Agency in Legal Terms


Another example is the relationship between a board of directors and its company. Decisions made by the Board of Directors on behalf of the Company are legally binding on the Company as a whole. The loss or destruction of the Agency`s object or the termination of the Client`s interest is another ground for termination of the Agent`s authority. The officer`s authority expires when he becomes aware of it. However, the destruction of the object does not always entail the termination of the authorization, especially if the object can be replaced without significant alteration of one of the parties. Similarly, a representative is liable if he does not disclose the agency and the identity of the client when concluding the contract. In this case, the agent is subject to all the liabilities arising from the contract in the same way as if the agent were the capitalist of interest. Permanent powers of attorney are unique types of agency creations, and each state has specific laws that limit their scope and impact. They usually do not put an end to the lack of instruction of a competent manager, but are actually created to maintain existence even when the client becomes incompetent. Check out our article on this type of agency relationship in California.

Second, commercial agents and principals must not exploit asymmetries in their relationship as commercial agents in a way that frustrates the legitimate expectations of the other party. In this regard, the question of whether conduct violates the obligation must be assessed holistically, taking into account all aspects of the relationship; The essential facts include the contractual and commercial leverage of each party, its objective intentions as set out in the contract and the business practices of the sector concerned. However, the initial axiom of this investigation must be that these are business relationships in which professionals are supposed to be independent and free to pursue their own interests. Fundamentally, it will not be an estimate aimed at achieving ontological fairness, a fair agreement or a balance between giving and receiving commercial agents and constituents. [14] The Agency`s law is particularly important in business relationships. Here`s a more in-depth look at the agency`s law and how it affects businesses and investors. In a dual agency, an agent represents both the buyer and seller in a single transaction and has fiduciary responsibility for both clients. The error of an agent acting as a double agent becomes a mutual factual error of the two principals. This prevents one customer from holding the other customer accountable for the authorized representative`s error. However, the knowledge or notification of a double agent is not presumed if the agent has acted in an adverse or fraudulent manner. Dual agency is only allowed with the informed and voluntary consent of the buyer and seller. Herdan v Hanson, 182 Cal.

538 (Cal. 1920) The agency must be adopted retrospectively or granted in advance. In the first case, there must be tolerance on the part of the representative (whose recognition may be rightly implied) or explicit recognition. “First, commercial agents and constituents who express honesty and openness must work together to respect their agreement. Good faith behavior requires each party to take proactive steps to help the other comply with its agreement, rather than simply refraining from obstructionist behavior. However, whether a party has acted in good faith cannot be determined by reference to a moral or metaphysical concept of cooperation; That assessment must be based on an objective assessment of the actual relationship between commercial agents. As a result, the intensity of the required cooperation varies depending on the terms of the contract and relevant business practices. With respect to tort (i.e. liability for a civil offence, such as negligent driving of a car and the cause of an accident), the client is liable for an act committed by an agent while acting within the limits of his powers while employing the agent.

This legal rule is based on respondeat superior, which in Latin means “let the master answer”. The doctrine of the Respondeat Superior, first developed in England in the late 1600s and adopted in the United States in the 1840s, was based on the theory that a master must answer to third parties for losses caused by negligence by the master`s servants. In more modern terms, the employer is said to be vicariously liable for injuries caused by the actions of an employee or agent; In other words, responsibility for an employee`s actions is assigned to the employer. The agent can also be held liable to the aggrieved party, but because the client is financially better able to pay any judgment against him (according to the “deep pocket” theory), the client is almost always sued in addition to the agent. In the case of transactions carried out by parties through an intermediary, the intention of the parties depends on whether or not an agency relationship is established. In such cases, the terms used to designate the capacity of the intermediary in the written act participating in the transaction are not always conclusive. Factors to be taken into account in determining whether an agency exists and which part is the main part of the intermediary include the functions of the intermediary, the performance of those functions and the person for whose benefit they are performed. Carr v Hunt, 651 S.W.2d 875 (Tex. App. Dallas 1983) Consensual relationship created by contract or by law in which one party, the principal, another party, the agent, gives the power to act on behalf of and under the control of the principal to deal with a third party.

An agency relationship is fiduciary in nature, and the actions and words of an agent exchanged with a third party are binding on the client. The relationship between the client and the representative is usually terminated by the act or agreement of the parties to the agency or by law. “It is assumed that if it is proved that an organization existed, it continued in the absence of anything demonstrating its termination, unless such a period of time has elapsed that destroys the presumption.” Kaufmann v. Foreman, 182 Kan. 550, 555 (Kan. 1958). An officer is responsible in principle for the conduct of a sub-agent with respect to matters of the principle entrusted to the sub-agent. However, a sub-agency cannot give it more power than the agency, and when that general agency ceases to exist, it automatically dissolves the sub-agency. The customer is no longer liable for a specific act after the third party becomes aware that the customer has rejected the representative`s authorization to commit such an act. After the termination of an agency for a specific purpose and the notification of the revocation of the agency, the action of an agent will not normally bind the client.

Often, a client is responsible for the illegal acts of an executing agent within the scope and scope of the contractor`s employment. However, it should be emphasised that, unless the contracting entity orders or directs the act, a contracting entity is not liable for the offence committed by a representative while acting against the contracting entity or outside the sphere of employment of the agent. An agency relationship is established by the consent of the agent and the client; No one can unknowingly become an agent for another. Although a principal-agent relationship may be established by a contract between the parties, a contract is not necessary if it is clear that the parties intend to act as principal and agent. The intention of the parties may be expressed by their words or implied by their conduct. The death of a client and the impact on the agency are often negotiated when third parties or agents are trusting the agency. In most U.S. jurisdictions, two views prevail. According to one view, the Agency, unless it is associated with an interest, will end with the death of the Client, regardless of whether the Agent and the third party are unaware of this. Another view is that if the third party dealing with the agent acts in good faith and in ignorance of the client`s death, the Revocation of the Client`s death by the Agency will only take effect from the moment the representative receives notification of that death. In such a case, the client`s estate may be linked. However, check out our article on permanent powers of attorney.

The agency`s law allows a person to hire another to do their job, sell their property and acquire property on their behalf, as if the employer were present and acting in person. The principal may authorise the staff member to perform various tasks or limit the staff member to certain functions, but irrespective of the amount or extent of the authority conferred on the staff member, the staff member represents the principal and is subject to the control of the principal. Most importantly, the client is responsible for the consequences of the actions for which the entrepreneur was instructed. The concept of “agency” is so fundamental to legal transactions in the United States and most countries around the world that it is often taken for granted. In its simplest form, it`s easy to appoint someone else to act on your behalf for a specific purpose. It is inherent in any working relationship, most sales relationships, most organizations and business structures. If an executing agent acts on its own behalf without disclosing the customer, this does not exclude the customer`s liability. Note that if there is no evidence of an actual agency relationship, there can be no trust in the doctrine of undisclosed principles.

The customer is also not liable if the contract states that an undisclosed customer is not a party.