Delivering Ricardo's Car: Devon's Agency Role
What type of agency is Devon operating under when delivering Ricardo's car to the airport for $100?
a) Apparent agency
b) Gratuitous agency
c) Actual agency
d) All of the answer choices are correct, these are merely different terms for the same concept.
Answer
Devon is operating under the concept of actual agency. Actual agency occurs when an individual, called an agent, is authorized by another person, called the principal, to act on their behalf in contractual agreements with third parties.
In this case, Devon has been given specific instructions by Ricardo to deliver his car to the airport for $100. By doing so, Devon is acting as Ricardo's agent and has the authority to enter into a contract with third parties on Ricardo's behalf.
Apparent agency and gratuitous agency are two other types of agency, but they do not apply in this situation. Apparent agency occurs when a principal leads a third party to believe that someone is their agent, even though that person has not been given explicit authority to act on their behalf. Gratuitous agency occurs when someone acts on another's behalf without expecting to receive compensation for their actions. Since Devon has been given explicit instructions by Ricardo and is expecting to receive compensation for delivering the car, neither of these concepts apply in this situation.