of Claims and Parties, Impleader, Intervention, Interpleader Class Actions (Rule 23 and California) Discovery: Scope, Devices, Privilege, and Sanctions Pretrial Adjudication: Dismissals, Default, and Summary Judgment Trial, Jury, Judgment as a Matter of Law, and Post-Trial Motions Appeals, the Final Judgment Rule, and Claim/Issue Preclusion
3 Constitutional Law
Judicial Review, Justiciability, Standing, Ripeness, Mootness, and Political Questions Federal Legislative Power: Commerce, Taxing & Spending, and the Tenth and Eleventh Amendments Separation of Powers: Executive, Legislative, and Judicial Authority Federalism, Supremacy, Preemption, the Dormant Commerce Clause, and Privileges & Immunities State Action and Congressional Enforcement of the Reconstruction Amendments Procedural Due Process Substantive Due Process and Fundamental Rights Equal Protection and Levels of Scrutiny First Amendment: Speech, Press, Forums, and Association First Amendment Religion Clauses and the Takings Clause
4 Contracts
Applicable Law: Common Law vs. UCC Article 2 and Mixed Contracts Mutual Assent: Offer, Acceptance, Mailbox Rule, and UCC 2-207 Consideration, Bargained-for Exchange, and Promissory Estoppel Defenses to Formation: Capacity, Mistake, Misrepresentation, Duress, Unconscionability The Statute of Frauds Parol Evidence Rule and Contract Interpretation Conditions and Performance: Express, Constructive, and Substantial Performance Breach, Anticipatory Repudiation, and the Perfect Tender Rule Excuse of Performance: Impossibility, Impracticability, and Frustration UCC Warranties and Risk of Loss Third-Party Beneficiaries, Assignment, and Delegation Contract Remedies and UCC Buyer/Seller Remedies
5 Criminal Law and Procedure
Actus Reus, Mens Rea, Concurrence, and Causation Accomplice Liability and Parties to Crime Inchoate Crimes: Attempt, Conspiracy, and Solicitation Homicide: Murder, Manslaughter, Felony Murder, and California Degrees Other Crimes Against the Person: Assault, Battery, Kidnapping, and Sex Offenses Property and Theft Crimes: Larceny, Embezzlement, Robbery, Burglary, Arson Criminal Defenses: Insanity, Intoxication, Self-Defense, Duress, Necessity, Mistake Fourth Amendment: Searches, Seizures, Warrants, and Exceptions The Exclusionary Rule, Standing, and Fruit of the Poisonous Tree Fifth Amendment: Miranda, Self-Incrimination, and Double Jeopardy Sixth Amendment: Right to Counsel, Confrontation, Speedy Trial, and Jury Pretrial Identifications, the Eighth Amendment, and Trial Rights
6 Evidence
Relevance: Logical and Legal, Rule 403, and California Proposition 8 Policy-Based Exclusions: Subsequent Remedial Measures, Settlements, Insurance, Pleas Authentication and the Best Evidence Rule Witness Competency, Personal Knowledge, and Examination Impeachment of Witnesses Lay and Expert Opinion Testimony (Daubert and California Kelly/Sargon) Character Evidence and Other Acts (MIMIC) Habit and Methods of Proving Character Hearsay: Definition, Non-Hearsay, and Exemptions Hearsay Exceptions: Availability Immaterial (FRE 803) Hearsay Exceptions Requiring Unavailability (FRE 804) and the Confrontation Clause Privileges, Judicial Notice, and Presumptions (Federal and California)
7 Real Property
1.1 Estates in Land 1.2 Future Interests 1.3 Rule Against Perpetuities 1.4 Concurrent Ownership 1.5 Landlord-Tenant Law 1.6 Easements and Servitudes 1.7 Covenants Running with Land 1.8 Recording Acts and Title 1.9 Mortgages 1.10 Land Use Regulation Adverse Possession and Rights Incident to Ownership Land Sale Contracts, Marketable Title, and Risk of Loss Deeds, Delivery, Warranties of Title, and Fixtures
8 Torts
Intentional Torts Against the Person: Battery, Assault, False Imprisonment, IIED Intentional Torts to Property and Defenses/Privileges Negligence: Duty and the Standard of Care Negligence: Breach, Res Ipsa Loquitur, and Negligence Per Se Causation: Actual and Proximate Cause Negligence Damages and Defenses: Comparative Fault and Assumption of Risk Strict Liability: Animals and Abnormally Dangerous Activities Products Liability Private and Public Nuisance Defamation Invasion of Privacy, Misrepresentation, and Economic Torts Vicarious Liability, Joint Tortfeasors, and Immunities
9 Business Associations
Agency: Formation, Actual and Apparent Authority, and Ratification Agency: Principal/Agent Duties, Respondeat Superior, and Tort Liability General Partnerships: Formation, Rights, and Partnership Property Partnership Liability, Fiduciary Duties, Dissociation, and Dissolution Limited Partnerships, LLPs, and LLCs Corporations: Formation, Promoters, and Piercing the Corporate Veil Corporate Finance: Stock, Securities, Dividends, and Distributions Directors and Officers: Fiduciary Duties, the Business Judgment Rule, and Indemnification Shareholders, Derivative Suits, Fundamental Changes, and Federal Securities (10b-5, 16(b))
10 Community Property
General Principles, the Community Estate, and Marital Economic Community Characterization: Separate vs. Community Property and Presumptions Tracing and Commingling (Exhaustion and Direct Tracing) Transmutation and Premarital/Marital Agreements Special Assets: Businesses (Pereira/Van Camp), Goodwill, Education, Pensions, Disability Management, Control, and Spousal Fiduciary Duties Debts and Creditors' Rights Distribution at Dissolution and Death; Quasi-Community Property
11 Professional Responsibility
Regulation of the Profession, Admission, and Discipline (California Rules vs. ABA Model Rules) Competence, Diligence, Communication, and Scope of Representation Confidentiality and Its Exceptions (California vs. ABA) Conflicts of Interest: Current Clients Conflicts: Former Clients, Imputation, and Business Transactions Fees, Client Trust Accounts (IOLTA), and Safekeeping Property Duties to the Court and Third Parties: Candor, Advocacy, and Fairness Forming, Declining, and Terminating the Attorney-Client Relationship Advertising, Solicitation, and the Unauthorized Practice of Law Judicial Ethics, Reporting Misconduct, and Special Prosecutor Duties
12 Remedies
Compensatory Damages: Causation, Foreseeability, Certainty, and Mitigation Punitive, Nominal, and Liquidated Damages Restitution and Unjust Enrichment Constructive Trust and Equitable Lien Injunctions: Temporary Restraining Orders, Preliminary, and Permanent Specific Performance Reformation, Rescission, and Cancellation Equitable Defenses, Declaratory Relief, and Remedy Selection
13 Trusts
Trust Creation, Required Elements, and Types of Trusts Charitable Trusts, Cy Pres, and the Rule Against Perpetuities in Trusts Trustee Powers and Trust Administration Trustee Duties: Loyalty, Prudent Investor, and Impartiality Beneficiary Rights and Principal/Income Allocation Spendthrift, Discretionary, and Support Trusts; Creditors' Rights Modification and Termination of Trusts Breach of Trust, Remedies, and Will Substitutes (Totten, POD, Revocable Trusts)
14 Wills and Succession
Intestate Succession and California Distribution Will Execution and Formalities (Attested and Holographic; California) Testamentary Capacity, Undue Influence, Fraud, Duress, and Mistake Will Components: Integration, Incorporation, Acts of Independent Significance, and Pour-Over Revocation, Revival, and Dependent Relative Revocation Lapse, Anti-Lapse, Class Gifts, Ademption, Abatement, and Exoneration Protection of the Family: Omitted Spouse and Child, Pretermitted Heirs Will Contests, Standing, and No-Contest Clauses Probate Administration, Powers of Appointment, and Will Substitutes
15 Performance Test
The Performance Test: Task Memo, File, and Library Objective PT Products: Memos, Briefs, and Client Letters Persuasive PT Products and 90-Minute Execution
Agency: Formation, Actual and Apparent Authority, and Ratification
Key Takeaways Explain This Topic AI
Agency is the fiduciary relationship that arises when a principal (P) manifests assent that an agent (A) act on P's behalf and subject to P's control, and A consents — no consideration and no writing are required to form it.
Actual authority (express or implied) is measured from the agent's reasonable interpretation of the principal's manifestations; apparent authority is measured from a third party's reasonable belief based on manifestations traceable to the principal.
An undisclosed or partially disclosed principal can be bound and the agent is personally liable on the contract; with a disclosed principal the agent is generally not personally liable.
Ratification requires the principal to have knowledge of all material facts, accept the entire transaction, and have capacity; it relates back to the time of the original act but cannot prejudice intervening third-party rights.
Inherent agency power and agency by estoppel can bind a principal even absent actual or apparent authority where the principal's position or negligence justifies third-party reliance.
Last updated: June 2026
Formation of the Agency Relationship
Agency is the fiduciary relationship that results from (1) the manifestation of assent by one person (the principal ) that another person (the agent ) shall act on the principal's behalf and subject to the principal's control, and (2) the agent's manifestation of consent to so act (Restatement (Third) of Agency §1.01). Three elements recur on the bar: assent, benefit, and control. The principal must intend the agent to act for the principal's benefit, and crucially the principal must retain a right of control over the agent's work.
The relationship is consensual but not contractual — no consideration is required, so a gratuitous agent (one who acts without pay) is still a true agent who owes fiduciary duties and can bind the principal.
No particular formalities are required to create an agency. There is generally no writing requirement, with one classic exception tested on the bar: the equal dignities rule , which provides that if the underlying transaction the agent is authorized to perform must itself be in writing under the Statute of Frauds (e.g., a contract for the sale of land), then the agent's authority must also be in writing. California follows the equal dignities rule in Civil Code §2309.
Capacity matters on both sides. The principal must have contractual capacity because the agent's acts bind the principal as if the principal had acted personally; a minor or mentally incompetent person generally cannot be a principal. The agent, by contrast, needs only minimal capacity — an agent need not have contractual capacity because the agent is merely a conduit. Thus a minor can serve as an agent and bind a competent adult principal. Determining whether an agency exists is the threshold question; only after establishing the relationship does the analysis move to the agent's authority to bind the principal in contract.
Actual Authority: Express and Implied
Once an agency exists, the agent's power to bind the principal in contract flows from one of several sources of authority. Actual authority is authority the agent reasonably believes she possesses based on the principal's manifestations to the agent . The decisive viewpoint is the agent's reasonable interpretation of what the principal communicated. Actual authority subdivides into express and implied.
Express actual authority is conveyed in the principal's words, whether oral or written — "Sell my car for at least $10,000." Express authority is construed narrowly but is the cleanest basis for binding the principal. A wrinkle: express authority obtained by the agent's fraud or misrepresentation is still effective to bind the principal as to innocent third parties, though the principal may have remedies against the agent.
Implied actual authority is authority the agent reasonably believes she has as a result of the principal's conduct. It includes authority that is incidental to express authority (reasonably necessary to accomplish the authorized task), authority arising from custom in the trade or industry, and authority arising from prior dealings or acquiescence — where the principal has previously allowed the agent to act in a certain way and said nothing, the agent reasonably infers continued authority.
For example, a manager expressly authorized to run a store has implied authority to buy inventory, hire clerks, and pay suppliers, because those acts are reasonably necessary to operate the store. Title or position can itself confer implied authority — naming someone "president" or "general manager" implies authority to do the things such officers customarily do. When the principal's instructions are ambiguous, the agent has actual authority if she adopts a reasonable interpretation of the instruction, even if it later proves to be the interpretation the principal did not intend.
Apparent Authority and Agency by Estoppel
Apparent authority exists when a third party reasonably believes the actor has authority to act on behalf of the principal, and that belief is traceable to a manifestation of the principal . The pivotal contrast with actual authority is viewpoint: apparent authority is judged from the third party's reasonable belief , and that belief must be grounded in something the principal said or did — not merely in the agent's own representations.
The classic recurring example is lingering apparent authority : after a principal terminates an agent's actual authority, the agent may still bind the principal to third parties who dealt with the agent before and were not notified of the termination, because the principal's prior manifestation (holding the agent out) continues to operate until the principal gives notice.
Apparent authority also arises through title or position : by placing an agent in a position that customarily carries certain powers, the principal manifests to the world that the agent has those powers. A person dealing with a corporate treasurer may reasonably believe the treasurer has authority to do what treasurers ordinarily do. Importantly, an agent who has no actual authority can still bind the principal under apparent authority — the doctrines are independent, and a single set of facts can produce apparent authority even where actual authority was expressly withheld.
Closely related is agency by estoppel , which binds a person who is not even a principal. If a person intentionally or carelessly causes a third party to believe another is his agent, or knowingly permits the appearance of authority and the third party justifiably and detrimentally relies, the purported principal is estopped to deny the agency. Estoppel requires detrimental reliance , distinguishing it from apparent authority, which does not.
Finally, inherent agency power is a residual category (Restatement (Second)) that binds a principal — even an undisclosed one — based on the agent's position, to protect third parties who reasonably deal with an agent acting within the usual scope of such an agency.
Ratification and the Disclosed/Undisclosed Principal
Ratification allows a principal to become bound by an unauthorized act performed on the principal's behalf. To ratify, the principal must: (1) have knowledge of all material facts at the time of ratification; (2) accept the entire transaction (a principal cannot ratify only the favorable parts — ratification must be of the whole or nothing); and (3) have capacity both at the time of the original act (the act must have been done on the principal's behalf) and at the time of ratification.
Ratification may be express (affirming the act) or implied (accepting the benefits of the transaction with knowledge of the material facts, or suing on the contract). Once made, ratification relates back to the time of the original unauthorized act, but it cannot cut off intervening rights that third parties acquired before ratification, and it cannot be used if the third party has already withdrawn.
The agent's personal liability on a contract depends on how much the third party knew about the principal. With a disclosed principal (the third party knows the principal exists and the principal's identity), the agent is not personally liable on the contract; only the principal is bound.
With a partially disclosed (unidentified) principal (the third party knows an agent acts for some principal but does not know the principal's identity) or an undisclosed principal (the third party does not even know a principal exists), the agent is personally liable on the contract, and the third party may elect to hold either the agent or the later-revealed principal. An undisclosed principal can sue and be sued on the contract unless the contract excludes that result or the agent's personality was material to the deal.
Type of Principal Third Party Knows P Exists? Third Party Knows P's Identity? Agent Personally Liable?
- Disclosed Yes Yes No
- Partially disclosed Yes No Yes
- Undisclosed No No Yes