1. Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia This is the prescribed textbook for your course. Available NOW at your campus bookstore!

2. Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Principal and agent Chapter 18

3. Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia 18-2 Agency An agency is a relationship that exists between one person, the principal, and another person, the agent, where the agent undertakes to do certain acts on the principal’s behalf, the purpose being to bring a third party into a contractual relationship with the principal.

4. Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia 18-3 Creation of an agency Expressly created agency (written or verbal) Impliedly created agency - Agency of Necessity - Cohabitation - Agency by Estoppel - Agency by Status - Agency by Ratification

5. Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia 18-4 Agency of Necessity  A person must be entrusted with the property of another person.  An immediate expense is required to preserve the property.  The owner of the property is virtually impossible to contact.  The person entrusted with the property (agent) must act in the best interests of the owner (principal).

6. Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia 18-5 Agency by Ratification Required when:  No authority to act as agent  Agent exceeds authority given by principal

7. Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia 18-6 Working relationships Agent - Fiduciary relationship i.e. exercising rights and powers, in good faith, for the benefit of another. Employee - Under control and supervision of employer. Independent contractor - Decides how their work is carried out. Trustee - Holds property on behalf of another person.

8. Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia 18-7 Categories of agents Special - i.e. appointed for a particular task. General - i.e. appointed for all normal matters. Universal - i.e. appointed for all acts principal can do, e.g. Power of Attorney.

9. Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia 18-8 Authority of an agent Actual Authority - Express (written/spoken) - Implied (by action) Apparent Authority (Ostensible Authority) - Authority agent has from the viewpoint of the third party, with whom the agent is dealing.

10. Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia 18-9 Duties of an agent To follow the principal’s instructions To act personally To exercise reasonable skill and diligence To act in principal’s best interest Not to make a secret profit Not to divulge confidential information To keep proper accounts

11. Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia 18-10 Rights of an agent To receive remuneration for work performed To be indemnified against all losses and expenses incurred while carrying out principal’s lawful instructions To a lien (i.e. a right to retain possession of principal’s property) until liabilities satisfied To stoppage in transit (before received by principal)

12. Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia 18-11 Liability of an agent to principal  If agent - fails to follow instructions - acts in a negligent matter  If a loss is incurred

13. Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia 18-12 Liability of agent to third party Name & existence or existence of principal disclosed - Act outside authority (i.e. breach of warranty)  Acts on behalf of someone who has not given authority (unless ratified), or  Exceeds authority (unless ratified) - Non existent /unascertainable principal - Agent agrees to be liable - Usage/custom make agent liable Existence of principal not disclosed - Agent bound Torts committed while acting within actual or apparent authority

14. Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia 18-13 Liability of agent to third party Tort committed by an agent acting within the actual or apparent authority.

15. Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia 18-14 Doctrine of undisclosed principal If the agent acts as if he/she is the owner by not disclosing agency then the principal can later reveal agency agreement and can sue and enforce the contract. If third party discovers there was an agency agreement, he can then sue the principal (as well as the agent) for breaches of the contract.

16. Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia 18-15 Termination of agency By the acts of the parties - By performance of the agency - With frustration of the agency agreement - By mutual agreement - By revoking the authority of the agent (ineffective to third parties until advised) By the operation of Law - By death of either party - By bankruptcy of principal - By bankruptcy of agent - By insanity of either party

17. Copyright  2003 McGraw-Hill Australia Pty Ltd. PPTs t/a Fundamentals of Business Law 4e by Barron & Fletcher. Slides prepared by Kay Fanning. Copyright © 2000 McGraw-Hill Australia 18-16 Types of agents (Statute Law) Factors/mercantile agent - Goods in agent’s possession to sell or use for borrowing Del Credere agent - Guarantees payment for goods sold (therefore higher commission) Partners - Principals/agents for each other Broker - Buys/sells goods without possession Real estate agent - Sells/leases vendor’s land; finds property for sale/lease Travel agent - Sells principal’s products; receives commission based on sales; organises principal’s travel arrangements Company director - Agent of company