unit 2 - Chapter 29 Agency Relationships 0. Formed by the...

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Chapter 29 Agency Relationships 0. Formed by the mutual consent of principal and agent. 1. Agency is a fiduciary relationship “which results from the manifestation of consent by one person to another that the other shall act in his behalf and subject to his control, and consent by the other so to act.” Agency 0. Agency Law – Body of common law that governs agency. 0. Contract law and tort law. 1. Principal – The party who employs another person to act on his or her behalf. 2. Agent – The party who agrees to act on behalf of another. Principal-Agent Relationship Who Can Initiate Agency Relationship 2. Any person who has the capacity to contract can appoint an agent to act on his or her behalf. 3. Persons who lack contractual capacity cannot appoint an agent. 1. E.g., insane persons and minors. 2. Court may appoint guardian who may act as agent of such persons. Purpose of Agency Relationship 0. An agency can be created only to accomplish a lawful purpose. 1. Agency contracts that are created for illegal purposes or are against public policy are void and unenforceable. 0. E.g., contract to hire agent to commit crime. Kinds of Employment Relationships Principal-Agent Relationship 3. Employer hires employee, giving employee authority to act and enter into contracts on his or her behalf. 4. Extent of authority governed by any express agreement between the parties and implied from the circumstances of the agency. 0. E.g., president of corporation has authority to enter into major contracts; assembly line supervisor has authority to enter contracts to buy supplies to keep line running. Employer-Employee Relationship 4. Employer hires an employee to perform task or service. 5. Employee is not an agent unless he or she is specifically empowered to enter into contracts on the principal/employer’s behalf. 1. E.g., assembly line worker may have no authority to enter into contracts. Principal-Independent Contractor Relationship 2. Principals employ persons or businesses that are not employees to perform certain tasks. 2. E.g., plumbers, architects, lawyers, CPAs. 3. Crucial factor in determining whether employee or independent contractor is degree of control that principal has over that person. Independent Contractor and Agency Status 4. Principal can authorize independent contractor to enter into contracts. 3. E.g., authorize attorney to enter into settlement agreement on client’s behalf. 5. Principal liable for authorized contracts of independent contractors. Summary: Kinds of Employment Relationships Express Agency 6. Express agency contracts may be either oral or written, unless the Statute of Frauds stipulates that they must be written. 4. E.g., agency agreement with real estate agent to be in writing. 7.
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unit 2 - Chapter 29 Agency Relationships 0. Formed by the...

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