Management and Organizational Studies 2275A/B Lecture Notes - Lecture 6: Contract, Sole Proprietorship, Legal Personality

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Has the legal power to carry on business as anyone. Separate legal entity: when people invest into a corporation they have limited liability. Only can be sued for what they invest. Agency results in a legally binding agreement between he principle and the 3rd party. Agency is an exception to the doctrine of privity: privity only those involved in the contract can sue. Agent negotiates with the 3rd party main contract that arises between the principle and 3rd party. Agents may be: employees, partners, independent contractors. The agency agreement may cover: the scope of authority, the duties to be performed, the fees to be paid. Actual authority is the authority the agent actually has. Apparent authority is the authority the agent appears to have. Someone can act with either actual or apparent: a contract will be formed, e. g. someone goes to the bank to ask for a loan.

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