Management and Organizational Studies 2275A/B Lecture 6: Biz Law- Lecture 6

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Business Law
Lecture 5: Agency
Forms of Business Organization
Manufacturer and Distributor or Franchisor and Franchisee
o Contractual Relationship (Different)
Sole Proprietorships
o Business and the person is the same thing
o Ex: Person selling eggs is a sole proprietor
o On your own: vulnerable
Partnerships
o If you understand Agency, you understand Partnership
o Benefits of working together: More money, brains, horse-power, diversification
of risk, and safety and security. Rather than working separately
o Share the decision making and the profits
o Became very common, and a law of partnerships developed
o 1500s-1600s: Business is booming (First sort of Industrial Revolution)
Need enormous amounts of capital
Problem trying to collect investment
King invented a legal business, all the powers of an individual, and will be
reated  la. “eparate thig that ill arr o usiess ad the
people who own it will not be entitled to the debts. This created a
corporation
Corporations
o Corporation is a person
o Legal authority to carry on business just the sale as a sole proprietor
o Corporations are the boss now (Most dollar value compared to others)
Once you understand agency and accept that a corporation is a person, you understand
corporate law
Corporate La: Corporatio is a separate legal etit
o Its not real, its imaginary
o All the rights and powers of an actual person
Agency
Agency results in a legally binding agreement between the Principal and the 3rd Party
o Agent acts on behalf of the principal
o Think about hockey agents
Agency is an exception to the doctrine of Privity
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o Three sided legal relationship
o Agents can be employees, contractors, or partners
Agents may be:
o Employees
o Partners
o Independent Contractors
Agency is usually created by contract
o Created by the agency contract
The age agreeet a oer:
o The scope of authority by the agent
o The duties to be performed by the agent
o The fees to be paid to the agent
Actual authority is the authority the agent actually has
o There will be the contract between the 3rd party and the principal if the agent
acts within their authority or acts within their apparent authority
o Apparent Authority is the authority an agent has
o The amount of authority an agent has is the reasonable amount based on the 3rd
party
Apparent authority is the authority the agent appears to have
o Comes from the principal, not from the agent. You cannot create apparent
authority by yourself.
o Words and deeds of the principal
o Scope of apparent authority comes from the 3rd party
As long as it is a reasonable amount
Apparent authority comes from the words or deeds of the principal (not the agent)
o Actual authority is 500,000
o Apparent Authority is 500,000
o If she signs a loan for 1,000,000 then there is no loan unless the bank ratification
PRINCIPAL
AGENT
3RD PARTY
Agency
Agreement
Negotiations
Main
Contract
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