Chapter 13 - Chapter 13 Agency Relationship The Nature of Agency Agency relationship that exists when one party represents another party in the

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Chapter 13: Agency Relationship The Nature of Agency Agency: relationship that exists when one party represents another party in the formation of legal relations Agent: the person who is authorized to act on behalf of another Principal: a person who is permitted another to act on her behalf These legal relationships are binding on the principal as if that person had directly entered them herself Examples of Agency: A sports agent negotiates a multimillion dollar deal on behalf of a hockey player Booking agents negotiates fees and dates on behalf of entertainers This kind of relationship is essential to the success of the principal, who may not have the expertise to handle the given matter or cannot promote and manage the business single handedly Agency Defined There are two key relations at play in agency relationships: (1) relationship b/w the agent and principal (2) relationship b/w the principal and the party with whom the agent does business (outsiders) Law of agency: the law governing the relationship where one party, the agent, acts on behalf of another, the principal Creation of Agency Most often, relationship arises by contract b/w the parties Relationships can also arise by conduct; parties do not specifically agree to an agency relationship, but y worlds or actions outsiders are led to believe the relationship is one of agency Agency by Agreement Agency relationship by contract normally involves the principal authorizing an agent to act on her behalf and the agent agreeing to do so in return for some fee or other remuneration Not all employees are agents for the business that employ them Ex: A clerk is not considered an agent but if asked to buy a gift for a departing employee then they will be considered an agent Concept of Authority Key concept of the agency relationship = authority of the agent It determines whether there is a contract b/w the principal and the outsider
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When am agent acts within the scope of the agent’s authority and negotiates a contract for the principal, the principal is bound by the contract, whether the principal likes it or not Even if the agent acts outside the scope of her authority in entering into the contract, the contract may still bind the principal The principal will be obligated by the contract when the agent has actual authority or when the agent has apparent authority Actual Authority An agent’s actual authority can be expressed or implied Express authority = written or oral authority granted by the principal to the agent and is an authority that the agent actually has Implied authority = authority that the agent has, but it is present by implication only An agent will have implied authority when that authority: is inferred from the position the agent occupies is reasonably necessary to carry out or otherwise implement the agent’s express authority arises by virtue of a well-recognized custom in particular trade, industry or
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This note was uploaded on 01/09/2011 for the course AFM AFM 231 taught by Professor Darrencharters during the Spring '10 term at Waterloo.

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Chapter 13 - Chapter 13 Agency Relationship The Nature of Agency Agency relationship that exists when one party represents another party in the

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