LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CHAPTER 21 Agency Law Creation and Operation of Agencies Agency Duties

LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 21 SLIDE Creation and Operation of Agencies GOALS Understand the agency concept Appreciate the scope of agency authority

LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 21 SLIDE 3 WHAT IS AN AGENCY? Principals Agents

LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 21 SLIDE 4 CHECKPOINT Define agency.     

LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 21 SLIDE 5 SCOPE OF AN AGENT’S AUTHORITY Creation of authority Express grant of authority Implied grant of authority Apparent authority Ratification

LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 21 SLIDE 6 CHECKPOINT List the ways in which agency authority can be created.     

LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 21 SLIDE Agency Duties GOALS List the duties of an agent List the duties of a principal Identify when an agency is terminated

LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 21 SLIDE 8 WHAT ARE AN AGENT’S DUTIES? Duties owed the principal Loyalty and obedience Reasonable care and skill Confidentiality Accounting Duties owed to third parties Exceeding the scope of authority Principal’s lack of capacity Liability due to an undisclosed principal

LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 21 SLIDE 9 CHECKPOINT What are the duties of an agent to the principal?     

LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 21 SLIDE 10 WHAT ARE THE PRINCIPAL’S DUTIES? Duties owed the agent Duties owed third parties

LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 21 SLIDE 11 CHECKPOINT What is a principal’s main duty to an agent?     

LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 21 SLIDE 12 HOW IS AN AGENCY TERMINATED? By unilateral action of a party By agreement By operation of law

LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 21 SLIDE 13 CHECKPOINT Name the three general ways in which an agency may be terminated.     

LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 21 SLIDE 14 PREVENT LEGAL DIFFICULTIES If you are a third person dealing with an agent you should verify the extent of the agent’s authority directly from the principal. If you are uncertain about the authority or honesty of the agent, make payment by a check payable to the principal. Continued on the next slide

LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 21 SLIDE 15 PREVENT LEGAL DIFFICULTIES If you are an agent, when you sign anything for your principal, make it unmistakably clear that you are signing as an agent. Always write the name of the principal first, and then add “by” and your signature followed by the word “agent.” If you exceed the scope of your authority and that injures the third party, you may be liable for that injury. Continued on the next slide

LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 21 SLIDE 16 PREVENT LEGAL DIFFICULTIES If you are a principal, remember that your agent’s acts become your acts. Use care in selecting agents. If you discharge your agent, protect yourself against apparent authority by notifying those the agent dealt with in your name and publicizing the discharge in newspapers of general circulation in the area. Continued on the next slide

LAW for Business and Personal Use © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 21 SLIDE 17 PREVENT LEGAL DIFFICULTIES As an agent, you must be loyal to your principal, maintain confidentiality, exercise reasonable care and skill in obeying all proper instructions, and provide accountings as required. If you handle your principal’s money or other assets, you should keep them separate from your own.