The Nature of Agency

Topics: Contract, Gentlemen's agreement, Business law Pages: 2 (385 words) Published: July 3, 2011

The Nature of Agenc

The Nature of Agency
A contract agreement is essential when two or more parties decide to do business. Even though verbal contracts is considered legal, companies or individuals involved in the contract negotiations takes the risk of only hearing what they want to hear. According to the video, The Nature of Agency (Cheeseman, 2010), the question was asked by a partner of Quick Takes Video, how can an employee sign a binding contract with Non-Linear Pro without the authorization from the owners. In the video, the owner of Quick Takes Video informs the salesman to make all arrangement with his employee. At that point, the owner put himself at risk by allowing the salesman to assume his employee has the authority to finalize contracts. As an owner with eight years’ experience in contracts agreements, he should have known not to allow any assumption during verbal agreements. At the very least, he should have made it clear; any final contract agreements can be finalized only by the owners of the company. The video also acknowledges the female employee has some implied authority. Under this concept, the employee understands her role when buying supplies for the company. She should also know, just because she can buy supplies, this does not give her the authority to bind the company into a contract. With this understanding, she should have informed the salesman, whatever agreements made between them; the final contract can be signed only by the owners of the company. During their contract agreement negotiations, the owner of Quick Takes Video had the opportunity to inform the salesman and his employee the limits of his employee’s authority. By not doing so the owner gave the impression to the salesman that the employee had an apparent authority. By misguiding the salesman, the owner gave the impression the employee had implied or apparent authority. As for Non-Linear Pro, to use...
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