Question

Because she is a minor, Sarah cannot enter contracts on her own behalf even though she is perfectly competent. Her mother wishes to make Sarah an agent of the family business, and Sarah will be responsible for entering into contracts as an agent. Can Sarah act as an agent of the company?

Multiple Choice
a.Yes, because she has capacity to do the acts for which she has been retained
b.Yes, but only because it is a family business
c.No, because she does not have the capacity to enter into contracts
d.No, because she is a minor

Answer 1

Sarah can act as an agent for the family business because she has the capacity to perform the duties for which she has been retained, not because she can enter into contracts on her own. The principal's capacity is what matters in agency law, and since her mother consents and has the capacity, Sarah’s age does not prevent her from being an agent. c.No, because she does not have the capacity to enter into contracts

Step-by-step explanation:

Sarah, although being a minor and not having the capacity to enter contracts on her own behalf, can act as an agent for the family business. This is because the capacity to enter into a contract is related to the principal, not the agent. The rule is that anyone can act as an agent as long as the principal has the capacity to contract and the principal, in this case Sarah's mother, consents to the agency relationship. Therefore, the correct answer to whether Sarah can act as an agent of the company is a. Yes, because she has capacity to do the acts for which she has been retained. This capacity is not the same as the legal capacity to enter contracts. It means she has the capacity to perform the duties as an agent, not necessarily the legal standing to enter contracts on her own behalf.

In the context of agency law, the capacity refers to the competence to perform the task assigned, and as long as the person who gives the authority (principal) has the full capacity to contract, the agent can be any person whom the principal trusts to do the job, including minors. It's important to remember that the acts that Sarah performs as an agent bind the company, not Sarah personally, due to the authority granted by her mother.

It is irrelevant that it is a family business in regard to agency. What matters is that Sarah's mother, who has the rightful authority in the business, has authorized her to act on the business's behalf. As an agent, Sarah's actions will be legally binding on the family business as long as they are within the scope of her authority and the business has the capacity to contract.