Legal Aspects of Business

This document discusses the legal aspects of business, focusing on the concept of authority in agency law. It explains the difference between apparent and actual authority, the impact on third parties, and the response of courts in such cases. Relevant case laws are also discussed to provide a better understanding of the topic.

Legal Aspects of
Business
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Table of Contents
INTRODUCTION............................................................................................................................3
MAIN BODY...................................................................................................................................3
APPARENT AND ACTUAL AUTHORITY..................................................................................3
Apparent authority affect the position of third parties .....................................................................6
Response of courts in this issue........................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES.................................................................................................................................9
REFERENCES.................................................................................................................................9
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INTRODUCTION
In present scenario, agent are the most important part for the business world because it
allows to take some of the most important decision for the business organisation through which
goals and targets can be accomplished easily. It falls under the category of commercial law where
major role is to deal in the area of quasi-contractual, contractual and fiduciary relation. The
power is given to the agent who takes the decision on behalf of principals and it is assumed that
there is the direct relationship between principal and third party. If agent takes any of the decision
which are not in their capacity, still principal will be liable to bear any of the losses.
Agency law is explained as the law where legal relationship is created by the help of
contract law where principal provides the authority to its agent. Here, agent can act on behalf of
principal. Agent gets the opportunity to deal with third party and take any of the decisions which
are beneficial in context of agent (Boguslavski and et. al., 2019). The main thing which is needed
to be understood is that agent doesn't have the power to take those decisions where authority has
been not given to them and this is how their relation works on daily basis. Agent has been given
three different types of authority and they are express, implied and apparent. In context of the
file, different case laws will be explained and detail explanation will be there on the topic of
authority.
MAIN BODY
The main purpose of giving the authority to another person is just to deal with the
situation and take appropriate decision by looking at the condition. It is necessary for the one who
has been given the authority that they should not misuse the power which has been given to them
because it directly impacts on the performance of principal . Below, there is the detail explanation
about the different authority which is based on consent.
APPARENT AND ACTUAL AUTHORITY
Actual authority: It can be explained as the authority which is generally expressed in
nature. Basically, in this types of authority, it is the responsibility of principal that what are those
works and decision which can be taken by agent on behalf of principal . In any of the situation, it
becomes important for the agent that they must know that what can perform and where they are
not allowed (Ghanavati and Hulstijn, 2015). This types of directions are given through the mode
of verbal communication or even written agreement can be also done easily. It is helpful for
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principal because every activities will be needed to perform by agent just after taking the
permission of principal due to which chances of taking any of the decision of will reduce
significantly. If in any of the situation arises where agent has breach the terms and condition of
the contract then third party can easily ask the question with principal because they will be held
personally liable in this situation. In case of implied authority, agent will required to find that
what are those work which they must do for the betterment of principal or organisation. Here,
ultimate liability will be of principal s and they are needed to understand and check each and
every work which is being performed by the agent because single mistake might create lots of
issues in future period of time for principal . Both, implied and express authorities are of different
nature where it is important for principal to find that what are those situation where problem
might arise for the principal as they are the one who have to deal with liability to pay third
party. One of the famous case Hely-Hutchinson v Brayhead Ltd [1968] discuss about the relation
of agent and principal where court declare the decision that Mr Richards had the authority to give
the indemnity because he was the one who was working on behalf of Brayhead on the post of
Managing director. It is becomes important for principals that they must inform third party about
the agent who will take some of the decision on behalf of principal.
Apparent Authority: It is the situation where principal is held personally liable for any
of the work which is performed by the agent on behalf of principal. Here, if any of the work is
performed by the agent then it is assumed that the work is being performed the principle and as
agent are the one who is representative body of principals. There are number of situation where
agent shows to third party that any of the decisions which are being taken by them are based on
the power which has been delegated to them. If in any of the situation they perform the activity
which are beyond their power then still principals will be the one who will have to pay the
charges for any of the mistake performed by agent (Herlambang and Setyawan, 2018). It is
necessary to have the fiduciary relationship between agent and principal. For example: in
apparent authority principal have give the responsibilities to agent to perform the task in specific
manner but still agents takes the decision of own which create issues for the third party then third
party will sue principal in this situation. But, legal actions can be taken upon agent in this
situation. Apparent authority comes under the situation of implied authority where agent and
principals shares the better form of bonding due to which some of the important decision can be
easily taken by the agent. For example: if in any of the situation principal of the company has
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gone to outside the country and it is important for the agent to take quick decision by looking at
the situation although power has been delegated to them or not as it doesn't matter. In this
situation, it is assumed that decision has been taken by principal. Also, agent will not be held
liable in this situation as decision which were taken by them was just for benefit of principal.
Focus on Apparent authority: It can be said that in apparent authority, agents are given
the opportunity to perform the task as per the prepared contract. Apparent authority is one of the
authority which completely works against the teams motive. If in any of the situation any of the
decisions are needed to be taken then regulatory systems must be considered so that correct
decision can be taken out. The main things which is assumed in apparent authority is that third
party develops the concept the decision which are being taken by third party are based on the
power given to them.Below, some of the relevant cases has been discussed and that are related
with the apparent authority.
Relevant case law to understand estoppel: One of the famous case which has taken
place in the year 1963 which is related with the scene of estoppel. In this case, it came to know
that A was the agent of P who is working on the behalf of P. The deal was taking place between
T and P. They were selling the cotton to T. The the time of loading the product A had informed
that P must negotiate the amount as cotton got burn and party might take legal action in future
period of time. The same thing happen where T was willing to claim the losses which he has to
suffer just because of P and A. Now case was revolving that who will be the ultimate person who
must pay the damages (Kemp, 2018). Here, by looking at the situation the judges of the supreme
court decided that it is the responsibility of P to pay the amount of loss to T. Because it was found
that the deal must have been done between P and T but A did the work which was needed to done
by P. A was not the person who had been clarified for the aim and deal on behalf of P. Here,
express authority was given to him. As A was the general agent in this case it was the
responsibility to buy the product as per the standard set in the market. Therefore, it is the
responsibilities to pay the losses which has been incurred.
Rama Corp Ltd v Proved Tin and General Investments Ltd [1952] 2 QB 147 (QBD):
The case between Rama Corp Ltd v Proved Tin and General Investment Ltd is one of the case
which one of the famous case under the agency law. It is the case which included different results
which is related with the result of agent and principle which plays the crucial role in context of
any of the business organisation (Bank, 2015). The main aim of this case was to make people
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understand about correct statement which is related with cost or patent authority. Here, it is the
form of estoppel and it is understood about the term agency by estoppel. In this, it has been
explained that individual done have the right to take any of the assistance in estoppel unless if
there is no presence of three elements of the case laws. The first part of the case will reflect about
the facts and figures which are presented within the case. While talking about the second part, it
will about the certainty which is being presented by the parties. The third one is about the
alternate solution which can change the whole scenario of the case from the first party. In the
case it was found that there was the contract between innocent part and defendant party. The
article was written in briefly where it has been explained that there is the relationship of agent,
principal and third party (Znikin and Zharikov, 2018). The director of a company have signed the
illegal cheque which were signed on behalf of the owner of a company. As per the contract which
has been prepared it was found that the director of the company will not be held liable for any of
the mistake which has been performed by him because there was no authority of director to sign
the cheque because there was no contract about this term at any of the stage.
Apparent authority affect the position of third parties
Form the above discussion, it has been found that just because of the apparent authority,
the third party has to suffer from number of issues and problem on daily basis. They doesn't have
any of the option available except filing the case against principal who has misguided for the
personal benefit. It is important that agent and principal must know about their roles and
responsibilities because if they are unable to determine it than third party have to suffer form
number of problem in different situation. Here, third party has to deal with agent who works on
behalf of company but they do not know that what are the responsibilities which has been given
to agent ad what are those which is still in the hands of principal. Whenever cases are filed in the
court, principal try to prove that they they were not involved in the whole scenario as decisions
were taken by agent and they must be held personally liable in the similar manner agent do the
same. This is one the reason that case revolves here and there which consumes unnecessary
expenses and create unwanted problem for the third party. This process consumes unnecessary
time and doesn't allow any of the party to come to the conclusion. The find out the final decision
of court it takes lots of time which arises lots of problem.
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Response of courts in this issue
There has been number of issues which are coming in front of the court that principal are
the ultimate person has to compensate the third party. Court will not be able to make the
judgement to that in every situation that principle will be liable for the case but there are number
of occasion where court must declare the decision against the agent. In order to resolve any of the
problem in this situation, court is needed to find that whether the work which has been performed
by the agent was in capacity or not and if it not within the capacity they what were the
circumstances to take those decisions(Andersen, 2018). If in this situation, circumstances are
against the agent then it will be important for court to make agent as personally liable for the
mistake which they have performed. It will be important for the court to give the response in this
type of cases because it consumes unnecessary time period and even third party have to face
number of problem.
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CONCLUSION
It is established in the above analysis of cases however that this cases are centred on agency
law. All cases outlined the factors that effect of case law. The main components and causality
required when a person is binding within a contract are discussed. In addition, the authority of the
agency and its influences are further addressed. The important characteristics of the agency
relationship are explained. Also, discussed is the crucial role of various factors. There is clear
jurisdiction in this situation. Even individual are required the help of other people for the purpose
of achieving personal milestone. But, if in any of the situation default has been done then
necessary for the individual to pay the third party. The files object is to understand the basic
theories of apparent authority and some of its different elements, which are based on rules and
legal principles established by legislation. As per the fundamental legislative guidelines, they are
fundamental regulatory guidelines. Apparent authority is a legal principle that determines the
better use of agent as well as the principal relationship. It should be described that when the
authority is split among two people, they must provide bigger advantages in their work. There are
some case laws, like that of the above-mentioned in report, and they should carry it out in
accordance with the authority's guidelines. Such cases help to better understand the above
relationship of legal aspects and provide a concise overview of the removal of all the related
aspects throughout this matter. There are different educational sites that may conflict with this
definition but need to be legally accepted in the working areas. The laws as well as principles of
the agencies that have been defined in these matters. The case laws mentioned above are the
important case laws that have defined several issues in the company according to guidance. The
fundamental purpose here is to identify the categorization, including the proof, and to include the
fundamental relationship in terms of real life. Generally, the principle is always misleading in the
scenario of third-party disputes.
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REFERENCES
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compliance. In Proceedings of the First International Workshop on TEchnical and LEgal
aspects of data pRIvacy (pp. 26-31). IEEE Press.
Herlambang, D. and Setyawan, D.Y., 2018, October. LEGAL ASPECTS OF BUSINESS
COMPETITION ON ELECTRONIC COMMERCE. In Prosiding International
conference on Information Technology and Business (ICITB) (pp. 107-111).
Kemp, R., 2018. Legal aspects of cloud security. Computer Law & Security Review. 34(4).
pp.928-932.
Znikin, V. and Zharikov, E., 2018. Legal Aspects of Industrial Enterprise Security in Mining
Region. In E3S Web of Conferences (Vol. 41, p. 04018). EDP Sciences.
Andersen, C., 2018. Legal Aspects of Asset Valuation on Copyright as Part of Boedel
(Countable-List) in the Process of Bankruptcy in Indonesia Following the Latest
Copyright Law Act No. 28/2014. Central European Journal of International & Security
Studies. 12(4).
Bank, R., 2015. Modern security paradigm of business activity: administrative and legal aspects.
Administrative law and process. (1 (11). pp.73-79.
Boguslavski, M. M. and et. al., 2019. The Reorganization of Soviet Foreign Trade: Legal
Aspects: Legal Aspects.
Books and journals
Ha, H.T.H., 2017. Legal aspects of pension product-review of the client's rights and tax
incentives related to voluntary pension insurance business.
REFERENCES
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