2What is agency law?Area of law dealing relationships created between two parties in which the principal gives authority to an agent to act of the principal’s behalf in business transactions with a third party.
3Agency Definitions Principal Agent Third party Individual who gives authority to the agent.AgentIndividual employed by principal to work with the third party.Third partyThe person or company whom the agent deals with on behalf of the Principal.
4Types of Work Relationships Principal-Agent Relationship“Genuine” agency relationshipAgent has conducts business on behalf of the principal (it is as if the principal has acted)
5Types of Work Relationships Proprietor-Independent ContractorProprietor is an individual or business that hires someone to perform a taskIndependent contractor (plumber, electrician, lawyer, etc.) works for the proprietorIndependent contractor cannot act on behalf of proprietor without expressed permission
6Types of Work Relationships Master-Servant RelationshipsA master is a person who has the right to control the actions of another personActions include where to work, what time to arrive at work and tasks to complete at work.The person performing the actions is the servantAt times, the interactions between employer-employee are considered to be master- servant
7Actual Authority Express Powers Implied Powers If the principal intentionally gives express and implied powers to the agent to act for him/her, the agent possesses actual authority.Express PowersResponsibilities of the agent are written or spoken.Implied PowersResponsibilities created by the agent’s actions.
8Apparent Authority Apparent Authority Also called, agency by estoppel. Created by law or circumstance.Occurs when a principal, intentionally or negligently, causes or allows a third person to believe that an agency relationship exists, when there is no express agency.Principal remains liable for the agent’s actions.
9Types of Agents General Agent Special Agent Subagent Given authority by principal to perform a VARIETY of tasks.Special AgentAuthority restricted to certain, specific tasks.SubagentAn agent appointed by another agent with the knowledge and consent of the principal.
10Types of Agents Agent’s Agent Co-agents Partially Disclosed Agent An agent appointed by another agent without the knowledge and consent of the principal.Co-agentsTwo or more agents working together.Partially Disclosed AgentGiven authority to work with a third party but forbidden to reveal identity of the principal.
11Types of Agents Gratuitous agent Agent that works for free No contract exists between agent and principalAgent can terminate relationship at any time
12Duties of Agent to the Principal An agency relationship is fiduciary in nature; a good faith relationship based on trustAgent must protect the interests of the principal
13Duties of Agent to Principal Duty of loyaltyDuty of confidentialityDuty to abide by all lawful instructionsDuty to act with reasonable careDuty to account for funds
14Duties of Principal to the Agent CompensationPayment for services renderedReimbursementPayment for expenses incurred by the agent on behalf of the principalIndemnificationPayment for losses incurred by the agent on behalf of the principal
15Duties of Principal to the Agent CooperationPrincipal must allow agent to perform his/her tasksPrincipal must not make agent’s job difficult or impossible to perform
16Termination of Agency By operation of law: Death of principal or agent Either party becomes insaneBankruptcy of principalDestruction of subject matterAgent’s objective becomes illegal
17Termination of Agency Fulfillment of the agency purpose Mutual content The agent completes his/her taskMutual contentBoth agent and principal agree to end relationshipExpiration of timeOnly applies if the agent is contracted to perform duties within a certain period of time