...arise when agents make contracts on behalf of principals. Should a principal be bound when his agent makes a contract on his behalf that he would immediately wish to disavow? The tradeoffs resemble those in tort, so the least-cost avoider principle is useful for deciding which agreements are binding and can unify a number of different doctrines in agency law. In particular, an efficiency explanation can be found for the undisclosed-principal rule, under which the agent's agreement binds the principal even when the third party with whom the contract is made is unaware that the agent is acting as an agent. Agency deals with situations in which one person -- the principal-- uses another person -- the agent-- to act on his behalf. Sometimes the acts of the agent are attributed legally to the principal, sometimes not. Clearly, agency is central to business dealings. No owner of a business can do everything himself; he must delegate some things to agents, and this is true not only of large corporations but of sole proprietorships that have employees who work for the owner. In partnerships, the partners act as each other’s agents. And in corporations, the shareholders are completely unable to act on their own behalf; they delegate authority to a board of directors, who in turn delegate authority to the officers of the corporation. In this report we will discuss the formation and types of agencies with a detail analysis of the evident problems between principal-agent relationships. Moreover...
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...Agents play a vital role in commercial activity. Many commercial transactions in the field of commerce are conducted through agents who act as intermediaries and represent the interests of their principals in the conduct of the principals business. Auctioneers, estate agents, commercial agents,commission agents, mercantile agents, brokers, factors, solicitors and barristers are just a few of the many people described as agents who may act on people behalf in the ordinary course of life. The essential point to be borne in mind is that the relationship between agent and principal is essentially a binding contractual one which imposes upon both parties' rights, duties and obligations. Agents “are to be found in all advanced societies and… [Their] activities are an inevitable feature of a developed economy”. In addition, it may be useful at the beginning of any discussion of agency to attempt a definition of the common factor which brings them all into the category “agent” or, indeed, it may be useful to ask whether they all properly called agents. The courts have only very rarely attempted to define the agency relationship though they have an occasion pronounced on what agency was not. In the recent case of Comet Group plc v British Sky Broadcasting the court held that promotional contracts to be quite distinct from agency. Fridman (1996) stresses that the effect of someone being an agent is that he affects the legal rights of his principal, and he works backwards from his conclusion...
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...INSURANCE SERVICES AGENCY APPROACH In recent times the insurance business has been based on agency representation and relationship. The agent represents the principal in the sale of insurance policies and in forcing a contractual relationship between the principal and the client. According to Nwachukwu (1991), the following criteria will be considered in agency creation 1) The creation of agency. The relationship can be formulated either through written or oral communication or by conduct. When required to act under seal, the agent must be given a document to validate his authority. This gives the agent power of attorney to act on behalf of his client. It has also been 2) Capacity: only individual who have been proven capable can act as agents. Exceptional cases are made during his period of sanity. Also a company can take up the role of an agent for another party, even if its not in line with the business operation of the company. The relationship that exists between the principals and agents is solely based on the resultant benefits. Classification of the Power and Authority of the agent 1) Express Authority: in this situation, the authority and rules governing the relationship is clearly spelt out in writing, oral or by deed. The oral form might not cure handy when issues come up. Where the written authority might not be specific and this gives room for manipulation of the principal by the agent. 2) Implied Authority: this authority is based on the nature...
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...non-contractual set of relationships when a person, called the agent, is authorized to act on behalf of another (called the principal) to create a legal relationship with a third party.[1] Succinctly, it may be referred to as the relationship between a principal and an agent whereby the principal, expressly or impliedly, authorizes the agent to work under his control and on his behalf. The agent is, thus, required to negotiate on behalf of the principal or bring him and third parties into contractual relationship. This branch of law separates and regulates the relationships between: • Agents and principals; • Agents and the third parties with whom they deal on their principals' behalf; and • Principals and the third parties when the agents purport to deal on their behalf. The common law principle in operation is usually represented in the Latin phrase, qui facit per alium, facit per se, i.e. the one who acts through another, acts in his or her own interests and it is a parallel concept to vicarious liability and strict liability in which one person is held liable in criminal law or tort for the acts or omissions of another. In India, section 182 of the Contract Act 1872 defines Agent as “a person employed to do any act for another or to represent another in dealings with third persons”.[2] | | [edit] The concepts The reciprocal rights and liabilities between a principal and an agent reflect commercial and legal realities. A business owner often relies on...
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...The wisdom behind this principle is to maintain consistency in law and to oust any ambiguity or confusion concerning any subject. PARTIES TO THE CONTRACT OF AGENCY AGENT AND PRINCIPAL: AGENT: Agent is an individual or firm authorized to act on behalf of another (called the principal), such as by executing a transaction or selling and servicing an insurance policy. The agent does not assume any financial risk in the transaction. The function of the agent is to act on behalf of his principal in bringing about a contract between his principal and a third party. The relationship between principal and agent can arise in many ways, by contract under seal or in writing or verbal, by contract implied from the conduct or situation of the parties and by ratification. An agent such as a director has a lot of duties for the company. He must act in good faith in the interests of the company. As well, he has duty to avoid actual and potential conflicts of interest. If the agent breaches his duty, he may be sued by the company, the liquidator, the creditor, the shareholder and even ASIC. Furthermore, the principal can get compensation for the agent's breach behavior. EXAMPLE: C appoints B to buy 10 bags of sugar on his behalf. C is the principal and B is the agent. The contract between the two is agency. PRINCIPAL: An agent who makes a contract on a principal's...
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...Ratification: an agent secures a contract on behalf of the principle and the principle agrees to it. Buy custom Law of Agency: Amber and Ashgan Case Study Analysis essay The law of agency applies to both the two individuals in the case given that they possess an agent-principal type of relationship. Thus, the law of agency between the two is narrowed-down to the duties of the agent in respect to their respective principals. It should be noted Ashgan, the personal assistant, is the agent while Amber, who happens to be the employer, is her immediate Principal, The first duty of Ashgan, as an agent, is not to become the principal as against her employer’s or principal’s knowledge. This duty, on the part of the agent, is meant to prevent her from situations in which there will be possible conflict of interest between her duty as an agent and her personal interest. Notwithstanding, a breach against this course of duty renders the contract, entered into by the agent, as voidable at the desire of the true principal. For this case, the contract to purchase the limited edition, sliver Bays-water Tote handbag created the aforementioned type of conflict and thus, it was Amber to decide whether or not the contract was voidable. Second, the agent has a duty not to engage in business activities and hence making secret profits. It should be noted that secret profits is a phrase taken to mean any form of material or financial benefit that may be accrued on the part of the agent without the...
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...whereby a person is bound by the principal to act, represent or speak for him in front of the third party and make decisions on behalf of the principal. A principal may hire an agent who will act as a principal and will be solely responsible for the decision he makes on the name of the principal (Mckendrick 2012,p. 5). There are three types of authority but an agency made with an agreement is an implied authority. Contract of agency can be helpful for big business official as they cannot be available anywhere, anytime. The relationship with an agency can be terminated if the parties feel that the relationship is not going in a beneficial manner. There are various factors which can influence and terminate contract of agency it depends on the legal contract and various clauses they have signed during the agreement. According to Scottish law if the contract which has been set up for indefinite time the notice for termination of agency to be given for first year should be 1 month for second year two months and for third year 3 months prior before the termination by any of agent or the principal. There are different ways in which contract of agency can be terminated 1)Act of parties 2)Operation of law 3)By agreement. Under act of parties there can be few scenario's one is revocation by principal in which the principal no longer wants the agent to work or act for his business or premises this situation can be handled by giving a notice to an agent and the notice should also be presented...
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... Know the term fiduciary in the context of agency, and the requirements of a fiduciary relationship. “the fi duciary relation [that] results from the manifestation of consent by one person to another that the other shall act in his [or her] behalf and subject to his [or her] control, and consent by the other so to act.” When used as a noun, it refers to a person having a duty created by his or her undertaking to act primarily for another’s benefi t in matters connected with the undertaking. When used as an adjective, as in the phrase fi duciary relationship, it means that the relationship involves trust and confi dence. 2. Know the criteria used by courts to determine a worker's status as employee or independent contractor. Why does this determination make a difference? How much control does the employer exercise over the details of the work? Is the worker engaged in an occupation or business distinct from that of the employer(If so, this points to independent-contractor,) Is the work usually done under the employer’s direction or by a specialist without supervisionDoes the employer supply the tools at the place of work? (For how long is the person employed? What is the method of payment—by time period or at the completion of the job? What degree of skill is required of the worker? ( 3. Know the 4 ways an agency relationship can be created. An agency relationship can arise in four ways: by agreement of the parties, by ratifi cation, by estoppels and...
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...defined as a legal relationship that exists between two persons where one called the agent is considered in law to represent the other called the principal in such a way as to affect the principal’s legal position in relation to other parties. This presentation will explore the below: • Definition of agency • Creation of agency • Effects of contracts made by agents • Rights and duties between principal and agent • Termination of agency DEFINITION OF AGENCY An agent is a person employed to do any act for another or to represent another in dealings with third persons. Cap 23 Laws of Kenya is the law that governs Agency law in Kenya. The law of agency is based on the common law rules developed by English courts and rulings made by other courts in the Commonwealth. On March 14th 1978, Kenya adopted the convention on the law applicable to agency. In Timmins (Town) v Brewers' Warehousing Co. Ltd (1962) Schroeder, J.A. stated, inter alia, that "the outstanding feature of an agent's employment in a legal sense is that he is employed primarily to bring about business relations between the principal and third persons, and this characteristic is perhaps the most distinctive mark of the agent as contrasted with others not agents who act in representative capacities". The law of agency prescribes the legal rules for determining- (a) How a person may become an agent; (b) The rights and duties between the agent and the principal; (c) The relations between the agent and the third...
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...with a lawsuit or petition for a court order must be free from unfair conduct (have "clean hands" or not have done anything wrong) in regard to the subject matter of his/her claim. Common law is based on precedent (legal principles developed in earlier case law) instead of statutory laws. It is the traditional law of an area or region created by judges when deciding individual disputes or cases. Constitutional law – a body of law dealing with the distribution and exercise of government power. Criminal Law versus Civil Law – Civil * between you and another citizen (no government involved); * disagreements between citizens were no crime has been committed (only e.g. injury); * designed to compensate parties (including businesses) for losses as a result of another conduct ; * e.g. speeding and parking violations; * don’t result in loss of freedom, though they can result in loss of privileges or fines. Criminal * between you and the government/law; * are a protection of society; * Congress and House of Representatives are involved; * When the individuals break the laws/are against the government; * actions that have been declared illegal; * they are prosecuted by the state (city, state or country); * normally punished with fines and/or loss of freedom through jail or probation; * Both of them can be also combined Jurisprudence is the science and philosophy of law; system or body of law; the course of court decisions. Law versus...
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...AuditQuality Agency theory and the role of audit The Audit Quality Forum comprises representatives of the audit profession, investors, business and regulators who have an interest in high quality and confidence in the independent audit. a Q AuditQuality a Q The Audit Quality Forum brings together representatives of auditors, investors, business and regulatory bodies. Its purpose is to encourage stakeholders to work together by promoting open and constructive dialogue in order to contribute to the work of government and regulators and by generating practical ideas for further enhancing confidence in the independent audit. The initial focus of the Forum was to improve audit transparency and support shareholder involvement in the audit process. At its meeting in May 2005 the Forum agreed to explore a broader agenda which will examine the relationships between shareholders, boards, auditors, regulators and other stakeholders in the audit. Anyone interested in providing feedback on this paper should send their comments to louise.maslen@icaew.co.uk. Further information on the Audit Quality Forum, the current work programme and how to get involved is available at www.icaew.co.uk/auditquality or contact 020 7920 8493. © December 2005 Institute of Chartered Accountants in England & Wales Dissemination of the contents of this paper is encouraged. Please give full acknowledgement of source when reproducing extracts in other published works. No responsibility for any person...
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...how the law handles purchasing agent actions when acting upon directions from their principal, but what happens when the agent acts alone, is the agent held responsible? What about signature authority or when the agent is careless and takes on actions that he/or she has no right to perform. Can a purchasing officer be held personally responsible for actions outside the knowledge of his principle? Purchasing officers (agent) are employees who buy supplies and materials for the companies they work for. They dicker over the smallest costs and make decisions for the company on materials and supplies that would benefit the company. Agents are also in charge of managing contracts and ensuring that they are completed in time. Purchase agents have to be educated with enough knowledge to make the right decisions on handling the purchasing, inventory levels, suppliers and the economics which will enable them to make the important decisions to help a company succeed. Contracts involve negotiating for bids, being technical in your knowledge and being able to access what products are needed is part of what makes the agent the expert and their field. Purchasing agents are expected to be able to meet with vendors and to be able to iron out the problems, so as not to cause harm to the company. The control of the Agent comes from the principal. This can either be a company, or an individual who has the authority to delegate his duties to the agent for the good of the company. ...
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... Abstract Agency is defined as the relationship which arises where one person known as the agent acts for another known as the principal. Through the acts of the agent, the principal and a third party may be brought into a contractual relationship. The legal effect of such acts by agents is that the person for whom they are acting - the principal – is bound by such acts and may incur legal obligations to the third party who has dealt with the agents. By this, the law of agency is able to multiply the individual´s legal personality in space. Generally, the agent´s acts have such effect because the principal has authorized the agent to do the acts in question and the agent has agreed. The agent in a sense becomes an extension of the principal and is therefore capable of altering the principal´s legal position either by binding him to a contract or effecting a binding disposal of the principal´s property. An agency relationship is fiduciary in nature and the actions and words of an agent exchanged with a third party bind the principal. Keywords: Agent, Principal, Third Party, Contractual Relationship, Legal Obligation, Legal Personality, Fiduciary Relationship. Page | 1 Table of Contents PAGE CONTENTS NO. INTRODUCTION……………………………………………………………... 3 AN OVERVIEW OF AGENCY……………………………………………… SIX GROUNDS TO BIND A PRINCIPAL BY ACTS OF THE AGENT………………………………………………………………………... 4 6 RELATIONSHIP BETWEEN THE PRINCIPAL AND AGENT...…............. 11...
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...Agency Theory Agency theory identifies the agency relationship where one party, the principal, delegates work to another party, the agent who performs that work. In the context of corporation, the agents are the managers and the principals are the shareholders. Agency theory as related to the corporation is set in the context of the separation of ownership and control as described in the work of Berle and Means (1932) Agency relationship Agency relationship is defined by Jensen & Meckling (1976) as a contract under which one or more persons (the principal(s)) engage another person (the agent) to perform some service on their behalf which involves delegating some decision making authority to the agent. If both parties to the relationship are utility maximizes there is good reason to believe that the agent will not always act in the best interests of the principal. Agency cost Agency cost is the principal can limit divergences from his interest by establishing appropriate incentives for the agent and by incurring monitoring costs designed to limit the aberrant activities of the agent. In addition, in some situations it will pay the agent to expand resources to guarantee that he will not take certain actions which would harm the principal or to ensure that the principal will be compensated if he does take such actions. However, it is generally impossible for the principal or the agent at zero cost to ensure that the principal will be make optimal decisions from the principal’s...
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...Agency Relationships LAW/575 February 23, 2015 Shannon Allen Agency Relationships The relationship established between two parties for lawful purposes, in which one party, named the principal, requests the other party or agent to represent him is called Agency. Agency relationships create fiduciary duties between the principal and the agent (Kubasek et al., 2012). In this paper, Team B will discuss the different types of Agency and the legal consideration surrounding each of them. Expressed Agency Expressed Agency is known as an agency by agreement; this agreement can be oral or written. Expressed agency is an agency that is commonly used. This particular agency gives the agent ability to contract on behalf of the principal. Power of attorney is a prime example of expressed agency. “A power of attorney establishes an agency by agreement that gives an agent authority to sign legal documents on behalf of the principal” (Kubasek et al., 2012, p.729). There is another form of power of attorney which is durable power of attorney. Durable power of attorney allows the principal to take all decisions until he/she becomes incapacitated and then the agent will step in and act on behalf of the principal. Legal considerations. Expressed agency must have either an oral or written agreement. If there is neither then there is no expressed agency. When it comes to power of attorney “an agency relation exists only if there has been a manifestation by the principal to the...
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