Agency Relationships

Employee Vs. Contractor Relationships
1. Contractor
  1. Works for and receives payment from an employer but working conditions and methods are not controlled by the employer. A contractor maybe an agent.
2. Employee
  1. Acts on the owners behalf
  2. Work Conditions controlled by employer
  3. Employment laws apply
A relationship between two parties. One of the parties, the agent, agrees to represent or act for the other, called the principle.
1. Formed by voluntary consent and agreement between the parties
  1. Individuals possess the mental capacity required by law to enter into a contract.
  2. Express or implied agreement (oral or written) that the agent will act for the principle and the principle agrees for the agent to do so.
  3. Ratification: An agreement made by a person not an agent or acting outside their scope of authority.
  4. Estoppel: A principle causes a third person to believe that another person is their agent and the third person deals with the supposed agent.
An Agent's Duties
1. Notification: Communicating all matters that come to the agents attention concerning the subject matter to the Principle.
2. Performance: the agent uses reasonable diligence and skill performing the work.
3. Loyalty: Acting soley for the benefit of his or her principle.
4. Obedience: Following all lawful and clearly stated instructions of the principle.
5. Accounting: Keeping and making available to the principle an account of all property and funds received and paid out on behalf of the principle.
Principal's Duties
1. Compensation: Payment to the agent for service in a timely manner.
2. Cooperation: Not interfering with the agent's abilities to perform their duties
3. Reimburses agent for reasonable costs incurred
4. Provide safe working conditions and equipment.
Agent's Authority
1. Express Authority
  1. Declared in clear, direct and definite terms. Power of Attorney and a notary public are examples.
2. Implied Authority
  1. Doing what is reasonably necessary to carry out express authority and accomplish objectives.
3. Apparent Authority
  1. Causing a third party to believe an agent has authority to act
TERMINATION OF AGENCY can occur when:
1. A time period agreed upon during which the agency relationship exists, expires.
2. The agent accomplishes the objective they were hired for.
3. An agency relationship is created to be terminated on the happening of a specific event.
4. Mutual agreement by both parties to terminate the contract/relationship.
5. One of the parties decides to terminate.
Ratification of Agency
1. Occurs when the principle affirms an agent's unauthorized act.
2. Both the principal and third party must have legal capacity to engage in the transaction
3. A principal who ratifies a contract without knowing all the facts can cancel the contract.
4. The prinicpal's affirmation occurs before the third party withdraws from the transactions

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Agency Relationships

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