Business Law Chapters 26,27,28,31

Termination of an Agency by Acts of the Parties

Agency may be terminated by: Original Agreement. Subsequent Agreement. Revocation. Renunciation by the agent.

Estoppel

Agency of Estoppel- agency arising when a person leads another to believe 3rd party is an agent. Prevents injustice to parties that have been mislead by the principal.

Obedience.

Agent must carry out all instructions as long as they are not illegal or defrauding others. Example, wear suit for all removals.

Brokers

Agent with the job of bringing two contracting parties together. Simply can be to find people to bring together to satisfy a need or want, contractually.

Implied Authority, Inferred

Agents authority to do things in order to carry out express authority, not specifically stated. Example- a retail manager might have implied authority to purchase shoes from wholesalers in order to have shoes to sell.

Agent's Liabilities to 3rd Parties

Agents who contract in their own names, without naming the principal, become liable to the same extent of the principal. Can be sued for fraud or other wrongdoings, including disobedience, carelessness, or malice.

General Agents

An agent authorized to carry out particular kinds of business or business at a place. Example- Manager of a retail store. They can pay bills, employs help, buys and sells merchandise, collect on accounts. Usually these roles are carried out by employment contract. Broad authority.

Special Agent

An agent authorized to transact a specific act or acts. Limited powers only for a specific purpose. Example- Repetitious acts, toll booth operators.

Subsequent Agreement

An agreement between the principal and the agent may terminate an agency at any time. "I don't like you, you don't like me... Let's go our separate ways."

The principal, agent, or third party may be...

An individual, a partnership, or a corporation.

Creation of Agencies

Appointment. Ratification. Estoppel. Necessity.

Ratification

Approval of an unauthorized act. Must provide knowledge party was acting on behalf of another party. Party must approve act, must be legal, done before the 3rd party has withdrawn from transaction. People have the power to change, must make changes before transaction ends!

Apparent authority

Authority agent believed to have because of principle's behavior. Example- "for ALL your cleaning needs call ABC cleaners.

Customary Authority

Authority to act on behalf of another arises when someone is customarily used to doing something. Example- a lower level employee may place an order for paper products to keep their station clean, accustomed to placing those orders.

Bankruptcy

Bankruptcy of the principal terminates the agency. Bankruptcy of the agent does not terminate the agency.

Principal's duties to agent

Compensation. Reimbursement. Indemnification. Abidance by the terms of the contract.

Original Agreement

Contract creating the agency often expires on a certain date. This leads to automatic termination. Example- Special agents will terminate when act is complete, selling a yacht.

Appointment

Contracts may be oral or written, formal or informal. Real estate transactions require writing, formal contracts, or contracts for more than one year UCC requires writing, Example- Power of Attorney. Appointing someone to do something for you.

Death or Incapacity.

Death of the principal or agent normally terminates relationship. Exceptions: states that allow Durable Power of Attorney, may allow agent to be appointed by writing to make health care decisions, or withhold certain specified medical treatments or procedures.

Destruction

Destruction of the subject matter terminates the agency.

Accounting

Duties of an agent include keeping a a detailed record of all money transactions.

Types of Authority

Express Authority. Implied Authority. Customary Authority. Apparent Authority.

Factor del credere, trust

Factor who sells on credit and guarantees price will be paid. These merchants sell on credit, and guarantee prices will be by the purchaser or by the factor. High end items. The

Additional types of agents, most are special agents.

Factors. Factors del credere. Brokers. Attorneys in fact.

Loyalty and Good Faith.

Fiduciary Relationship, trust based. If they are proved disloyal, the law can revoke payment, and award principals compensation. Agent should promote the interests of agent to the best of their ability.

Classifications of Agents

General Agents. Special Agents.

Other employee relationships

Independent contractor. Employee/Employer, aka Master/Servant.

Who may appoint an agent?

Legally competent individual.

Renunciation

Like the principal, the agent has the power to renounce the agency at any time. An agent who abandons the agency without cause before fulfillment of the contract incurs liability to the principal for all losses due to the unjustified abandonment.

Agent's duties to principal, person who hires/contracts them.

Loyalty and Good Faith. Obedience. Reasonable Skill and Diligence. Accounting. Information.

Abidance by Terms of the Contract

Must abide by terms of the contract in all respects, including implied compliance. Cooperation through the end of the agreement.

Reimbursement

Must reimburse expenses that are necessary to carry out tasks. Does not cover negligent behavior, Speeding Ticket!

Reasonable skill and diligence.

One who acts as an agent must possess the skill required to perform the duties and must be diligent in performing the skill. Anyone being relied on for a specified talent, skill, or judgment should not appoint sub agents.

Independent Contractors

One who contracts to perform tasks for a certain fixed fee. They simply are held accountable for proper performance of the contract. Example- construction work

Factors

One who receives possession of another ones property for the purpose of sale on commission. Bailee seeking to sell property on commission. When factors collect the sale price, they deduct a percentage for commission. Example- Plato's Closet, consignment shop.

Necessity

Parents must support their minor children. Unforeseen emergencies. Example- charter bus operator may charge the principles card for repairs in order to keep bus functioning.

Subsequent illegality

Some aspect of the subject matter of the agency terminates the agency, illegal in nature.

Termination by operation of the law

Subsequent illegality. Death or incapacity. Destruction. Bankruptcy. Dissolution. War.

Who may act as an agent?

Sufficient intelligence, chosen by principal.

Dissolution

Termination of a corporation's operation except activities needed for liquidation. When things dissolve, the assets sold off to pay off bills.

Employer and Employee

The employer controls all aspects of the employees work. May be held liable for any accidents involving employee, all federal/state labor laws.

Revocation

The principal may revoke the agency's authority at any time. Certain stipulations regarding finances may need to be paid to the principal upon revocation of the authority. Revoke, cut off. If contract made until May 1st, must keep paying until then. Unless negligence occurred.

Durable Power of Attorney

This form helps you to direct your care should your doctor decide you lack capacity too make your own Medical Decisions. It has nothing to do with arranging funerals/disposition.

Indemnification

To secure against hurt, loss or damage. Compensation for incurred hurt, loss or damage. Male suits can get very complicated... Example- signing for personal effects at coroners office... You're responsible for those items.

How a 'contract of agency' is formed

When one party, known as a PRINCIPAL, appoints another party, known as the AGENT, to enter into contracts with 3rd parties in name of the Principal.

Notice of termination

When principles terminate agencies, they must give notice to third parties with whom the parties have previously transacted with agents. Written is not required, but all parties need to know. When operation of law terminates, notice does not need to be given to the agent or 3rd parties.

War

When the country of the principal and that of the agent are at war against each other, the agents authority terminates or lapses until peace occurs. If that is impossible, agency terminates.

Power of Attorney

Writing appointing agent. Can do anything you can do, financial decisions. Must be acknowledged by public notary. POA ends at death!!!

Express Authority

Written, spoken, clearly stated. Authority specifically delegated to the agent by the agreement creating the agency. Power to do whatever the agent is appointed to do.

Compensation

'Thank you!' The provision for payment can be expressed or implied. The courts will typically fix a reasonable rate if there is any question regarding rate. Can be on contingency, if sale happens.

Agency

A contract under which one party is authorized to contract for another.

Attorneys in fact

A general agent who has been appointed by written authorization. Can step in and run system as agent.