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Legal Aspects of Business

   

Added on  2020-01-23

12 Pages4028 Words406 Views
Legal Aspects ofbusiness1

TABLE OF CONTENTSIntroduction......................................................................................................................................3Main part..........................................................................................................................................4Types of agent authority based on the consent............................................................................4Types of agent authority not based on the consent......................................................................7Conclusion.....................................................................................................................................10References......................................................................................................................................112

INTRODUCTIONAgency in English law is a vital part of commercial law which describes necessary normsfor the smooth functioning in business entities. Legal relationship between agent and principal isgoverned as per the agency agreement and legal regulation (Forstenlechner and Lettice, 2008).Agency law is important because it provides description about the rights and duties of principalas well as agent in order to promote fairness and prevent unfair actions. In legal terms, agency can be defined as consensual relationship between two parties. Inthis relationship, principal provides authority to their agent to act on their behalf while dealingwith the third party. This relationship is fiduciary in nature and supported by contractual norms.Main features of agency are agreement, implication (based on the practices of custom and trade)and conduct of the principal (Goldman, 2013). Agreement of agency creates relationship between three parties i.e. agent, principal andthird party. Therefore, agency agreement deals with the three different relationships: betweenagent and principal, principal and third party as well as agent and third party.3Illustration 1: Agency relationships(Source: )

Present study is focused on the evaluation of different types of agent authority byconsidering the aspect of presence and absence of consent. Study will include the description oftypes of authority with its main features. This evaluation will be supported by previous case lawsfor the better understanding (Kantarelis, 2008). MAIN PARTIn accordance with the provisions of agency law, agents are required to act within thescope of authority that are conferred by their principal (Klass, 2010). This authority createsobligation for the principal for the actions of agent with the third party (Lockwood, 2011).Mainly, there are two types of authority in agency on the basis of consent of parties. Types of agent authority based on the consentActual express authorityDefinition and main featuresActual express authority can be defined as the power of agent to act on the behalf ofprincipal (Forstenlechner and Lettice, 2008). This authority is expressly granted through theagreement of agent and principal. This authority may be general or special in nature. Actualauthority is said to be exist in situation where words of principal is the rational cause of beliefthat agent is empowered to do such act. This authority can be provided in either oral or in awritten manner (Manuel, 2011). In accordance with the provisions of agency law, writtenauthority is comparatively preferable. It is because; there is absence of evidence in verbal form insituation of dispute. Scope of actual authority can be determined through oral and written agency agreementof principal and agent. In addition to this, custom of relevant trade and course of dealing inparticular profession can also be considered (McKendrick, 2015). Use of actual express authorityby agent creates contractual rights and obligations between third party and principal. For thebetter understanding of actual express authority, following cases can be considered:CasesIreland v Livingstone [1872] LR 5 HL 385: In this case law, Livingston who is aprincipal and Ireland, who is an agent, had decided for the procurement of 500 tons ofsugar for shipping of maximum number of place in UK. This procurement can be reducedor increased by the margin of 10%. However, in the market of Ireland, procurement of4

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