Law Chapter 11 - Law Chapter 11 Agency Agency Law the body...

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Law Chapter 11: Agency Agency Law- the body of laws that governs the relationships created when one party hires another party to act on the hiring party’s behalf Agent- one who agrees to act and is authorized to act on behalf of another , a principal, to legally bind the principal in particular business transactions with third parties pursuant to an agency relationship Principal- an agent’s master; the person from whom an agent has received instruction and authorization and to whose benefit the agent is expected to perform and make decisions pursuant to an agency relationship Restatement (Second) of Agency- a set of principles, issued by the American Law Institute, intended to clarify the prevailing opinion of how the law of agency stands Employee Agents- one of the three broad categories of agents; includes, generally, anyone who performs services for a principal who can control what will be done and how it will be done o Master-Servant Relationship- nonagent employee relationship Independent Contractor Agents- one of the three broad categories of agents; includes, generally, anyone who performs services for a principal who has the right to control or direct only the result of the work and not the means and methods of accomplishing the result Gratuitous Agents- one of the three broad categories of agents; includes, generally, anyone who acts on behalf of a principal without receiving any compensation IRS Three Pronged Test- test to determine an agent’s status in an employment tax context; IRS considers: o Behavioral aspects of the agency o The financial arrangements between the principal and the agent o The type of working relationship the parties have in terms of benefit and promises or continuing employment Fiduciary Relationship- a broad term embracing the notion that two parties may agree that one will act for the other party’s benefit with a high level of integrity and good faith in carrying out the best interests of the represented party Manifest- apparent and evident to the sense; in this context of agency law, courts apply an objective standard to determine whether the principal intended that an agency be created Consent- an

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