Legal Aspects of Business

This document discusses the legal aspects of business, focusing on the responsibilities of agents and principals. It emphasizes the importance of following legal regulations and guidelines for smooth business operations. Topics covered include duties of agents, such as following instructions, performing work with care and skill, avoiding conflicts of interest, and more.

Legal Aspects of
Business

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................2
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Legal aspects of business are that kind of important aspects that is necessary for a business to
grow. It gives a systematic way of performing all kind of legal activities which help a business to
achieve its objectives and goals. Such kind of aspects helps in providing an effective form of
decision making which results into smooth and faster growth of an organisation. These types of
laws are formed by following proper procedure within a parliament. Rules and regulation are
mandatory to be followed by all organisations doing business. Scope of such aspects is very wide
and dynamic in nature because of its capacity of identifying those ideas which can have negative
impact over an organisation. An agency law are those laws which are formed which show a
fiduciary relationship within two parties. These laws are there which exist upon a basic rule of
principal and agent relationship. In these types of relationship a principal hires an agent to
perform a particular task on behalf of him. Major responsibility of principal is to keep check and
maintain communication with agent upon each and every action that has been taken by him. This
has to be done by a principal to make sure that task has been accomplished in smooth and faster
way. Such relationship acquires a legal base only when there is existence of a relationship
between principal and agent. Agreement has to be formed between principal and agent. This
agreement can be in written as well as oral form. An agreement is valid only through existence of
contract law and in order to give validity in the eyes of agency law is used. All these laws are
based over a tripartite form of relation, as such relationship exist between employer and
employee. This relationship gives boost to organisational activities for it smoother and better
formation. Tripartite relationship is that relationship which exists when an agent role is to give
services and it has to perform under agreement formed between an agency and principal. In the
file discussion about laws and regulation related to agency is going to be explained. Principal and
agent relationship is also going to be covered. “Through general laws lot of duties are there
which are to be performed by agent and legal incidences are also to be followed. As agency
is there upon contract, due to this reason only some duties comes into force after signing of
contract and some duties are imposed only upon signing of a contract”. Further this is going
to be discussed.
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MAIN BODY
Agency laws are very important kind of rules and regulations which are very important
for a business environment. All the responsibilities given by a principal to an agent has to be
followed by an agent. Such duties are given to agent are prescribed under contract signed by him
with principal (Frolova. and et. al., 2018). These contracts are formed under a time period
specified. All conditions mentioned under this agreement are to be followed by agent. So, that
principal is not effected from liability occurred out of such conditions. It is must to understand
that if an fault has happened through principal in performing of activity. Then principal has to be
held liable for any issue occurred. Various duties are there which are to be performed by agent
and also according to legal framework given under an agreement. Such duties are to be followed
in order to full fill those standards and regulations which is given under agency law.
First duty which has to be followed by agent at the time of accomplishing his task
assigned to him by principal is “Duty to follow instruction given by principal in lawful
manner”. Under this duty an agent has to follow guidelines or instruction that has been
instructed by principal to agent. Requirement should be filled by agent according to the rules
given by principal to them. If due to any reason an agent is not able to follow instructions given
by principal. Then liability has to be bare by principal. Lot of cases are there that is related this
duty of agent. A relevant case law is Dom v Richie. In this a responsibility of taking care goods
has been given by principal to agent. These goods were kept in his warehouse. This task was not
performed by agent as per instruction given by principal to him. His stored the goods with
utmost carelessness which lead to damaged of goods whose loss have to bear by principal. In this
case the judgment passed by court in favour of principal and agent has to bear for all damages
caused to the goods. In a simpler manner this can be understood that it is agent’s duty to do his
work with full responsibility and not with casual attitude. Also these duties are to be followed as
per information provided to agent by principal. It is agent’s duty to conform all this from
principal. So that duty can be performed without facing any kind of legal issues. An contributes
positively for growth of organisation (Lindström. and Hanken, 2018).
.
Second duty that is to be followed by agent towards principal is “Duty of performing a work
with care and skill”. It is very important to understand the situation by principal before
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performing tasks or doing work. This is very necessary if positive result has to be gained by the
company. In a simple way it can be understood as while a task is being performed at that very
point of time proper care should taken and skills has to used in appropriate manner. As this going
to play an important role in gaining faster and better result. Due to any circumstances or
situation, if an agent is not able to perform his duty. Under such situation principal is going to be
held liable for it. If an principal becomes insolvent the under such case duty is not going to be
applicable over agent. Relevant case regarding this duty is Gamon v Yekky. Facts of the case is
as follows an agent was given a responsibility to deliver all information regarding product
launched in market to principal but agent instead of doing so , performed his duty in very
careless way. Upon analysing the facts of all situation decision was passed sating that default
has been performed on part of agent (Maresova,. and Klimova, 2016.). Task as not performed by
him in appropriate manner. Duties of such kind are bound to be followed by the agent.
All duties are not limited only to those circumstances which are presented above. Certain
duties are there which are required to be followed for solving of conflict arising between agent
and principal. Other duty that has to be followed by agent towards principal is “duty to avoid
any kind of conflict between agent and principal”. Under such type of duty certain
circumstances are there in which an agent has a motive of earning interest out of hidden profit
and misuses his power that has been given to him by agent. For example an agent has been given
responsibility of selling the property and responsibility of selling it is given by principal to him.
As he is earning secret profit from it, which becomes reason for conflict among both parties . It
is duty of agent to disclose profit earned to principal.
Relevant case related to this situation is Ron v Ben; in this case it was found by the court
that one product has been purchased by a customer. According to the instruction given by Ron, it
is required by agent to reveal information information about the product by him. Agent did so
but did not disclose secret profit made by him out of purchase. This later on resulted in to
conflict of interest on part of agent with principal. Court held Ben liable for breach of duty to
avoid conflict of interest. So, it is observed from the situation of case mentioned above that
conflict of interest has resulted into negative impact over relationship of agent and principal.
It should be understood by agent that whenever he is going to perform any duty as
guided by principal, it is and is going to change automatically results into positive outcome.
Both agent and principal has to discuss all necessary points regarding agreement. This going to
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lead towards smooth and efficient working of organisation. It helps in raising standards set up by
principal for his company or organisation. This makes very important to follow duty mentioned
above by the agent of the company and should not earn any secret profit or commission without
its discloser to principal
Another duty of agent that has to be followed by him towards principal for accomplishing his
task is “Duty of account”. Under this duty it is very important to be followed by an agent rules
set in agreement regarding account. Assurance is required to keep about any of the
circumstance; because of which a principal is willing to have a view over accounts maintained
by agent and it is the duty of agent to show accounts to principal when asked by him. No
personal profit has to be made with that of organisation as this may lead towards ciaos among
agent and principal. Due to these problems arises. The duty is not limited only to this it is also
important that duty delegated must return to principal even after the problem occurred under
relation of principal and agent. Under various occasions number of roles and responsibility is
delegated to agent. Due to this, delegation of duties directly or indirectly increases the amount of
burden upon the agent. Another duty has been given to agent which is” duty not to delegate
work”. It is those general rules and regulations that is explained by an agent who is not given
authority to delegate work to some other agent or to nay sub agent under any circumstances.
Without taking full consent from the principal a duty cannot be delighted to any sub agent and
consent given should be legalised under eyes of law (Gordon, 2016). For instance an agent hires
a sub agent to perform his duties upon his behalf and while performing its duty problem is
created by an agent. All loss is going to be bear by agent because prior permission is not taken.
Relevant case related to this duty is“James Mac and co v Jennet”. In this case it was decided
by court that no agent is allowed to hire any employee or a sub agent to work upon his behalf
without gaining any legal permission from principal to hire a sub agent. Also, in another case
that is between “Ben v Tom, which is related with distribution of authority to an agent. In this
agent was hired to perform task on behalf of agent. It was observed in the case that important
decision regarding selling of property has been taken by the partner of agent. So, upon analysing
situation and all the facts of case, it is decided by court any loss happened to principal has to be
paid by agent. Decision was taken without permission of principal.
Final and most important duty that is required to be followed by agent is related to “Duty not to
accept bribe”. An agent has to work as per requirement of principal. Also agent should not
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forget that no decision should be taken which creates problems for him. In a simple way this
can be understood as a decision that has been taken in order to earn profit and has not been
disclosed in front of principal by agent. In such case principal can take legal action against
agent. Situations of such types always results in to breach of agency law and agreement
formed under it. An example is give for understanding it surpassingly a principle has given
the property to agent to use it. For his own purpose but agent misused it and planned to earn
rent from it. In such situation principal was allowed to file case against agent for not
disclosing any information regarding use of property for such purpose. But, if agent takes
prior permission and principal gives his consent in positive manner, then under those
circumstances. Then agent cannot be personally held liable for it. Regarding this a relevant
case is as follows Boket Sea Fishing and Ice Ltd v Ansell, (1888), in this case the director
has been performing its duty of directors in two different organisations. This was creating
direct or indirect impact upon business organisation because reduction in profit is there at
significant level. Having an over view of case the judges in this landmark case decided that
it is the duty of agent to inform both the principal about profit he has earned. So, looking at
the case, it is held by court that loss faced by principal has to be paid by agent only. These
are certain duties and responsibilities which are to be followed. Also, should be considered
by agent at the time of taking of the decision. If in any of the circumstance, they fail to
follow these rules then legal actions can be taken upon them (Reißmann, Thrän. and
Bezama., 2018).
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CONCLUSION
From the above file, it is clear that legal aspects of business is an very important thing
which deals with any of the business requires agent and principal for smooth functioning of an
organisation or business. It is an important aspect of business. It helps in attaining goals and
objectives for an organisation. Relations formed between principal and agent, should be able to
make understand that agent has liability of performing a task that has been assigned by principal
to him. It is the responsibility of principal to make sure that an agent is guided properly about
performing task and also situations related to it. Agent is responsible for performing all work in
a systematic manner and if he does not do so then he can be held liable by the principal for it. In
simple way, agent helps in reducing of workload form principal, which allows them to focus
over other work because of which desired results can be achieved in better manner.
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REFERENCES
Books & 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.
Lindström, J. and Hanken, C., 2018. Wearable Computing: Security Challenges, BYOD,
Privacy, and Legal Aspects. In Wearable Technologies: Concepts, Methodologies, Tools,
and Applications (pp. 1043-1067). IGI Global.
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.
Gordon, D. G., 2016. Legal Aspects of Cloud Computing. Encyclopedia of Cloud Computing,
pp.462-475.
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.
Loc, H. H. and et. al., 2018. The legal aspects of Ecosystem Services in agricultural land pricing,
some implications from a case study in Vietnam's Mekong Delta. Ecosystem Services. 29.
pp.360-369.
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