business law

Topics: Contract, Agency, Agency law Pages: 92 (31649 words) Published: December 25, 2013

Text Reader

Agency and Employment Law
 Dr. Jay-D Olivier

Diemen, Haarlem, Rotterdam
Course Year 2010-2011
 Term 5

Internal publication
INHOLLAND University of Professional Education
International Business Management
Dr. Jay-D Olivier (BA Law, MA, D. Law, Ph.D)


Agency Law 3

Principal's Duties to the Agent 18 Liability for Agency Contracts 30 Comparative Employment Law 49 Employment Discrimination 68 Strategies for Prevention of Sexual Harassment 87

This Reader is compiled by Dr. Jay-D Olivier based on West’s Business Law (Clarkson, Miller, Jentz and Cross) and other material together with legal opinions written by Dr. Jay-D Olivier based on legal sources and own experience and research. This material is for educational purposes only and in accordance to the Fair Use Doctrine with relation to copyright and use.

Agency and Employment Law

Qui facit per alium facit per se. He who acts through another acts for himself. This simple Latin phrase provides the keystone upon which the mutual obligations of agency law rest.

Agency is a legally recognized relationship that allows an attribution of one person’s behavior to another. This carryover process is two-sided in that both benefit and burden inure to the parties involved in the agency relationship.

Under the basic doctrine of agency, the principal is allowed to reap the beneficial harvest of the agent’s actions made on his or her behalf. For example, assume an agent has agreed to be paid a set salary of $100 for selling certain kinds of goods. The principal gets to keep the net profits from that agent’s selling activities, be they €100 or €1,000,000. This net gain is what allows the use of agency theory to maximize one’s efficiency through the actions of others.

Exponential growth of most any sort of enterprise is almost always directly tied to effective use of the talent of others through agency law. There are some limits on this ability to designate others to act on one’s behalf based on uniqueness of personal services or on public policy grounds that forbid use of agents, such as voting or serving a criminal sentence. As a practical matter, business as we know it today simply could not be conducted on any scale beyond sole proprietorship without extensive use of agency relationships.

One of the fastest growing areas of management specialization in today’s business environment is risk management. This area generally concerns business financial responsibility for exposures to specified contingencies or perils. Included in these perils are the acts of the agents for which the principal may be liable. The ironic aspect of all this is that the very same people who help a business grow can lead that same enterprise to financial ruin.

In an agency relationship between two parties, one of the parties, called the agent, agrees to represent or act for the other, called the principal. The principal has the right to control the agent's conduct in matters entrusted to the agent. By using agents, a principal can conduct multiple business operations simultaneously in various locations. Thus, for example, contracts that bind the principal can be made at different places with different persons at the same time. A familiar example of an agent is a corporate officer who serves in a representative capacity for the owners of the corporation. In this capacity, the officer has the authority to bind the principal (the corporation) to a contract. Indeed, agency law is essential to the existence and operation of a corporate entity, because only through its agents can a corporation function and enter into...
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