Test 3 book notes - Copy

Test 3 book notes - Copy - Chapter 28: Agency- The Inside...

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Chapter 28: Agency- The Inside Relationship Restatement of Agency: when 1 person manifests assent to another person that the agent shall act on the principal’s behalf and subject to the principal’s control, and the agent manifests assents or otherwise consents so to act. To establish consent the principal must ask the agent to do something and the agent must agree. A principal must not only have agent consent but also have control over the agent Elements not required for an agency relationship: written agreement (except: if the an agent is empowered to enter into an agreement that must be in writing the appointment of an agent must be in writing), a formal agreement to be agent and principal, consideration (need not be paid) Fiduciary duty: putting your own needs second Duties of agents Duty of loyalty: act loyally for the principals benefit in all matters connected with the agency relationship An agent may not receive profits unless the principal knows and approves Agents can neither disclose nor use for their own benefit any confidential information they acquire during their agency. Agents cannot compete with their principals whose interests conflict. If a principal hires an agent to arrange a transaction, the agent may not become a party to the transaction without the principals permission. An agent may not engage in inappropriate behavior that reflects badly on the principal. Gratuitous agents (non-paid and not as qualified) are liable for gross but not ordinary negligence. Remedies when the agent breaches a duty: 1)principal can recover from the agent any damages the breach has caused. 2)if agent breaches the duty of loyalty he must turn over any profits he has earned 3) they may rescind the transaction (selling a script u own) Duties of agents: loyalty, obey, care, provide information Duty of principal: reimburse, and cooperate A principal must also indemnity an agent for an unauthorized purchase if the agent reasonably believed he was authorized and the principal received a benefit. A principally must indemnify an agent for tort claims brought by 3 rd party if the principal authorized the agents behavior and did not realize he was committing a tort. Terminating an agency agreement:
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Term agreement: last a specific time Achieving a Purpose: terminates when goal is reached Mutual Agreement: both decide it should end Agency at Will: if they make no agreement in advance about the term of the agreement. Either can cancel at any time. Wrongful termination: either party always has the power to walk out but not necessarily the right. *gratuitous have the right and power to leave* Loss of ability to perform-cancels contract Loss of qualification- cancels contract Bankruptcy-cancels contract if it affects ability to perform (BC investor can cancel contract if he goes bankrupt) Disloyalty-cancels contract If changes are significant to undermine the purpose of the agreement, then the relationshop ends automatically.
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This note was uploaded on 09/01/2011 for the course FIN 3055 at Virginia Tech.

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Test 3 book notes - Copy - Chapter 28: Agency- The Inside...

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