Agency law is an area of commercial law that deals with a number of contractual, quasi-contractual and non-contractual fiduciary relationships involving one person, the so-called agent, who is authorized to act on behalf of another (called the client) in order to establish legal relationships with a third party. [1] In short, it can be described as the equal relationship between a contractor and an agent in which the principal expressly or implicitly authorizes the agent to work under their control and on their behalf. The entrepreneur is therefore obliged to negotiate on behalf of the customer or to bring him and third parties to a contractual relationship. This branch of the law separates and regulates the relationship between: An apparent authority (also known as “alleged authority”) exists when the customer`s words or conduct would cause a reasonable person in the third party`s position to believe that the representative was authorized to act, even if the customer and the alleged representative had never discussed such a relationship. For example, if a person appoints a person to a position that involves powers similar to those of an organization, those who are aware of the appointment may assume that there is a clear authority to do the things that are usually entrusted to someone in such a position. If a client gives the impression that an enforcement agent is authorized but there is no actual power of attorney, third parties are protected as long as they have acted appropriately. This is sometimes referred to as the “estoppel agency” or the “doctrine of perseverance,” which prevents the client from refusing to grant powers if third parties have changed their position to their detriment by relying on the representations made. [5] All it takes to create an agency relationship is the manifestation of mutual consent. This event may be oral or written. Examples of written agency contracts are lawyers` agreements.
Agency relationships may also arise from circumstances without express agreement. Whether an implied agency has emerged is a question of fact for a jury or judge to determine whether the problem leads to a trial. An agent is a person who acts on behalf of and on behalf of others after receiving and accepting a certain degree of authority to do so. Most organized human activities – and virtually all commercial activities – are carried out through agencies. No business would be possible without such a concept, not even in theory. For example, we could say, “General Motors builds cars in China,” but we can`t shake hands with General Motors. “The general,” as they say, exists and functions through agents. Similarly, partnerships and other commercial organizations rely heavily on agents to manage their activities.
In fact, it is no exaggeration to say that the ability to act is the cornerstone of the organization of companies. In a partnership, each partner is a general representative, while under corporate law, officers and all employees are representatives of the company. Nor can the client revoke the proxy of the agent after it has been partially exercised in order to bind the client (§ 204), although he may do so at any time before this power of attorney has been exercised (§ 203). In addition, in accordance with § 205, if the Agency is valid for a certain period, the Client may not terminate the Agency before the expiry of the deadline, unless there is sufficient reason. If he does so, he is obliged to compensate the enforcement agent for the damage he has suffered as a result. The same rules apply if the agent renounces an agency for a certain period of time. In this regard, note that lack of competence, continued disobedience to legal orders, and rude or offensive behavior were considered sufficient grounds for firing an officer. In addition, one party must give reasonable notice to the other party; Otherwise, the damage resulting from the absence of such notification must be paid (§ 206).
According to § 207, the revocation or renunciation of an agency may be made expressly or implicitly by conduct. Termination only takes effect vis-à-vis the agent until it is known to him and against third parties only if he is aware of the termination (§ 208). One of the most important factors to consider in a business law agency is the element of control. The Agent agrees to act under the Customer`s control, while the Customer agrees to relinquish control and allow the Agent to act on its behalf. The officer`s authority may take the form of an actual directive or an apparent and intended instruction. In the areas of social needs, the courts have stated that an agency exists in the absence of an agreement. The agency relationship would then have been implied “by operation of law”. In most states, children can purchase the necessary items – food or medical services – on behalf of their parents. Long-standing social policy considers it desirable for the head of the family to provide for his relatives, and the courts will transfer the costs to the head of the family in order to ensure the well-being of relatives. The courts come to this conclusion on the assumption that the parent is the agent of the head of the family, so creditors can sue the head of the family for the debt. The agency relationship can be created in two ways: by agreement (expressly) or by application of the law (constructive or tacit). Several problematic factual scenarios are repeated in the capacity to act, and the law has developed in response to them.
Even though the agency contract does not need to be in writing, the contracts that agents enter into with third parties often have to be in writing. Thus, Article 2-201 of the Unified Commercial Code expressly requires that contracts for the sale of goods at a price of five hundred dollars or more be concluded in writing and “signed by the party against whom performance is to be obtained or by his authorized representative”. The employee represents the employer in this relationship. This also means that the employer is responsible for any incapacity for work. If the employee acts in a manner that is ill-representative of the company, it is possible that the client may be held liable for the acts because he has accepted the agency contract. Most oral agency contracts are legally binding; The law does not require that they be reduced to writing. In practice, many agency contracts are drafted to avoid evidentiary problems. And there are situations where an agency contract must be written: (1) if the agency`s agreed purpose cannot be fulfilled within one year or if the agency relationship is to last more than a year; (2) in many states, an agreement to pay a commission to a real estate agent; (3) in many states, the power granted to a broker to sell real estate; and (4) in several states, contracts between companies and commercial agents. A real agency is approved before the start of the actions.
A person cannot become the agent of the other without his consent. This creates an agency contract. This agency contract authorizes one party to represent the other in the tasks envisaged. Some agency contracts are expressed orally or are based on intent. Others, on the other hand, are in the form of a legal person, such as a corporation or partnership. 2. There is obvious authority when the Agent performs actions on behalf of the Customer with a third party that the third party reasonably believes authorized to do so. [7] For example, suppose the customer employs an agent to run their business. The Customer must inform the Agent that it cannot purchase goods valued at more than $500 from a supplier. However, the principal tells or implies to a seller that the agent has full power to purchase from them.
The agent purchases goods worth $1,000 from the seller. The agent obviously has the authority to make this purchase because, because of the principal`s conduct, the seller reasonably assumed that the agent had the authority to purchase more than $500 on behalf of the principal. To define the agency in business law, it is important to examine common relationships in a business environment.3 min read An agent is a person acting on behalf of another. Many transactions are made by agents who act in this way. All corporate transactions, including those involving government organizations, are carried out in this way because the companies themselves cannot really act; they are legal fictions. .