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Chapter 17

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Department
Business
Course
BU231
Professor
Valerie Irie
Semester
Winter

Description
Chapter 17: Agency Agent: a person acting for another person in contractual relations with third parties. Principal: the person on whose behalf the agent acts. Dependant Agents: an agent who acts exclusively or mostly, for a single principal. Independent Agents: an agent who carries on an independent business and acts for a number of principals. Commission Agent: one who sells on behalf of a principal to third parties and receives compensation through commissions. - a relationship in which the agent is authorized by the principal to form contracts with third parties, usually has a contractual agreement where the agent is paid by the principal - someone can act gratuitously but is still bound by the duties imposed by agency law - may be created from an employment contract, but an agent need not be an employee, as all employees are not agents (important for income tax) - “agency” is used informally, and does not necessarily give all “agents” the power to enter contracts (eg. real estate contract) Creation of an Agency Relationship - any person who has the capacity to contract may appoint an agent, and the power is limited to the authority that the principal has - Agency Agreement: the agreement between a principal and agent whereby the agent undertakes to act on behalf of the prinipal + third party agreement between the principal and the 3 party - Agreement can be express, implied, oral, written, or in writing under seal, but if it is enforceable beyond one year it must be in writing - Should clearly define the agent’s authority, how far the agent can go without obtaining further instructions before contacting the principal. It can be a very wide range or very specific - Authorization should be in writing if the agent wants to issue promissory notes of draw cheques in the agents name; should be signed in a way as to demonstrate that the agent is acting on behalf of the principal otherwise they could be personally liable for the promise - Power of Attorney: a type of agency agreement authorizing the agent to sign documents on behalf of the principal. Must be issued under seal. Agency agreement Principal Agent No contract Relationship between principal and 3 rd rd 3 Party party that was created by the agent - agency may be implied through the conduct of the parties; if the principal has allowed the agent to act like his agent in dealings with third parties, agency is implied (estoppel principal) - Retroactively – through ratification, in which the principal adopts the contract as their own
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