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Lecture

Week 10 -chapter 15 - Agency.doc

10 Pages
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Department
Administrative Studies
Course Code
ADMS 2610
Professor
William Pomerantz

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Description
Week 9 Chapter 15 Agency Definitions Agent (A) - person acting for another person typically in contractual relations with third parties - going to be signing contracts on behalf of third parties Principal (P) - the person on behalf the agent acts Third Party (T) - the party that the agent contracts with Two levels of relationship - agent and principal - Principal and third partners (via agent) - THE CONTRACT IS BETWEEN THE Principal and third party only if everything is done properly Question: are you a legal agent - E.g. OfAgents - real estate agent - Insurance agents - Someone that represents a sports player Partners, managers, employees, corporations, lawyers, sports agents, insurance agents, travel agents, bankers, stockbrokers, booking agents, purchasing agents (trying to get the best deal for a company), real estate agents - you can be an employee and be an agent - Can be an independent contractor and be an agent Duties ofAgent to Principal Fiduciary relationship between PandA - based on trust (e.g. Duty upon agent to act in “utmost good faith” to the principal) - Agent always should put interests of princiipal first before his or her own personal interests (e.g. Avoid conflicts of interest, seek best price) E.g. Lawyer agrees to sell property of client, then decides she would like to own it herself. She buys.......Breached - Obey lawful instructions/agency agreement (e.g.Act within scope of authority) - Do the job as it was given like buy a certain car not another type - keep information confidential - E.g. Can sell for 400 but agent told the person that the principal would accept 350 to make a quick sale so they leaked information - keep in constant contact - tell them if any - Inform principal of any important information (e.g. Any information that might influence - principal’s decisions - notice to agent is notice to principal) - Maintain reasonable standard in performing duties - Can you sue an agent that gets too low of a price - If your holding yourself to be an expert and you should have knowledge in the area and then you sell a house for way less than other houses in a certain area, then you could sue - Do not delegate duties to sub-agent without express consent of principal - Account for goods or money received (e.g. Keep separate records/bank accounts) - whether a lawyer or agent you should never put personal money - Can’t act for both Principal and third part without express consent of both - Areal estate agent can represent buyer and seller by telling both that they are representing - Can’t keep any secrets Duties of Principal toAgent - pay agent his/her fee or commission - Pay agent’s reasonable expenses (within scope of agent’s actual/real authority) - E.g. What if a principal request the services of an agent but they d not agree on the fee or commission?YES (quantum merit have to pay agent fair price) - E.g. If I don’t sign an exclusive listing agreement’with the real estate agent, do I have to pay the commission if he or she did not find the buy? NOPE!!! - Recommend signing a real estate for only a month - whoever the agent introduces you to has to be done with between the agent and the third party Types ofAgency Relationships 1. Agency by ExpressAgreement 2. Agency by Conduct/Estoppel 3. Agency by Necessity 1.Agency by ExpressAgreement - Contractual - based on :agency agreement” - Written or verbal (always better to be in writing) - Can minors act as an agent or as a principal? - Can act as agent - Can be a principal but really it is not good because they can get out of contracts 2.Agency by Conduct/Estoppel (IMPORTANT!!!!) - arises as a resilt f conduct (e.g. Apparent Authority), principal cannot later deny lack of authority (e.g. ‘estopped’from denying authority) - Principal gives impression that agent has (real) authority - Principal adopts contracts that were outside agent’s authoirty - sometimes an agent may bind you into a contract to which you never gave them the authorization to do so - APPARENTAUTHORITY If you tell chaufer to go buy a limo that is not over 30 000 but they enter into a contract that is 40 000. Will we be bound in contract even though they went above?YES - APPARENTAUTHORITY - Maybe the first time the agent goes in and buys a car for - Tell agent not to go over 30 and buy for 40. Can probably get out of contract - Then you tell agent don’t do that again - Call dealership again but can’t get out because dealership has every reason to believe that theres reason to do contract again and again. - Principal gives agent the view that the agent has authority - THIRD PARTYWILLTHINK THATAGENT HAS AUTHORITY - if agency agreement expressly withholds real authority, restriction must be broight to attention of third party - Presumption at common law (e.g. Spouses) - Principal fails to notify third parties that agency relationship has terminated TEST - should the third party have been made aware of the agent’s lack of authority, or at least been sus- picious, or was it reasonable to assumed agent had the authority for the contract in question? Examples (slide 13) Example 1 - no Example 2 - principal is bound into contract because she has done contracts before - Manager can tell the supplier that Stephanie only has the right to spend a certain amount Example 3 - yes they can sue - because it is reasonable to understand that the repair shop can sell cars 3.Agency by Necessity - occurs when impossible to obtain authority from principal (e.e.g property owner) - Limited to pre-existing legal relationship and owner cannot be reached for permission to act - E.g. Perishable goods on board and ship is stranded. You can sell the goods on the ship because or else they will go bad Ratification of contracts by Principal Definition - subsequent adoption by the proposed principal made by an agent Agent exceeds authority and gets you into a contract you can get out of but you choose not to be- cause you like it Ratification of Contracts by Principal : REQUIREMENTS - subject matter (e.g. Type of activity) something principal was capable of doing at time contract made and at time of ratification (e.g. Corporations) - Ratified within a reasonable time - Ratification of entire agreement (not partial) - If chauffeur brings back car and drives it for 6 months cant bring it back now - Implied ratification: If benefits accepted by principal or principal performs promises Third Parties andAgency - Issue: when an agent makes a contract with a third party, who is liable on the contract, the agent, the principal or both It Depends: - Was the agent acting activing within the scope of her real/actual authority in making the contract? - Did the agent hold himself/herself out as principal? - Was the identity or existence of the principal disclosed to the other party? If agent says they are an agent and they have authority to enter into contract or they have ap- parent authorty - PRINCIPAL will be liable Agent Describes himself d as principale or disclose a non exist
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