MOS 2275 - Business Law all the notes from the readings.pdf

57 Pages
228 Views
Unlock Document

Department
Management and Organizational Studies
Course
Management and Organizational Studies 1021A/B
Professor
Phillip King
Semester
Fall

Description
Chapter 13 The Agency Relationship The Nature of Agency Agency A relationship that exists when one party represents another party in the formation of legal relationsAgent Person who is authorized to act on behalf of anotherPrincipal Person who has permitted another to act on their behalf In business agency is a common relationship WHY The Principal may not have the expertise to handle the matter or cannot managepromote their business on their own In almost every biz transaction at least one party is the agent Formally recognizes the delegation of authority from one party to another Agency Defined Creates complications and questions for bothTwo relationships1 That between the Agent and the Principal How does one become an agent When are they considered an agent What is As authority What types of transactions can A enter on behalf of P What are As duties What are Ps obligationsrd2 The 3 party Principle Relationship When is principal liable to the outsider When is agent liable to outsider Complications resulting from these relationships have rules of law to regulate and resolve them These rules are known as law of agency The Law governing the relationship where one party the agent acts on behalf of another the principal There is little legislation for agency and only other special statutes Creation of AgencyThe relationship arises by contract between the parties and at other times it arises through conduct Agency by agreement Principal authorizing an agent to conduct business on her behalf and the agent agreeing to do so in return for a fee or remuneration That is an explicit contract only for that Whereas in other situations the agency relationship may arise as part of another broader contract Concept of authorityAuthority of agent is key aspect to agency relationship Determines whether there is contract between P and O When A negotiates within the scope of P Then PO have a contract whether P likes or not When A negotiates outside of the scope of P Then PO MAY still have a contract P will be obligated when agent has actual authority or when agent has apparent authorityActual authority Power of an agent that derives from either express or implied agreement Express is written or oral granted by P Actually has Implied is present by implication only Only when authority iso Inferred from position A occupies o Reasonably necessary to carry out or otherwise implement As express authorityo Arises by virtue of a wellrecognized custom in a particular trade industry or professionThese terms are not any else real than express terms Just exist in less tangible form Nature of the Authority broadnarrow one transaction or several for a short long or indefinite period of time very formal or very informal Apparent authority Power that an agent appears to have to an outside because of conduct or statements of the principle As long as agent is acting within scope of authority principal is bound by agreement unless the O knew or ought reasonably to have known of the limitation on an agents authority Agency by Estoppel Agency relationship created when principal acts such that third parties reasonably conclude that an agency relationship exists A may exceed actual authority but act within scope of apparent authority leading to the binding of the P anyways P indicates another is A when in fact no relationship exists Not allowed to deny it even if its true because at one point they did say there was a relationship This will affect either the owner or the customer adversely Through estoppel the law sides with the customer Owner can sue A for misrepresenting When the authority is taken away or reduced Onus is on P to inform outsiders of their dissociation Agency by Ratification when person represents himself as anothers agent even though he is not and when purposed principle adopts the acts of the agent No agency relationship P can accept or not Only when they accept does an agency relationship develop Law permits P to take or decline as is in their best interest Can only ratify contract if He does so within reasonable timeP had capacity to create contract at time the agent entered into it and at time of ratification A identified the principle at time of entering contractHow created Agents Authority Agency by agreement P expressly or impliedly appoints X as an Actual express andor implied A Agency by Estoppels Representation of Authority Apparent P represents to OS that X has authority to as an A even though no actual authority givenExtension of Existing Authority Actual P represents to OS that A has authority in Apparent excess of actual authority givenTermination or reduction of Authority ApparentP terminated or reduces As authority but does not give notice to OS Agency by Ratification P adopts actions of X and X retroactively No authority until P adopts Xs becomes an A actionsDuties in the Agency RelationshipDuties of the Agent If an agent fails to perform duties its a breach of contract Required to abide by instructions W no instructions must abide by industry standards Personally perform obligations may be expressimplied term for delegation Download responsibility of performance to another Fiduciary duty duty imposed on person who has a special relationship of trust with another Utmost good faith to the principalo Expressed as the profit rule Fiduciary must not personally profit by virtue of positiono Conflict rule fid must not place themselves in position where own interests conflict with interests of principal As general rule Agent has duty too Fully disclose all material info that can affect Ps position o Avoid conflict of interest affecting interests of P o Avoid acting for 2 Ps in same transactiono Avoid using Ps money property or info to secure personal gain o Avoid accepting or making secret commissionprofit 3 and 4 work if everything is in the open though Fully informed consent of P Categories of Fiduciary duties are not closed Can arise where facts indicate sufficient elements of power and influence on the part of one party and reliance vulnerability and trust on the part of the other Where fiduciary duties are found to exist the innocent party can look to a wider range of remedies than found in contract or tort The whole range of equitable remedies is available Duties of the Principal Obligated too Pay agent specified fee orfor services rendered unless agreed otherwiseo Assist A in manner described in contract o Reimburse A for reasonable expenses associated with carrying out his A duties o Indemnify against losses incurred in carrying out A business Contract Liability in the Agency RelationshipLiability of the Principal to the outsider P not A who liable on contractPs liability to O depends on nature of As authority Doctrine of apparent authority applies Liability of A to OA who acts wout authority and contracts w O is liable to O for breach of warranty of authority Warranty of Authority representation of authority by a person who purports to be an agent No contract btwn PO Unless ratified or AO A may be bound when contracts on own behalf to be party along with principalLiability of Undisclosed PrincipalAgent may incur liab when contracts on behalf of undisclosed principala principal whose identity is unknown to O who has no knowledge that agent is acting in an agency capacity O thinks no PP still liable if A acts within authority A has no liability A may be liable in certain circumstances ex representations made by AParole evidence rule may operate to prevent admission of evidence of undisclosed principalVariation of undisclosed is unnamed principal P liable A not Liability of A to PWhen A exceeds authority principal can sue agent for breach of contract Tort Liability in the Agency Relationship Agent is personally liable for any torts heshe commitsActing on behalf of another is no defense in a tort action Principal is liable for any tort committed by agent while agent is acting within scope of agents authority Express implied or apparent authority Termination of Agency Agreements Agree to bring relationship to endOne party gives notice of termination to another Cease by operation of law Due to death dissolution in case of corporate agent andor principal insanity or bankruptcy of one of the parties When terminated P should give notice to Os so they dont assume apparent authority and P faces liability
More Less

Related notes for Management and Organizational Studies 1021A/B

Log In


OR

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


OR

By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.


Submit