Legal Aspects of Business: Agency, Authority, and Case Law Examination

This report provides an in-depth analysis of the legal aspects of business, specifically focusing on agency relationships and apparent authority. It begins with definitions of key terms such as agency relationship, principal, agent, and fiduciary duty, explaining their significance in business operations. The report then delves into the concept of apparent authority, detailing its definition and key features, and differentiating it from other types of authority. It explores the essential elements of apparent authority, emphasizing the representation of the agent, its origin from the principal, and the reliance of a third party on this representation. The report also includes a case law analysis, providing a practical application of the concepts discussed. Furthermore, the report touches upon different types of agency authorities such as actual, apparent and rectified authorities. The report uses examples to explain each term and its relation to business law, offering a comprehensive understanding of agency relationships in a business context.

Legal Aspects of Business

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................4
Definition and key features of an agency relationship.................................................................4
Defination of apparent authority..................................................................................................6
Case law.......................................................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Legal aspect refers list of laws and utilization of the principal of laws and justice to
business. While legal aspect concept refers requirement of occupation records and evidence to
conform legal requirements. For example business records should be maintained along with
accurate statement which should be prepared in the well-formed manner and that's offered by law
(Semenov and Mishalchenko, 2017). To starts business needs agreement which is known as
business agreement. Business agreement mentions a contract which is formed between two
business company. Main purpose of business agreement to accomplish all legal requirement for
appropriate contract which consider mutual assent, offer & acceptance, capacity and legal
purpose. It is crucial for runs business because it leads transparency in decision-making and
assists to gain trust of stakeholder. Business law covers every prospect of starting, running and
closing. Besides of this includes contracts, employment law, intellectual property and bankruptcy
etc. this report will cover legal agent and agreement of business.
MAIN BODY
Definition and key features of an agency relationship
Agency refers relationship between rules and agent where one person keeps legal or
ethical relationship of belief along with one or more than other parties. Thus, kind relationship
also known as fiduciary relationship. Agency is a medium between two business organization
where laws (principals) offers legal authority to agent for dealing with third party on the behalf
of principals(Andersen, 2018). This relationship supports business to gain growth in market and
agency laws makes corporation accountable for their decision, even action doesn't follow law.
There are some terms which is mainly designed to builds trustable relationship between agent
and principals such as principals, agent, independent contract, agency relationship, fiduciary
relationship, power of attorney which requires in written etc. beside of this three factor requires
building relation that are consent, control and fiduciary duty etc. Agency relationship starts up
through agreement where both laws(principals) and agent gives agreement in written or oral. In
that state apparent authority creates during dealing with third party. Apparent authority is a
situation where third party gets that an agent action is bounded with principals. Such kind
contracts and principals supports agent to deal with third party. Such kind transparency in
business leads trust of third to agency to agent or organization. Agency relationship not only
gives benefits in business dealing, but also supports to develop marketing strategies i.e. in

recruitment and selection process for employees, organizing training and skill development
programs. Agency relationship can understand through valid example a company ABC which
takes help of agency to appoint intellectual qualitative employees for company where agency
acts as authority on the behalf of organization to recruit and appoint talent employees as per the
requirement of organization.
Key features of agency relationship
 Agency relationship establishes between two persons where one person (organization)
fully agree that agent can act on the behalf of organization to give effectiveness in his
relation with third party.
 Main characteristic of agency relationship is that agent always stands for principals
during dealing with third party regarding business or hiring process.
 In agency relationship, agent have rights to express authority and guides organization to
act on authority.
 Agency relationship has various types of authorities like apparent, inherent, actual,
estoppel and rectification etc.
 Agent relationship is basically depends on principals and agent acts according to
principal during dealing.
 This relationship is based on contract which leads agreement between agent and
organization.
 Agent relationship has contractual capacity where both can keep an eye on their action.
Agent relationship concludes three type of relationship such as principal-agent relationship
which refers as an agreement where one party can legally nominate another party to do action on
the behalf of laws(principals). Second is agent- third party relationship where third party act on
the position of an agent. Third relation is principal-third party relationship where third party act
on the behalf of principal.
Different types of agents’ authority
Agents authority is crucial for business and agent where authorities carry out on the
behalf of principals. There are various authorities in law but three types of authorities are
essential such as actual authority, apparent authority and rectified authority.
Actual authority: Actual authority mentions particular powers which accurately conferred by
laws for an agent who act on the behalf of principals. Such kind authority concludes the implied

and express dominance. It is different type of authority where principals give to agent as
authority in written or orally (Burnett, 2016). While implied authority mentioned a usual
authority, in this authority agent can carry the act which is reasonably demanding to achieve the
goal of company. There are various content which depends on the fact of different cases and
determines by the organization principals (Miller, and et.al., 2019). If Agent enters into contract
along with third party which is legal for actual authority. Such kind contract known as
contractual rights or in simple term liabilities and this contact subsist between two parties. This
agreement form exist in two forms oral or written.
Apparent authority: It mentions a condition where reasonable third party understands that an
agent have legal right to act (Sitdikova, Starodumova and Volkova, 2018). It can understand
through example apparent authority gives by organization to the individual who doesn't have
authority to take decision and contract such as organization forma along with organization's logo
and company's supply trucks with logo etc. apparent authority can consider ostensible authority
if there are some rules follows by organization and agent. Such as -
 third party is that agent who understandf the authority and act on the behalf of
laws(principal) even that agent doesn't have any authority to act. Thus kind principles
represent by words or conduct to third party.
 In this authority third party can alter position as result it leads dependency for obligation
under the contract along with agent.
Ostensible authority is a unique type of authority where tules can dominant to third party on the
behalf of trust on agent (Chamorro-Courtland, 2017). In ostensible authority agent only have
apparance of authority but in reality he doesn't have any type of authority. In contrast situation if
third party comes into contract with agent in belief of the laws which legally repersent in
contaract. In contarct third party gives their agreement to agent to act behalf of them where agent
act as estoppel. Here agent fully bounds with principals.
Defination of apparent authority
Apparent authority is the law of agency which is specially organised for corporate law
and constituational law. Apparent authority mentions a situation where resonable third party
understands that agent has fully authority to act. In simple term agent action is depend on the
principals, even agent doesnt have any right or authority wheather express and implied. To
enhance third party assurity, agent has to raise estoppel (Vagts, and et.al., 2015). Apparent

authortiyt can be legal if actual authority doesn't provide to agent for making decision. Apparent
authority can find two types. For example if agent acts to offers false impresion to third party, in
that state agent doen't bound with principal (El Ouirdi, and et.al., 2015). In second situation if
agent acts in the persence of principal, principal stays quietly and doesn't put any question to
agent duringdealing with third party. Agent gives values to third party,in that situation agent has
authority to fixup principal. Apparent authority also occurs when principal modify authority of
agent but doesn't adderss third party about modification. Thus kind authority known as lingering
apparent authority. here principal has power to change, modify or terminate authority of agent.
While agent has authority for appreaence beside iof this agent can't use authority to dominant
thrird party. The apprent authority concludes directors, officers and agents of the organization
are mentioned as ostensible authority. Soctrine of apprent authority is depensent on the principal
of estoppel where it restricts the laws from admit the existance of agency to third party.
In law term apparent authority mentions rights of an agent as apprearnce form to others
and it oprtaes for both actual authority and create authority but actually agent doesn't have any
authourity. The law correlates to organizations and to ostensible authority. it is subsets of the
principalswhich correlates to apparent authority and the law agency. Apparent authority also uses
as defence when an experss and implied authority doesn't exist. There is an example for
undersand apparent authority (Eleftheriadis, and et.al., 2016). A customer wants to buy
motorcyle from motorcycle dealer and the dealer offers him latest bikes and takes customer on
test drive and then takes order from bike buyer. Here a bike dealer seems as merchandiser for
customer to whole acounts besides buyer gets excited by getting $4000 discount from the asking
price and merchandiser says customer to come next to pick bike. In next day customer addreses
by owner that he just mechanic of bikes. In that state customer gets that mechanic has apparent
authority to sell the car and it was just action of mechanic to take customer in trust. Here
mechanic is a agent of owner who acts as merchandiser Thus kind authority known as apparent
authority.
Analysis of the essential elements of apparent authority
Apparent theory specially relevant to corporate law and constituional law. There are
various factors or element which is crucial for apparent auhority and it requites such as-
Representaion of agent has authority: it is major or basic needs of the apparent authority
where properly repersent that agent has authority, but actually it is action of agent which is given

by owner to take third party in trust. It can be understand from above example which hasbeen
mentioned such as cutomer trust on mechanic that he is merchandiser due to his actions like take
customer on test drive, offers $4000 discount on bike. Thus type repersenraion of agent seems cu
that merchandiser has authority to sell bike to buyer.
Repersentaion comes from principal: it is another essential element which is crucial for
apparent authority where repersentaion comes from principal (Kirillova, and et.al., 2017). In the
basis of above example mechanic works for owner of the bike dealership where owner gives
apparent authority to mechanic to talk to customer, sells the bike and encourage customer to buy
bike. Beside of this convinece customer in impressive manner by offering discount. These all are
actio are part of job and it comes from part of principal. It is a type of power which gives to
agent through owner to act on the position of principal.
Repersentaion should be relied by the third party (customer): It is one of the most essential
requirment for apparent authority. According to this authority customer relies on agent due to
his action even customer unawares about that agent doesn't have any authority. Such kind
representaion authority gives by owner to agent so that he takes customer in trust for dealing.
Case law
Rama Corp Ltd v Proved Tin and General Investments Ltd [1952] 2 QB 147 (QBD)
in the year 1952, there is a sofa Ltd company where owner hires agent to selling red
sofas. But owner of company unawre that agent marketing image is not good. Agent takes
sgerement with owner to sell sofas in 15000. Beside of this agent takes agreement with other
friend because agent knew that he can sell soffes in 20.000 and can get profit five thousand.
Cause this agent braeks agreement with owner.
Background
sue appoints lan as agent for selling furniture and sells her customers. Even sue doesnt
known that lan is thief and dishonest. Sue agree with lan to buy twenty sofas in 15000. while lan
knew that he can sell these sofas on 20,000 to his friend bob and can get more profit. While lan is
agreement with bob and sell sofas. Thus agent get profit and breaks agreement with sue.
Decison
From the above study can understand that lan isnt able to accomplish his contarct to sell
the red dofas to Bob, he breachs that agreement faces claim from bob for breach agreement.
Comment

On the basis of above decision finds that lan shows apparent authority with sue while bob
agree with agent.
CONCLUSION
This report has been concluded agent relationship and importance for business law. This
report also has been explaines about legal aspect. It has been covbers types of agent authority
where has been explaibnes about actural authority, apparent authority and ostensible authority.
This report has been concluded apparent authority along with examples. In thias report has been
coverd essential element which is important for apparent authority. In this report also cover case
law which is relevant to agency law. Thus this report has been clarified about agent relationship
importance in business law.

REFERENCES
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Chamorro-Courtland, C., 2017. The Legal Aspects of Portfolio Margining: A Move Toward the
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Eleftheriadis, P., and et.al., 2016. Legal aspects of withdrawal from the EU: A briefing note.
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management of innovations in the EU and the CIS. In 2017 International Conference"
Quality Management, Transport and Information Security, Information
Technologies"(IT&QM&IS) (pp. 571-573). IEEE.
Sitdikova, L.B., Starodumova, S.J. and Volkova, M.A., 2018. Aspects of Transactions by
Business Entities in Civil Legislation. European Research Studies Journal. 21(4).
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Vagts, D.F., and et.al., 2015. Transnational business problems. West Academic.