This relationship that exists between principal and agent is appropriately called the "agency. The law of agency permits individuals to hire others to do their job, sell their merchandise, and purchase property on their behalf as if the principal were there in person.
The principal can give the agent authorization to perform several duties or the agent can be curtailed to do particular tasks. No matter what the tasks are, the authority given to the agent is representative of the principal and the principal's control. The official stipulations of a particular principal-agent relationship are generally specified in a contract. The principal-agent relationship consists of any consenting and capable parties for the intent of performing any legal undertaking.
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Determination of commission disputes. Important Notice to Complainants. Important Notice to Complainees. Notice of inquiry hearings. Inquiry Hearing. General Etiquette for Inquiry Hearings. Recent Inquiry Hearing Results. New Scheme for Disciplinary Cases. CPD Scheme. Contents What Is the Purpose of an Agent? How Is an Agency Relationship Formed? How Is an Agency Relationship Terminated? Jose Rivera Managing Editor Editor.
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Sexual Harassment. Employment Contracts. Wages and Overtime Pay. Employment Discrimination. Workplace Disputes. The relationship between an agent and a principal is a contractual one. Therefore, rights and duties of the agent and principal are in accordance with the agency contract. To establish an agency, there must be consent of both the principal and the agent, although such consent may be implied rather than expressed.
The written authorization by which principal appoints another as his or her agent and confers upon the agent the authority to perform certain specified acts or kinds of acts on behalf of the principal is often the power of attorney but can be any type of contract or employment or assignment agreement. Thus, one appoints a real estate agent; one employs an attorney; one hires an administrative assistant; one executes a durable power of attorney.
All these are forms of creation of agency. The relationship of principal and agent can be terminated only by the acts or agreement of the parties to the agency or by operation of law. An agent cannot delegate his or her authority and have services performed by a subagent without express permission from principal unless permission can be implied from the nature of the business or custom. In a dual agency, an agent represents both buyer and seller in a single transaction and carries fiduciary responsibilities to both principals.
The mistake of an agent acting as a dual agent becomes a mutual mistake of fact by both principals. This prevents one principal to make the other principal liable for the mistake of the agent.
However, knowledge or notice to a dual agent is not imputed if the agent acted adversely or fraudulently. Dual Agency is only permitted with the informed and voluntary consent of both the buyer and the seller. Herdan v. Hanson , Cal. An employee is the agent of the employer and in performing acts within the scope of work, is acting on behalf of the employer.
An independent contractor can also be the agent of the principal, again, performing tasks within the scope of specified authority. Most courts impose a fiduciary duty of agency upon employees and a more limited fiduciary duty upon contractors, often relying on the employment or contracting agreement to determine the scope of the duty and agency.
A great deal of law has dealt with whether other types of professions, most particularly stock brokers, are held to fiduciary and agency duties to their clients, with the crash of resulting in shocked reactions when many people discovered that their brokers were not considered their agents. They achieved this status by fine wording in their retention agreements indicating that they were not acting as agents.
Lesson: read the contract. It is important to understand how broad agency can be. If one hires a contractor to rebuild the kitchen, he or she will hire numerous subcontractors plumbers, electricians, etc. See our article on mechanics liens. Any limited liability entity must have agents to act for it. That is true of corporations, limited liability companies and limited partnerships. Usually those agents are managers, directors, officers and employees.
All have a fiduciary duty to the entity, can bind the entity, and are subject to the corporate opportunity doctrine. In reality, the above are only a small sampling of the myriad agency relationships that can be created. Almost all of us are both principals and agents in a dozen or more relationships all the time-if you work or are an independent contractor, you are an agent.
If you are an officer of your church or a community group, you are an agent. If you employ an accountant, a nanny, a secretary or are on the board of a little league team, you are a principal with agents reporting to you.
It is an inherent part of social and legal life. And there are as many additional types of agency relationships as there are conceivable delegation arrangements between people and between people and entities. Such a relationship is based on an agency contract. The rights and duties of the agent and principal are in accordance with the express or implied terms of the contract.
With the exception of implied agency discussed below, to create an agency, the consent of the agent and the principal is necessary. The principal must intend that the agent act for him or her, the agent must intend to accept the authority and act on it. The intention of the agent and the principal must be either in express terms of the contract or can be inferred from the conduct of the parties. An agency relationship can arise only at the will and by the act of the principal.
Existence of agency is always a fact to be proved by tracing it to some act or agreement of the alleged principal. Note that there are two types of agency: 1 actual, either express or implied , and 2 apparent. The relationship of an agent and a principal may also arise by estoppel, necessity or operation of law.
In transactions conducted by parties through an intermediary, whether an agency relation has been created depends on the intention of the parties. In such cases, terms used to designate the capacity of the intermediary in the written instrument attending the transaction are not always conclusive.
Factors to be considered in determining if there is an agency and which party is the principal of the intermediary include the duties of the intermediary, the exercise of such duties, and the personfor whose benefit they are being performed. Carr v.
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