BLRB29 - Business Law and the Regulation of Business...

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Unformatted text preview: Business Law and the Regulation of Business Regulation Chapter 29: Relationship of Principal and Agent Chapter By Richard A. Mann & Barry S. Roberts Topics Covered in this Chapter Topics A. Nature of Agency B. Creation of Agency C. Duties of Agent to Principal D. Duties of Principal to Agent E. Termination of Agency Nature of Agency Definition of Agency – relationship authorizing one party (the agent) to act for and on behalf of the other party (the principal). principal). s Scope of Agency Purposes – generally, whatever business activity a person may accomplish personally he may do through an agent. may s Other Legal Relationships Other Employment Relationship – one in which the employer has the right to control the physical conduct of the employee. employee. s Independent Contractor – a person who contracts with another to do a particular job and who is not subject to the control of the other. the s Creation of Agency s s Formalities – though agency is a consensual relationship that may be formed by contract or agreement between the principal and agent, agency may exist without consideration. without Requirements – no particular formality usually is required in a contract of agency, although appointments of agents for a period of more than one year must be in writing. of Duties of Agent to Principal s s s Duty of Obedience –agent must act in the agent principal's affairs only as authorized by the principal and must obey all reasonable instructions and directions. instructions Duty of Diligence –agent must act with agent reasonable care and skill in performing the work for which he is employed. work Duty to Inform –agent must use reasonable agent efforts to give the principal information relevant to the affairs entrusted to her. relevant Duties of Agent to Principal Duty to Account –agent must maintain agent and provide the principal with a true and complete account of money or other property that the agent has received or expended on behalf of the principal. expended s Fiduciary Duty –agent owes a duty of agent utmost loyalty and good faith to the principal. principal. s Duties of Principal to Agent Compensation – a principal must compensate the agent as specified in the contract, or for the reasonable value of the services provided, if no amount is specified. specified. s Reimbursement – the principal must pay back to the agent authorized payments the agent has made on the principal's behalf. principal's s Duties of Principal to Agent Indemnification – the principal must pay the agent for losses the agent incurred while acting as directed by the principal. principal. s Tort Duties – include the duty to provide an employee with reasonably safe conditions of employment and to warn the employee of any unreasonable risk involved in the employment. employment. s Duties of Principal and Agent Duties Duties of P to A Compensation Reimbursement Indemnification authorizes agent to act P agrees to act Duties of A to P Obedience Diligence Loyalty A Termination of Agency s s s s s s s s s s s Lapse of Time Fulfillment of Purpose Mutual Agreement of the Parties Revocation of Authority Renunciation by the Agent Operation of Law Death – of either the principal or the agent of Incapacity – of either the principal or the agent agent Change in Circumstances Loss or Destruction of the Subject Matter Change in Law Termination of Agency s s s s Bankruptcy – bankruptcy of a principal Bankruptcy usually terminates all of his agency relationships; if the credit of the agent is important to the agency relationship, the relationship will be terminated by the bankruptcy of the agent. bankruptcy Disloyalty of Agent Outbreak of War Irrevocable Agencies – an agency coupled Irrevocable with an interest is irrevocable and occurs where the agent has a security interest in the subject matter of the agency. the ...
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