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Unformatted text preview: L293 (4/8/2009) • The Agency Relationship • Overview o 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 ). o All employees are agents, but not all agents are employees. • Creation of Agency o Anybody may be an agent or principal, but the agreement is voidable by minors and the mentally incapacitated o Certain duties are non-delegable Example: If IU hired a hip-hop artist for Little 5 week, the artist couldn’t delegate duties to the Valkyrie opera singer • Agency Authority o An agent can bind his principal only when the agent has authority to do so o Two forms: actual or apparent authority o Actual authority is either express or implied Express authority is created by the principal’s actual words (written or oral)- Example: “I want to hire you as my realtor to sell my house.” • Implied Authority o Implied authority 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 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 • Apparent Authority o 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 certain way and the third party reasonably relies on the appearance (cloak) of authority o To protect third parties, agency law allows agents to bind the principal on the basis of apparent authority • Euclid Plaza Associates v. African American Law Firm o Facts o Issue: Was Del-Mar Euclid’s agent? •...
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- Winter '09
- Business Law, Conflict of interest, apparent authority