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Final

LAW 603 Study Guide - Final Guide: The Negotiation, Sual Group, It Is The Law


Department
Law and Business
Course Code
LAW 603
Professor
Theresa Miedema
Study Guide
Final

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CLASS 1 (JANUARY 12 TH 2011)
DR. THERSA MIEDEMA
HOMEOFFICE: (416)423-9140 (CALL OFFICE DURING MONDAYS TO FRIDAYS, 10 AM – 7 PM )
T.MIEDEMA@RYERSON.CA
MOBILE: (647)286-4374
======================================================================
===============
CHAPTER 20: RULE ABOUT AGENCY
RISK MANAGEMENT ISSUE; AS PRINCIPAL WHAT IF AGENT GETS THEM INTO CONTRACT THAT THEY DON’T
LIKE
ABOUT EFFICIENCY IN BUSINESS; CAN’T MEET ALL THIRD PARTY, ETC
MOST EFFICIENT WAY TO ENSURE THAT PEOPLE CAN USE AGENTS AS INTERMEDIATES WITHOUT
ALLOCATING TOO MUCH DUE DILIGENCE
WHO IS BEST PLACED TO MANAGE THIS RISK?
 PRINCIPAL (APPOINTS) -> AGENT -> (NEGOTIATES ON BEHALF OF PRINCIPAL) THIRD PARTY
THIRD PARTY CANNOT SUE AGENT IF SOMETHING GOES WRONG
E.G. RYERSON UNIVERSITY IS A LEGAL PERSON (PRINCIPAL). CORPORATIONS ENTER THROUGH
CONTRACTS THROUGH AGENTS
THIRD PARTY DOESN’T CARE IF AGENT RETURNS, BUT THEY WANT THE PRINCIPAL TO COME BACK AND IF
AGENT HAS THE AUTHORITY TO REPRESENT PRINCIPAL
ξ€β€œROGUE β€œAGENTS – WHEN SOMETHING WRONG HAPPENS
AGENT ACTING ON BEHALF OF THE PRINCIPAL’S INTEREST
COMMON LAW AND STATUTORY LAW BIND THIS CONTRACT FORMATION (HUMAN ACT, EMPLOYMENT ACT,
ETC)
(E.G. IF AGENT IS A LAWYER OR REAL ESTATE AGENT, THERE IS ANOTHER LEGISLATION, THERE ARE
OTHER GUIDELINES THEY MUST FOLLOW)
HOW TO SET UP AGENCY AGREEMENT:
1) EXPRESS AGREEMENT – (SCOPE OF AUTHORITY – ACTUAL AUTHORITY: THERE ARE SET BOUNDARIES WHAT
THE AGENT HAS TO NEGOTIATE)
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- PRINCIPAL/AGENT ENTER CONTRACT THAT SETS OUT TERMS ON WHICH THE AGENT IS APPOINTED, AND INCLUDES
THE SCOPE OF THE AGENTS AUTHORITY AND AGENT’S PAYMENT.
- EXAMPLE OF EXPRESS AGREEMENT IS LISTING AGREEMENT THAT IS SIGNED WITH A REAL ESTATE AGENT.
- IF STATUTE OF FRAUDS APPLIES TO THE PROVINCE, CONTRACT MUST BE IN WRITING IF THE RELATIONSHIP WILL
LAST MORE THAN ONE YEAR.
- COMMERCIAL REPRESENTATION AGREEMENT – WHEN A MANUFACTURER OF GOODS AGREES TO LET SOMEONE
TO ENTER INTO CONTRACTS WITH CUSTOMERS ON ITS BEHALF TO SELL ITS GOODS
(PRINCIPAL APPOINTS AN AGENT TO NEGOTIATE CONTRACT ON BEHALF OF PRINCIPAL TO THIRD PARTY. THE
CONTRACT IS THEN ESTABLISHED BETWEEN THE PRINCIPAL AND THE THIRD PARTY.
2) REPRESENTATIONS –
- IMPLICATION (WORDS, OR ESTABLISHED FROM CONDUCT FROM PRINCIPAL)
- APPARENT AUTHORITY
3) LAW
- PARTNERSHIP (FORMING A LEGAL RELATIONSHIP TOGETHER, THEY CANNOT INCORPORATE, LIABILITY IS PUT
ON ANY/ALL MEMBER OF THE PARTNERSHIP)
4) RATIFICATION
- SITUATION WHERE AGENT DOES NOT INITIALLY HAVE AUTHORITY TO NEGOTIATE ON PRINCIPAL’S BEHALF..
AFTER THE FACT PRINCIPAL MIGHT AGREE TO THE NEGOTIATION
2 TYPES OF AUTHORITY
1) ACTUAL AUTHORITY – EXPRESS AGREEMENT
2) APPARENT AUTHORITY –PRINCIPAL GIVES THIRD PARTY REASONABLE IMPRESSION THAT THE AGENT
HAS THE AUTHORITY TO ACT
- PRINCIPAL: ONLY RELY ON WHAT THE PRINCIPAL SAYS AND IMPRESSION THEY GIVE AND NOT ONLY RELY
ON AGENT ALONE
- THIRD PARTY: REASONABLE IMPRESSION, WHAT’S REASONABLE?
*IMPRESSION COULD BE WORDS, CONVERSATION BETWEEN PRINCIPAL AND THIRD PARTY(X WILL
NEGOTIATE ON MY BEHALF)
* CONDUCT
* EXPRESS/IMPLIED/DIRECT/INDIRECT
- IF EXPRESS AGREEMENT DOESN’T COVER WHAT PRINCIPAL TOLD THIRD PARTY, IT DOESN’T MATTER.
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WHATEVER THE PRINCIPAL TOLD THE THIRD PARTY OVERWRITES WHAT THE EXPRESS AGREEMENT.
- THE MORE VAGUE THE MESSAGE IS, THE THIRD PARTY SHOULD FOLLOW UP WITH PRINCIPAL
- A CONTRACT IS BINDING IF IT’S UNDER ACTUAL/APPARENT AUTHORITY
RATIFICATION
- PRINCIPAL ADOPTS IT AFTER THE FACT THE NEGOTIATION HAPPENED
- AGENT REPORTS TO CONTRACT WITHOUT AUTHORITY FROM PRINCIPAL, SO THE CONTRACT BECOMES
FORCIBLE LIKE THE PRINCIPAL WAS INCLUDED IN THE BEGINNING
- AGENT HAS TO IDENTIFY A SPECIFIC PRINCIPAL
FOR RATIFICATION TO BE EFFECTIVE, IT MUST MEET THESE REQUIREMENTS
- PRINCIPAL HAS CAPACITY; HAS TO BE IN A LEGAL POSITION TO ENTER THE CONTRACT AT THE TIME (TOO
YOUNG, ABORIGINAL, INSANITY)
- PRINCIPAL HAS TO RATIFY IN A REASONABLE AMOUNT OF TIME
- PRINCIPAL HAS TO RATIFY THE ENTIRE CONTRACT
- RATIFICATION HAS TO BE EXPRESSED CLEARLY OR IMPLIED
LIABILITY
– CONTRACT TO PRINCIPAL AND THIRD PARTY (P3PK),
WHEN DO WE DECIDE WHEN PRINCIPAL IS LIABLE FOR THE CONTRACT?
1) WHEN AGENT HAS ACTED IN THE SCOPE OF THEIR ACTUAL AUTHORITY /ENTERED INTO A CONTRACT, THAT WILL
BE VALID, EVEN IF THIRD PARTY DOESN’T KNOW THE TERMS OF THE ACTUAL AUTHORITY
2) AGENT ACTS IN THE SCOPE OF APPARENT AUTHORITY , CREATED BY PRINCIPALS REPRESENTATIONS TO THIRD
PARTY, AND IT IS REASONABLY RELIED ON FROM THE THIRD PARTY. (IF THIRD PARTY ACTUALLY KNEW THAT THE
AGENT DIDN’T HAVE THE AUTHORITY, THEN IT IS NOT REASONABLE TO RELY)
- PRINCIPAL IS NOT LIABLE IF AGENT STEPS OUT OUTSIDE THE BOUNDS OF ACTUAL/APPARENT AUTHORITY
IF AGENT IS ACTING UNREASONABLE, THIRD PARTY SHOULD NOT RELY
PRINCIPALS ARE LIABLE FOR ANY CONTRACTS THAT ARE RATIFIED
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