Legal Aspects of Business: Agency Law and Case Law Analysis Report

This report delves into the legal aspects of agency law within the context of UK business, examining the formation and features of agency relationships, the roles of agents and principals, and the legal implications of their interactions. It explores the different types of agent authority, including express, implied, and apparent authority, providing detailed explanations of each and their practical applications. The report also includes an analysis of relevant case law, specifically Rama Corp Ltd v Proved Tin and General Investments Ltd, to illustrate the legal principles discussed and their real-world consequences. The content covers the responsibilities, liabilities, and the importance of trust in agency relationships, providing a comprehensive understanding of the legal framework governing agents and principals in business transactions. The report concludes with an overview of the key concepts and their significance in ensuring compliance with legal regulations.

Legal Aspects of
Business

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................4
Agency relationship and its features............................................................................................4
Agent authority and its different types........................................................................................4
Case law in the area of Agency Law...........................................................................................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
Legal aspects will be considered as the indistinguishable aspect for each nation's successful
business climate. The political system and the thought process of a nation's government
framework are planned and developed in a comprehensive manner across legal aspects. A
national legal implications help to decide that each corporation meets the regulatory guidelines
established by the legal framework. Such elements assist to conclude the fact at problem with
flashcard facts, testimony, physical and sound image. Legal implications of UK business are
being used to cope with legally binding, quasi-contractual and fiduciary relationships involving
agent as well as principal relationships (Teshome, Agostini and Nosella, 2018). If business
organizations assign agents to act in specific circumstances on their behalf, it refers to the
formation of legal partnerships and this arrangement allows them for legal binding for behaviour
of others. Apparent authority is essentially a circumstance where the principal does not grant the
agent power to act in some way, but third parties understand such act with acts of principal to be
accepted. In this scenario, the principal is held accountable in regards to third party for just the
act or decisions made by agent. Any express or implied agreement occurred between agent and
principal at the time of the apparent authority then even in this situation all of the liability will
occur upon principal only. In agency relationship, agent is just an intermediary who represents
the interests of a principal and is regulated by agency contract they have joined into. The agent
serves clearly as the principal's agent to third parties and uses the opportunity throughout the best
interests of the principal.
The relationship of the agency is developed on accordance with the law so there is a
contractual relationship between the two people involved. Whenever any of the agent executes
agency activities, it is necessary that all of the activities are being performed as per the terms and
condition of contractual agreement without having any of the specific interest of agent in any of
the organisational transactions (Amadi-Echendu and Amadi-Echendu, 2015). Any of the legal
principle explains that term estoppel is used to confirm that on what terms and condition any of
the contract will be prepared. It is helpful for the third party because their rights and interest can
be protected easily.

MAIN BODY
Agency relationship and its features
Agency law can be defined as the law which explain about the relation of agent and
principal. It is very important to understand that present are the one who I need to work as per
the guidelines provided by principal as ultimate liability is always upon principal. it is a kind of
fiduciary relation in which trust between the parties play the key role. special rights are given to
agent to work on behalf of principal. the relation between agent and principal can be formed with
the help of express agreement that means that principal and agent are agreed to come into a legal
relation. in this agreement can be formed in the form of written or oral or implied to create
agency relation (Bank, 2015). it is important to understand that whenever agent is being given
sum of the responsibilities by principal then they must act according to the given responsibilities
because of the mistake can create lots of problem for third party and visible but not for agent.
There number of features of agency relationship and some of them are explained below:
 The first thing which is necessary to be understood that agency relationship must be created by an
individual who is able to enter into the company. It means unsound minded person and below the
age of 18 years are not allowed to enter into a contract of agency law.
 it is important that agreement of agency must be form in written or oral or in any of the certain
condition which can be implied (Glinkowska and Chebotarov, 2019).
 While forming the relationship between agent and principal they must be able to develop
fiduciary relationship where they can trust each other through which any of their work can be
conducted successfully.
 In any of the situation if agent is unable to perform his talks as per the rules and regulation of
agreement then principal will be held personally liable to third party.
Agent authority and its different types
Agent authority can be explained at the term fair agents are being given some rights and
responsibilities by the principal to perform any of the specific tasks on behalf of principal which
is ancient in the terms and condition of agreement (Ha, 2017). the authority says that agent must
perform athletics in specific manner as any of the mistake can create problem for principal. agent
authority is classified into three different categories and they are expressed, implied and apparent
authority. it is said that expressed and implied authority are related with actual authority. Below
there is a detailed explanation about different types of authorities.

Actual Authority: it is expressed as the power which given by principal and agent to
perform the work on his behalf. the special power is provided with the help of agreement which
is signed by both of them. actual power can be of wider income UN general in sense or even it
can be limited to some of the extent where limited sort of power is provided to agent. the
agreement which is signed between both of them has to maintain the agency relationship
between them where it gives the authority to determine that what is right and what is wrong and
what to do and what is not allowed to do (Kemp, 2018). Whenever agreement is signed between
agent and principal then in the situation express authority is provided to the agent. whenever
agency relationship is created on expressed authority then in this situation principal provides the
detailed guideline to agent that what are the terms and condition where agent can take any of the
action or decisions. There number of situation where agent is required to take decision of on then
in this situation it will also fall under the category of expressed authority. it is important for agent
that they must inform each and every activity they perform on behalf of principal to principal.
except some of the exceptional situation it is important for agent to understand that they are not
allowed to perform any of the activities which are not mentioned within the agreement. if in case
there is a breaking contact with third party then necessary to find the actual person who has
performed the difficult and they will be held personally liable to the third party.
In case of implied authority, the power is provided with the help of addiction rules and
regulation for the purpose of performing some of the specific tasks which are necessary to
perform by agent. it is also known as actual authority (Laudon and Traver, 2016). In implied
authority, third party in agent enters into legal binding contract on behalf of principal for the
purpose of performing any of the specific activity which are mentioned in the agreement. for
example: if a person visit tour showroom to purchase a car then he must deal with agent where
they provide number of offers and services to the customer then it become important for
principal to comply with those terms and condition as it has been given by agent on his behalf.
Apparent Authority: it is the situation where agent act on behalf of principal even
though he has been not provided any of the rights and authority. Here, the tax which is
performed by agent are not mentioned in express or implied agreement. Also, agent perform on
behalf of principal in good faith and any of the authority is not provided to them. In addition,
third party involved within the deal with agent bye as you mean that all of the rights and

responsibilities are handed to agent by principal. in this situation all of the liability arises to the
one person i.e., principal. The main purpose to commence apparent authority is just to protect the
right of third party for the miss representation which has been done by agent on behalf of
principal.
It becomes important for principal to inform the third party if they do not possess with an
any relation with agent under agency law in future period of time else it might also create
problem for them. apparent authority gives rise to agency by estoppel where principal is not
allowed to deny the liabilities that has been raised because of agent (Mohamad, 2018). If
principal is capable of proving that authorization was given to agent but still there is no actual
authority which means that liability of third party is protected till the date they have performed as
per the guidelines of act. There are some of the essential element which is needed to be
considered to form an apparent authority and they are described below:
No expressed and implied authority: for the purpose of proving that there is an
apparent authority it is necessary that principal mast proof that there was no authorization to
agent in any of the form such as written, oral or implied. Whenever any of the authority is
delivered in expressed and actual terms then it can fall under the category of apparent authority.
Fiduciary Relationship: to form any of the apparent authority, it becomes important for
agent and principal that they must possess with the relationship of trust where agent can take
some of the important decisions on behalf of principal without obtaining any of the authorities. It
is necessary that acts and decision which are being taken by agent should be favorable for
principal.
Communication to third party: Here, to form the apparent authority it is necessary that
principal have informed about the agency relationship between agent and principal where agent
can take some of the important decisions on his behalf (O’Regan, 2018). In this situation, the
relationship of agency is formed till the date principal inform about the breach of relationship
between them.
These are some of the elements of apparent authority which is necessary to be available to
form any of the agency relationship under apparent authority.

Case law in the area of Agency Law
Rama Corp Ltd v Proved Tin and General Investments Ltd [1952] is one of the famous case
where it was found that principal was liable to pay the third party for the decision taken by agent.
This was the case which held in the year 1963 where agent sold the burnt cotton to third party
which taking the prior approval from Principal. The deal was taking place between T and A.
Throughout this deal T must sell to A a quantity of 144 cotton cartons. This was stocked in a
boat to supply it to A to accomplish the exchange promised quantity of cotton. The boat that was
packed with cotton was burned in final analysis once the shipping occurred. A, who was P's
agent, joined this entire transaction and P advised A to conclude this contract with just a rate of
30 cents per pound (Racheva and Kuznetsova, 2016). P experienced failure as a principal.
Also, his agent did not respond to his directions. The situation was dependent on the interaction
between the company and included the employee, principal as well as third party. The ruling was
made by the supreme court of the United States and it was decided that P was responsible for the
costs incurred in the agreement.
It was one of the famous case where Principal was held liable for the mistake which has
been done by agent where condition of estoppel occurs. It is said that whenever the situation of
apparent authority occurs then in that situation if agent and principal doesn’t agree then here
third party does have the option to sue the case against organisation. Here, court takes the final
decision that what are the main causes of doing the default and who should be held personally
liable whether principal or agent.

CONCLUSION
From the above file it can be concluded that agency law is one of the most important law
which describes that what type of the relation should be their between principal and agent. In
apparent authority, principal held liable for the decisions which are being taken by the agent. It is
necessary for both principal and agent to develop the fiduciary relationship between them. It is
necessary for agent to understand that they are allowed to take only those decisions in which they
have obtained the legal authority from the principal on whose behalf they are performing the
task.

REFERENCES
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Glinkowska, B. and Chebotarov, V., 2019. Establishing a Business in Ukraine–the Initial
Regulatory Organizational and Legal Aspects for Polish Entrepreneurs.
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incentives related to voluntary pension insurance business.
Kemp, R., 2018. Legal aspects of cloud security. Computer Law & Security Review. 34(4).
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courts. The European Proceedings of Social & Behavioural Sciences, pp.247-253.
O’Regan, G., 2018. Legal Aspects of Computing. In World of Computing (pp. 267-280).
Springer, Cham.
Racheva, S. S. and Kuznetsova, E. V., 2016. The Outlook on the E-Commerce in Russia in
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Online
Apparent Authority. 2019. [Online]. Available through:
<https://www.lexology.com/library/detail.aspx?g=9103152b-0df5-4779-8005-
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