BUS18_CH_27 - Chapter 27 Agency Importance of Agency Miller...

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Chapter 27 Agency
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Importance of Agency + = $$$ Miller v. McDonald’s McDonald’s held liable for actions of it’s franchisee (3K Corp.) because 3K was found to be an agent of McDonald’s.
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Importance of Agency Disney World Disneyland
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Importance of Agency Disney World 27,400 Acres Total Park on 2,500 Acres Twice the size of Manhattan 4 Theme Parks 32 Hotels 47 million visitors per year 66,000 employees Disneyland 289 Acres Total (160 Acres to start) 2 Theme Parks (1 to start) 3 Hotels (1 to start) 15 million visitors per year
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Creating an Agency Relationship Agency is a relationship in which the agent agrees to perform a task for, and under the control of, the principal. To create an agency, there must be: A principal, An agent, Who mutually consent that the agent will act on behalf of the principal, and Be subject to the principal’s control, Thereby creating a fiduciary relationship.
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Requirements for Agency Consent, control and a fiduciary relationship are required. Elements not required for an agency relationship include: A written agreement (unless the business of the agent requires a written contract). A formal agreement (acting like agent and principal is enough to establish agency). Consideration (an agent does not have to be paid).
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Duties of Agent to Principal Duty of Loyalty-- The agent: must act for the benefit of the principal. may not receive outside benefits without approval of the principal. can neither disclose nor use for her own benefit any confidential information. is not allowed to compete with his principal within the scope of the agency business. may not act for two principals whose interests conflict without consent of both principals. may not become a party to a transaction without the principal’s permission. may not engage in inappropriate behavior that reflects badly on the principal.
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Other Duties of an Agent An agent must obey her principal’s instructions, unless illegal or unethical. Agent must act with reasonable care. An agent with special skills is held to a higher standard because she is expected to use those skills. Agent must give accurate information. An agent has a duty to provide the principal with all information in her possession that she has reason to believe the principal wants to know.
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Principal’s Remedies When the Agent Breaches a Duty The principal can recover damages caused by the agent’s breach.
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