April+21+2009

April+21+2009 - CHAPTER TheAgencyRelationship Ive got an...

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The Agency Relationship A E T H 3 5 “I’ve got an ego and all that, but I know I need help. So I go and hire the very best people.” H. Ross Perot, EDS founder, Inc. (Jan. 1989)
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v Agency is everywhere!  Agency is a two- party relationship in which one party (the  agent ) is authorized to act on behalf of,  and under the control of, the other party  (the  principal ).  v All employees are agents, but not all agents  are employees. Overview
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v Certain duties are  non-delegable   w Example:  If IU hired a hip-hop  artist for Little 5 week, the artist  couldn’t delegate duties to an opera  singer  Creation of Agency
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v An agent can bind his principal only when  the  agent has authority to do so v Two forms:  actual  or  apparent  authority v Actual authority is either  express  or  implied w Express authority   is created by the principal’s  actual words   (written or oral) w Example:  “I want to hire you as my realtor to  sell my house.” Agency Authority
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v Implied authority  w An agent may do whatever it is reasonable to  assume that the principal wanted the agent to do  given principal’s statements and surrounding  circumstances w Illustration:  a person hired as general manager in a  restaurant will have broad implied authority to run  the business while a person hired as a waiter will  have limited authority Implied Authority
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v Apparent authority  arises when a  principal’s  conduct leads a third party to believe that an agent  (who lacks actual authority) is authorized to act a 
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April+21+2009 - CHAPTER TheAgencyRelationship Ive got an...

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