10 -Forms of Businesses

10 -Forms of Businesses - FormsofBusinesses Agency An agent...

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Forms of Businesses
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Agency An agent is a person who can affect the legal relations of another person called the principal . The extent to which an agent can affect the legal relations of the principal depends on the authority (or power ) the agent has. There are two types of authority an agent may have: actual authority and ostensible (or apparent) authority .
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Agency contd. . An agent’s function is to represent and act on behalf of a principal in dealings with third parties. The term agency refers to the service an agent performs on behalf of the principal
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The Agency Relationship Agency A person or business acts on behalf of another person or business Parties in Agency Principal hires an agent to carry out business dealings with a third party, usually to allow the principal to enter a contract with the third party Relationship may be based upon Contract – verbal or written with set terms Agency by conduct or agency by estoppel – by words or actions agency is created
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The Agency Relationship contd. . Agency Relationship P T A (Third Party) (Agent) (Principal)
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The Agency Relationship (Cont’d) Duties Agency is based upon utmost good faith - relationship is of special trust and confidence
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The Agency Relationship (Cont’d) Principal’s Duties: Pay the fixed fee or a reasonable fee for services rendered Compensate for any reasonable expenses in carrying out the services
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The Agency Relationship (Cont’d) Agent’s Duties : 1. Obey all lawful instructions and keep information confidential 2. Inform the principal and be in constant contact (notice to an agent is notice to the principal) 3. Maintain the standard of skill required with no delegation unless permission is granted 4. Account for goods or money 5. Place the best interest of the principal first 6. Do not act for both the principal and third party without express consent
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The Agency Relationship (Cont’d) Liability of Principal & Agent to Third Parties in Tort Vicarious liability – principal may be liable for torts committed by the agent in the course of the agency agreement Termination of the Principal–Agent Relationship 1. Notice – principal should notify third parties or the principal may be liable by apparent authority 2. Completion of task or service 3. Incapacity of either party 4. Bankruptcy of the principal
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Choosing The Form of Business All businesses 1 of 4 choices 1. Sole Proprietorship 2. Partnership 3. Limited Partnership 4. Corporation Choosing The Form of Business
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SOLE PROPRIETORSHIP an unincorporated business organization that has only one owner owner has unrestricted legal responsibility for obligations oldest, simplest form of business organization no legislation pertaining to sole proprietorship as such
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Sole Proprietorship Just Register and Start (Inexpensive) Own Name - No Need to Register If the proprietor chooses to carry on a business
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10 -Forms of Businesses - FormsofBusinesses Agency An agent...

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