Business Consumer Law Study Guide
Law Midterm
Chapter 13- The Agency Relationship (Pg. 297)
• Agency: a relationship that exists when one party represents another party in the formation of legal relations Pg. 298 • Agent: a person who is authorized to act on behalf of another • Principle: a person who has permitted another to act on her behalf • Agency is a common relationship as is shown in the following examples: o A sports agent negotiates a multimillion-dollar deal on behalf of a hockey player o An insurance agent sells fire and theft insurance on behalf of several insurance companies o A travel agent sells tickets, cruises, and vacation packages on behalf of carriers and hotels o A booking agent negotiates fees and dates on behalf of entertainers ▪ In each case, the agent is acting for someone else (the principle) and is doing business on that persons behalf. ▪ This kind of relationship is essential to the success of the principal, who may not necessarily have the expertise to handle the given matter
Agency Defined: o The fact that parties use agents instead of dealing with each other face to face can result in complications and questions. o There are two key relationships at play in an agency situation o The first is the relationship between the agent and the principal. o This aspect of agency raises numerous questions, such as the following: ▪ How does A become an agent? When is one person considered to be an agent for another? ▪ What is the authority of A? What types of transactions can A enter on behalf of P? ▪ What are A’s Duties? ▪ What are P’s obligations?
o The second relationship in agency is between the principal and the party with whom the agent does business. o Such business are known as outsiders because
Chapter 13- The Agency Relationship (Pg. 297)
• Agency: a relationship that exists when one party represents another party in the formation of legal relations Pg. 298 • Agent: a person who is authorized to act on behalf of another • Principle: a person who has permitted another to act on her behalf • Agency is a common relationship as is shown in the following examples: o A sports agent negotiates a multimillion-dollar deal on behalf of a hockey player o An insurance agent sells fire and theft insurance on behalf of several insurance companies o A travel agent sells tickets, cruises, and vacation packages on behalf of carriers and hotels o A booking agent negotiates fees and dates on behalf of entertainers ▪ In each case, the agent is acting for someone else (the principle) and is doing business on that persons behalf. ▪ This kind of relationship is essential to the success of the principal, who may not necessarily have the expertise to handle the given matter
Agency Defined: o The fact that parties use agents instead of dealing with each other face to face can result in complications and questions. o There are two key relationships at play in an agency situation o The first is the relationship between the agent and the principal. o This aspect of agency raises numerous questions, such as the following: ▪ How does A become an agent? When is one person considered to be an agent for another? ▪ What is the authority of A? What types of transactions can A enter on behalf of P? ▪ What are A’s Duties? ▪ What are P’s obligations?
o The second relationship in agency is between the principal and the party with whom the agent does business. o Such business are known as outsiders because