Professional Documents
Culture Documents
by Henry R. Cheeseman
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Agency Law The large body of common law that governs agency.
Principal The party who employs another person to act on his or her behalf. Agent The party who agrees to act on behalf of another.
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Agency Contract
Agent
Third Party
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Principal-Agent Relationship
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Employer-Employee Relationship
A relationship that results when an employer hires an employee to perform some form of physical service. An employee is not an agent unless he or she is specifically empowered to enter into contracts on the principal employers behalf.
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Principal-Agent Relationship
An employer hires an employee and gives that employee authority to act and enter into contracts on his or her behalf. The extent of this authority is governed by any express agreement between the parties and implied from the circumstances of the agency.
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Principals employ persons or businesses who are not employees to perform certain tasks on their behalf.
The crucial factor in determining whether a person is an employee or an independent contractor is the degree of control that the principal has over that person.
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Employment at Will
Under common law, an at-will employee could be discharged by an employer at any time for any reason.
Principal-Independent Contractor
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Agency by Ratification
Apparent Agency
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Express Agency
An agency that occurs when a principal and an agent expressly agree to enter into an agency agreement with each other.
Exclusive agency contract Power of attorney
Express agency contracts can be either oral or written unless the Statute of Frauds stipulates that they must be written.
Copyright 2004 by Prentice-Hall. All rights reserved. 29 - 15
Implied Agency
An agency that occurs when a principal and an agent do not expressly create an agency. The agency is implied from the conduct of the parties. The extent of the agents authority is determined from the particular facts and circumstances of the particular situation.
Incidental authority
Copyright 2004 by Prentice-Hall. All rights reserved. 29 - 16
Apparent Agency
Agency that arises when a principal creates the appearance of an agency that in actuality does not exist. When an apparent agency is established, the principal is estopped from denying the agency relationship. It is the principals actions that create an apparent agency.
Agency by Ratification
An agency that occurs when: 1. A person misrepresents himself or herself as anothers agent when in fact he or she is not, and 2. The purported principal ratifies (accepts) the unauthorized act.
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Express Implied
Authority is expressly given to the agent by the principal. Authority is implied from the conduct of the parties, custom and usage of trade, or act incidental to carrying out the agents duties.
Principal and third party are bound to the contract. Principal and third party acts are bound to the contract.
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Loyalty and obedience Reasonable care and skill Confidentiality Accounting Exceeding the scope of authority Principals lack of capacity Liability due to an undisclosed principal
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Chapter 20
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As long as agent act within the scope of their authority, principals are bound by the agreements with the 3rd parties.
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Chapter 20
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Apparent
Authority created when the principal leads a third party into believing that the agent has authority. Acts of the agent committed outside the scope of his authority.
By Ratification
Principal and third party are not bound to the contract unless the principal ratifies the contract.
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Chapter 20
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Once an agency relationship is terminated, the agent can no longer represent the principal or bind the principal to contracts.
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1.
2.
3. 4.
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1. 2. 3. 4. 5. 6.
Name the three general ways in which an agency may be terminated. Unilateral action of a party,
by agreement, or by operation of law
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Chapter 20
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Irrevocable Agency
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