Chapters 13-14.docx

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Management and Organizational Studies
Management and Organizational Studies 2275A/B
Philip King

Chapter 13: The Agency Relationship The Nature of Agency Agency: relationship between two persons that permits one person, agent, to affect legal relationships of another, principal (as binding on principal as if person directly entered them herself) - About one person representing another in way as to affect latter’s relationships with outside world (e.g. sports agent negotiates for hockey player, insurance agent sells on behalf of several insurance companies, travel agent sells tickets, cruises, packages on behalf of carriers, hotels) - Relationship essential to success of principal, who may not have expertise to handle matter - Almost every business transaction features agent (e.g. managers carry critical tasks for owner) Agency Defined: two key relationships - Agent-Principal Relationship: how to be considered A, A’s duties and authority, P’s obligations - Outsider-Principal: when is P liable to outsider, when is A liable to outsider Law of Agency: govern relationships in agency issues; derived largely from tort and contract law - Very little legislation, other than special statutes for insurance agents, etc.; common law used Creation of Agency - Relationships arise by contract between parties mo
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