Legal Aspect of Business: Agency Laws and Duties of an Agent

This document discusses the legal aspect of business, specifically focusing on agency laws and the duties of an agent. It explains the importance of following lawful instructions, the duty of care and skill, avoiding conflicts of interest, maintaining proper accounts, and not delegating authority without consent. Several relevant case laws are also mentioned to provide a better understanding of these duties.

LEGAL ASPECT OF
BUSINESS

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
CONCLUSION...............................................................................................................................5
REFRENCES...................................................................................................................................6

INTRODUCTION
Legal aspect of business are those types of business aspects which are there to provide
stability in an business environment. Such policies are there to provide stability in a business and
forms policies which plays an important role in growth of a business. These aspects provide a
legal frame according to which a organisation has to work. Agency law are those types of laws in
which an contractual form of relationship exist between principal and agent. In such laws an
principal assigns another person known as agent to act on his behalf. An tripartite relation exist
between both the parties. In this file duties of agent is going to be defined in context to this
statement'' an agent is subject to a number of duties imposed by general laws as legal
incidents of the agency relationship. Where agency is contractual, some duties my take
effect as implied term in the contract, or be modified by its express terms. Certain duties
are imposed on the agent automatically''.
MAIN BODY
An agency law are those kinds of laws under which a relationship exist between agent
and principal. In such condition an agent has to act on behalf of principal. In law of agency a
legal relationship is present in which an contract is formed between agent and principal. This
gives an legal obligation to principal for assign agent to act for principal towards third party. A
tripartite relationship is there which defines relationship of employer and employee. An agency
is recognised in as an important part in existing social environment. These laws are very diverse
in nature and plays an important functions in both public and private law. An agency is formed
through through expressed and implied manner (Weber. and Studer, 2016). Under expressed
manner an agent is appointed through expressed agreement. This agreement can be oral or
written. Under implied manner an agent is formed by estoppel which means agreement is not
there but an oral conformation upon role of agent is there. No agreement is singed. A fiduciary
form of relationship exist between principal and agent. An agency is formed in order to full fill
certain objective or goal decided between principal and agent. Termination of an agency can
only take place when there is violation of any rule given in the contract. Fiduciary duties are the
duties which comes into picture when an interest of a person is put forward and companies
interest is ignored .The duties arises out of reasonable expectation that is done on part of party.
This can also happen when an obligation of full filling other person is there (Frolova, and et. al. ,
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2018). Breach of such duty is done for full filling intrest of close members before that of
company. Also profit earned out of these gains comes under these kinds of breach. In situation of
advantage taken at the time of fiduciary breach then this also comes under this.
Certain duties are there which are mandatory to be followed by agent. These duties are
mentioned under agency laws and cover lot of aspects related to agency. If such duties are not
followed properly then liability of damaged caused due to any violation of duties has to be bear
by principal. Some duties are to be taken into effect after contract comes into existence and
some starts before it. Number of duties are there which are to be followed by agent for
maintaining legality of work given to him by agent. Such duties are explained further (Maresova.
and Klimova, 2016).
These duties are the most important because they help in securing legality of relationship
between agent and principal. Very First duty which has followed by agent is “Duty to follow
lawful and reasonable instruction of principal”. Under this duty an agent has to follow all
instruction which are given to him by the principal to perform a particular task. This can be
better understood as a mandate that has been given by principal to his agent. Due to any chance
agent is not able to follow instruction given by principal then all the loss occurred has to be faced
through agent himself. Relevant case law related to this is John v Smith in this case the facts are
that driving test has been passed by the claimant. He does not know anything about car. So John
asked Smith to bring him a car which is not damaged from any point or has met with accident.
As it was made clear by John that he does not want a damaged car. Smith brought a car for him
whose bonnet was broken. Still was in good condition. Seeing upon condition of the car John
brought it for forty seven thousand euros. After some time it was discovered that car was not
repaired properly and because of which John has to face loss over it, as he has to get it repair
again. The court held in this case that breach of Duty of following reasonable instruction of
principal has been done. As it was clearly told that agent is not suppose to bring an car that has
met with an accident and duty of agent to take care of the condition of the car which he has failed
to do. Over that condition of the car has not been told by Smith to John. So, because of this only
Smith was held liable for breach of the duty. Also he has failed to follow instructions given by
principal to agent.
Second duty which has to be followed by agent towards principal is that “Duty of care
and skill”. In this an agent is required to use his skills and knowledge in order to perform a task
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in smoother manner. An agent should fully utilised his capabilities and skills as per his capacity.
Skill should be used by him with utmost care. If an agent fails to do so then he is going to
be amount for negligence (Maroušek. and et. al. 2016). This means that work done by him is not
in proper manner or has failed to perform ho duty with carefulness and concentration. It is
considered to be an most important duty because all skills has to be performed by agent and also
negligence done upon his part must be taken care. This duty can be more relevantly be proved
from the case law of “R v Don. In this case it was held by court that breach of duty of care and
skill has been taken place, as Don was given responsibility of taking care of car the has been
given to him by R. Being an mechanic it was responsibility of Don, to repair the car by using his
full skill and knowledge. He failed to repair the car in better way. So, court has held that breach
of duty by agent has lead to breach of fiduciary duty. Such breach is completely related to
intention of the party performing the work. Also upon situation that skills has been used in better
manner or not. So, Don was held liable in this case.
Third duty which has to be followed by agent is “No conflict of interest” under this duty
an agent should not act for more than one principal at a time under situation that he has been
given work already by an principal. This has to be taken care for avoiding conflict upon interest.
If an agent has disclose his duty to be performed to both the principals, then he can act
accordingly. Major objective of this duty is to avoid giving rise to any kind of conflict occurred
because of any gain earned and not disclosed by him (Khamzin. And et. al., 2016). Even if he
disclose his interest then he becomes liable for breach of duty. Under any condition if breach has
taken place then agent is going to be held responsible for it and has to pay all the profit gained
by him. An agent is also no allowed to purchase or rent any kind of property without proper
discloser of it done to a principal about gain made by him. This means that agent is required to
disclose all the facts that is required to be known by him in order to avoid breach of duty. This
cab be better understood in clear manner through this case is Resonse managing Ltd v Jordan
in this case Mr Jordan who is an professional football player and has played as goalkeeper for a
club in Berlin. Now he is willing to play for Duke Football club for which he has needs to for an
contract with them. For this purpose only he asked Mr Ben to act as an agent and help him out
with negotiation. This resulted into Jordan coming into contract of two years with Resonse
managing that is Ben's company. As per the agreement signed by him company wants Jordan to
represent in any contract which is related to any football club in UK . Jordan has to pay 11% of
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his income to his company. Ben was successful in negotiating about the contract of two years
with Duke football club and Jordan got a contract. It was agreed as per the contract that four
thousand euoroes has to be paid to Resonse for providing with work permit. That is required to
play in the UK. In this case it was held by court that Resonse has breach duty of no conflict
interest. As the company is more interested in gaining profit for itself. There is personal interest
of the company at the time of signing of contract because deal of four thousand euros has not
been disclosed to Jordan. So, Resonse is held labial for breach of this duty (Reißmann, Thrän.
and Bezama, 2018).
Fourth duty which has to be followed by agent is “Duty to account”. In these kinds of
duty a agent has to keep account of all the things that has been done by him ans also all the
expenses done by him. If an agent has been given property by his principal or even if that
property belongs to an principal. Then such property has to be kept separate from that of agents
own property. This means that agent has to keep and take care of all accounts that exist on
behalf of the principal. It is his main duty to disclose accounts when principal has requested him
to show. After ending of relationship between agency and principal this duty can go on if
accounts have not been settled by agent. In a simple manner it can be understood that an agent
has to maintain all accounts by himself. As requested by principal to do so. These has to be made
clear to the agent that he is not suppose to keep any part of account with him. This can also apply
to any property given to agent by principal. This is going to be understood with more clarity
through an relevant case law that is “Rayan v Atlo Commerce. Facts of the case are as follows
in this case Rayan is an agent who does work of managing of account for various companies. He
was hired by Atlo Commerce for the purpose of maintaining his accounts and property also. So,
an agreement was signed between Rayan and Atlo Commerce. Under which an clause it was
mentioned that no personal interest should be taken out of any account or property of the
company. Rayan did not followed the clause and started making profit from account of company.
Also he did not show accounts when asked by the company. Soon it was realised by the company
about the breach done by Rayan. So, in this case court held that Rayan is liable for breach of
duty of account. As he tried to made profit from companies money and also did not showed
accounts on time. Another case is there “R v Ella” in this case it was held by the court that right
of claiming of a statement of account is not an relevant form of relief. Such kind of claim can
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also be under certain special circumstances. These can be claimed only when relationship of
parties is such that without this relief, the claimant is not going to be able to assert his legal
rights.
Fifth duty that has been assigned by principal to an agent is “ Duty not to delegate
authority”. Under this duty an general rule is there which says that an agent does not has any
authority or duty of delegating his work to another agent or sub agent, without the consent of
principal (Alexandru, 2016). As its is an clear fact that an agent has be given legalised authority
by principal for handling the work by himself that has been assigned to him. In a contract
between principal and agent it is specified that an agent has to handle all the duty given by him
to through principal. That is why it is necessary for agent to not delegate authority to any other
agent. If due to any reason such breach of duty takes place then liability of such thing is not
going to be binding over the principal. Agent who has done the breach is going to be held liable
for it and also has to bear loss occurred because of this. This is going to be understand in better
manner by this relevant case law that is “John McCain and Co v Pow”. In this case it is held
that unless an authorization has been given by the principal to an agent for delegation of sub
agent to perform a work. An agent has got no right to appoint any person or an sub agent to
perform a work which requires specialised skills and care also. An implied authority cannot be
pleaded because of this an sub agent has affected a sale of account. Agent has sued commission
for this. The court held claim to be negative because agency has not permitted hiring of an sub
agent in an agreement (Amosova, 2016).
CONCLUSION
From the above file it is clear that agency laws are those laws which are there to express
relationship between an principal and agent. An agency is formed in order to perform an activity
on behalf of superior hired them to do so. Also certain duties are there which defines different
aspects of principal and agent relationship. These are related to no conflict of interest under
which an agent is not allowed to work for another agent. Other things covered are delegation of
authority, perform a work with due care and skill. Also reasonable instructions has to be
followed by agent. This is related to fiduciary form of relationship.
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REFRENCES
Books and journals
Weber, R. H. and Studer, E., 2016. Cybersecurity in the Internet of Things: Legal
aspects. Computer Law & Security Review. 32(5). pp.715-728.
Frolova, E. E., and et. al. , 2018. Information security of Russia in the digital economy: the
economic and legal aspects. Journal of advanced research in law and economics. 9(1
(31)). pp.89-95.
Maresova, P. and Klimova, B., 2016. Economic and technological aspects of business
intelligence in European business sector. In Advanced Multimedia and Ubiquitous
Engineering (pp. 79-84). Springer, Singapore.
Maroušek, J. and et. al. 2016. Polemics on ethical aspects in the compost business. Science and
engineering ethics. 22(2). pp.581-590.
Khamzin, A. S. And et. al., 2016. International Legal Aspects of Exercising Refugees Rights in
Central Asia. Journal of Advanced Research in Law and Economics. 7(4). pp.835-841.
Reißmann, D., Thrän, D. and Bezama, A., 2018. Hydrothermal processes as treatment paths for
biogenic residues in Germany: A review of the technology, sustainability and legal
aspects. Journal of Cleaner Production. 172. pp.239-252.
Alexandru, A. C., 2016. Information Security Aspects of Business Continuity
Management. International Journal of Information Security and Cybercrime (IJISC).
5(2). pp.17-24.
Amosova, J., 2016. Some aspects of criminal environment impact on sustainable
entrepreneurship activities. Entrepreneurship and Sustainability Issues. 4(1). pp.17-24.
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