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Lecture

Chapter 17 ReadingNotes.doc

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Department
Business
Course
BU231
Professor
Daniel J Fife
Semester
Spring

Description
1READING NOTESCHAPTER 19 AgencyThe Nature of AgencyAgency is a relationship in which one person known as an agent is authorized to bring its principal into contractual relations with third partiesoAn exception to privity rule allows insurance company to sue you for default of paymentDependent AgentsAct exclusively for a Third Partysingle principalAgentoFunctions of agency and employment may be entirely separate ie an agent need not be an employee just as an employee need not be an agentPrincipalIndependent AgentsNot an employee and acts on behalf of several principals or clients Eg Lawyers or stock brokers who act as agents for their clients when dealing with purchases of land buildings sharesoSo called realestate agent does not have authority to sell the property of a client and thus is not a true agent role is only to introduce prospective purchasers and buyers who contract directly with each otherReal estate agent can also act on behalf of buyer and seller which creates a conflict of interestNote Once a person begins to act as an agent in a particular transaction that person is bound by all the duties of a contractual agentCreation of an Agency RelationshipParties to the relationshipoAgent and PrincipalRelationship between agent and principal is expressed in the form of an agency agreementoPrincipal and third partyAgent makes contracts between these two parties on principals behalfoAn agents power to contract on behalf of her principal is limited to the capacity that the principal possessesExpress AgreementoAgency agreement may be oral written or in writing under sealoAgreement should define the limits of the agents authority ie how far they can go in making a contract with a third party without obtaining further instructions from principaloPower of attorney is a special type of express agency settlementoAgreements frequently contain implied terms which may supplement the express authority in the contractie In a contract to buy goods internationally the agent needs to have authority to have it shippedRatification
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