The Nature of Agency Simulation

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The Nature of Agency Simulation
Chanel Mitchell
January 16, 2012
Dr. David Tiffany

When starting a business, one usually focuses on the immediate needs of the company and can forget the risks that can occur. Employees can be that risk. An employee is working for your organization and that means they are representing your organization as well. Anything they do can affect your company in both negative and positive ways. For example, if an employee is adept at keeping track of inventory and handling the day to day operation of the company it will give you, the owner, the time needed to deal with more pressing issues. However, if that employee frequently makes mistakes he or she can cause stress not only internally but externally too. The Nature of Agency video gives more insight into this problem. An employee at Quick-Takes signed a lease causing a contract to be formed between them and another company named Non-linear Pro. The equipment received because of this contract did not operate correctly and Quick-Takes immediately stopped payment. Non-linear pro considered this a breach of contract and are suing Quick-Takes for breach of contract. The question is “Was this contract really formed between these two parties because of the actions a one employee?” The answer to the above question is, yes. A contract was formed the minute Janet, a Quick-Takes employee, signed her name to the lease the equipment. Although the owners of Quick-Takes would like to think her signature is not binding, it was. This contract was binding for two reasons. First, is because Janet was an agent of Quick-Takes and that gave her the authority to act on their behalf. For further clarification, an agent is someone who officially represents someone else in business. In this case Jane was representing Quick-Takes, the principal, by signing the leasing agreement. Second, is because Quick-Takes owners gave Janet implied authority in this situation. Hal, one owner, told the Non-Linear...
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