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Lecture 5

Management and Organizational Studies 2275A/B Lecture Notes - Lecture 5: Contract, Limited Liability Partnership, Best Interests


Department
Management and Organizational Studies
Course Code
MOS 2275A/B
Professor
Philip King
Lecture
5

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BIZLAW LECTURE 5 AGENCY
Forms of Business Organization:!
Sole Proprietorships
Easiest simplest form of business, cheap
Proprietor gets all profits and gets to make decisions
One individual involved, who is legally one in the same with
the business
Ex:// If business has employees, they are sole
proprietors employees, if business is sued the sole
proprietor is being sued
Personally liable for all debts of business
Partnerships
People carrying on business together for more resources,
money, people
Diversifies risk --> spread among more people
Personal liability
Partnership owed money = partners owed money
Corporations
Legally a person
"!
Agency:
Contract law (contains all factors)
Results in legally binding agreement between the principal
and the 3rd party
Giving someone else the legal authority to enter into
contracts on your behalf
Exception to the doctrine of privity
Agent is not entering into contract on own behalf
Principal is entering into a contract by their agent
Main Contract
Rises due to negotiations between agent and 3rd party
Agency Contract (agency is usually created by contract)
Governs relationship between principal and agent
Agent may be…

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employees
partners
independent contractors
"Agency agreement"
Scope of authority
Duties to be performed
Fees to be paid
"Actual authority
"Authority agent actually as
There can be apparent authority without actual authority
"Apparent authority
"Authority the agent appears to have
Acting within this authority creates legally binding contract
where both parties are bound
Comes from the words or deeds of the principal, not the
agent
Limited to what a reasonable person (3rd party) would
conclude
Based on estoppel --> can't lead someone to rely on what
you say then change your mind
Ex:// principal says agent has $10million authority but
agent has none, principal would be bound by contract
even though agent had no actual authority
Does not come from agent but comes from principal
Agent cannot create apparent authority for themselves
Ratification
If an agent exceeds their authority, the principal can "ratify"
or adopt the agreement
Decision goes to the principal
Ratification may occur by conduct
Can by ratified by words or by behaviour
If you accept benefit under contract, it has been
ratified
Unnamed Principal
If principal is anonymous, then the agent has no apparent
authority
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