Textbook Notes (369,198)
Canada (162,457)
LAW 603 (76)
Chapter 20

Chapter 20 Notes

4 Pages

Law and Business
Course Code
LAW 603
John Allen

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Chapter 20 Basic Rules ofAgency • Agent acts on behalf of principal • Circumstances determine agent’s authority • Agent can bind principal to contract • Or, agent could just assist principal • Agency governed by common law and any applicable statutes ActualAuthority • Authority expressly given to an agent • In writing or orally • In an organization, the authority must be given by someone who is allowed to delegate au- thority ApparentAuthority • When principal gives third party reasonable impression that the agent is authorized • UsualAuthority • Putting someone in a particular position • Reference to the authority of agents in similar situations in business When isAgent Liable? • To 3 party, if agent and 3 party agree • To principal, if agent lacks authority • Fraud - Intentional Deception • Breach ofAuthority - Negligence Ratification - Common Law • “Agent” purports to contract without authority • Principal later adopts actions of agent • Requirements of Ratification • Agent must identify principal at time of contract • Principal must have capacity at time of contract • Principal must ratify within reasonable time • Principal must ratify whole contract Statutory Exception to Ratification Rules • Ontario and Canada Business CorporationsActs • Acorporation may, within a reasonable time after it comes into existence, by any action or conduct signifying its intention to be bound thereby, adopt an oral or written contract made before it came into existence in its name or on its behalf. • This is an exception to the common law rule that principal must have capacity at time of con- tract in order to ratify it. Agent’s Duty to the Principal • Perform contractual duties • Carry out principal’s instructions • Satisfy Duty of Care • Use reasonable care of a person in the same position Fiduciary Duty • Avoid conflict of duty between self and principal • Do not profit from position as agent • Do not compete with principal • Disclose information relevant to principal’s interests • Agent strictly liable for breach of any duty • Without proof of loss • Even if principal benefitted • Breach excused if informed consent by principal Principal’s Duties to theAgent • Perform contractual obligations • Pay reasonable remuneration • Obligations may be terminated upon breach Termination • Either party may provide notice of termination • Agency agreement may express terminating event or specific length of agreement • Frustration - performance may be rendered impossible for other, outside circumstances • Agency is an ongoing authorization - if principal lo
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