Agency by Necessity

Definition

Agency by Necessity is a legal doctrine under which one person (the “agent”) is permitted to act on behalf of another person (the “principal”) in situations where it is necessary to prevent harm to the principal or their property. This type of agency is typically recognized by courts when prompt action is required, and obtaining the principal’s consent is not possible. Common scenarios include a spouse charging necessities to another spouse or a dependent charging necessities to a parent.

Examples

1. Spousal Necessities: If one spouse is incapacitated or otherwise unable to purchase essential items (such as food or medical supplies), the other spouse can act as an agent by necessity to buy these necessities on behalf of the incapacitated spouse, thereby creating a binding obligation on both.

2. Parental Obligations: In the case of a dependent child who needs urgent medical care while the parent is unreachable, a legal guardian or another adult may step in to make necessary purchases or decisions. The cost incurred can be charged to the parent, recognizing the agency by necessity.

3. Business Context: If an employee (agent) needs to make an urgent business decision to prevent substantial loss and cannot communicate with the employer (principal), the actions taken by the employee can be considered under agency by necessity.

Frequently Asked Questions

Q1: When is agency by necessity recognized by courts? A: Courts typically recognize agency by necessity in emergency situations where immediate action is required, and the principal’s consent cannot be obtained promptly.

Q2: Does agency by necessity require prior consent or agreement? A: No, this type of agency arises specifically when prior consent or agreement is not available due to exigent circumstances.

Q3: Can agency by necessity be applied retrospectively? A: Yes, the necessity-driven actions taken by the agent can be ratified by the principal retrospectively, especially if the actions were in good faith and for the principal’s benefit.

Q4: Is there a limit to what can be purchased under agency by necessity? A: Yes, the purchases must be for necessities and should not exceed what is reasonably required to address the immediate needs of the principal.

Q5: Does the agent need to be an officially designated representative of the principal? A: No, even without formal designation, the courts can recognize a person acting in good faith as an agent by necessity.

Related Terms

1. Express Agency: A clear, explicit agreement between principal and agent where authority is granted to the agent to act on behalf of the principal.
2. Implied Agency: An agency relationship inferred by the conduct of the parties involved, even without explicit agreement.
3. Apparent Agency: A situation where a principal’s actions lead third parties to believe an agency relationship exists, even if it does not.
4. Ratification: The formal approval of an agent’s unauthorized act by the principal, thus retroactively creating a binding agency relationship.

Online References

1. Investopedia - Agency by Necessity
2. Wikipedia - Law of Agency
3. Legal Dictionary - Agency by Necessity

Suggested Books

1. The Law of Agency by F.M.B. Reynolds - A comprehensive guide to the principles of agency law.
2. Principles of Agency by Howard Bennett - Detailed exploration of agency law, including various types of agency relationships.
3. Agencies and Partnerships by J. Dennis Hynes - Textbook covering agency relationships and partnership law, with practical case studies.