Legal Aspects of Business: Agent's Duties and Offer Duration Under Law

This report delves into the legal aspects of business, specifically focusing on the duties of an agent to their principal and the rules governing the duration of an offer under English contract law. The report begins with an introduction to the significance of law in the modern business environment, highlighting key concepts such as the law of agency and the relationship between agents and principals. Task 1 provides a detailed discussion of the various duties an agent owes to their principal, including acting within the scope of authority, exercising due diligence, maintaining a standard of care, avoiding conflicts of interest, and remitting funds. Case laws like Castillo v. Case Farms of Ohio and Liley v. Doubleday are referenced to support these duties. Task 2 then examines the duration of an offer within the framework of English contract law, outlining essential elements of a valid contract and types of contracts. The report concludes by summarizing the key findings and emphasizing the importance of understanding these legal principles in business operations.

LEGAL ASPECTS OF
BUSINESS

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
1.1 Discuss the duties of agent for its principal..........................................................................3
TASK 2............................................................................................................................................7
2.2 Discuss the rules relating to the duration of an offer under English contract law. ..............7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
In this present modern era, there is a great significance of Law and its aspects. Legal
aspects of business depicts that concept in which the legal and lawful terms related to business
law and agency has been mentioned. It is related to the relationship between agent and a
principal. In this report various terms used in business law has been discussed. Also , relationship
between an agent and its principal has been discussed. Further more, the Principal has assigned
its duties to its agents which he is required to perform (Aggrawal, 2016). Moreover, there are
different aspects of a valid contract which includes an offer, acceptance intention to create a legal
relationship etc. in this present report various legal principles has been discussed and also a
detailed analysis and application of law has been mentioned. In addition to this, there are many
concepts related to law of agency like duties and rights of agents etc.
TASK 1
1.1 Discuss the duties of agent for its principal
Law is a system in which there are rules and regulations which are enforceable through a
set of institutions. It governs a wide range of societal activities. Also, there are different types of
law which includes contract law, property law and criminal law. Also, there is a category of
business law. In this aspect there are many concepts and different terms in business law. One of
the concept is related to law of agency. Law of agency is a concept in which there is a
contractual relationship between agent and its principal (Ahlgren and et. al., 2013). A principal
is a person which authorises its agent to perform some functions on the behalf of him. Law of
agency is a place where all the cases get registered which occur on the daily bases or it is an
agency allows an individual or an company to employ other person to complete their task or any
activity on behalf of the owner. An agency help in creating a healthy relationship between two
parties which requires a precise and clear terms between both of them. In fact this agency act as a
mediator between two companies when they are coming to make a merger or acquisition so that

all the terms and condition should be clearly written and fulfilled by both the parties. The
principal and agent is the relationship in which one person authorises the other person on his
behalf. In this relationship , the agent is authorised to to carry the acts done on the behalf of the
principal (Beiker, 2012). In this aspect it has been evaluated that the relationship between the
principal and agent has been referred as “Law of Agency”. In addition to this, there are different
forms in which agency can be used such as :
 Agency can be used as the method by seller to sold goods to buyer: In this aspect two
parties are found which are seller and his agent. In this seller is required to appoint a
person as agent to act on his behalf for marketing of goods or for selling them (Bernstein,
2015).
In other words, Agency is a law in which there is fiduciary relationship between two
persons in which one party of them expressly or impliedly agree that the other will be acting on
behalf of him to effect the relationship with third parties.
There are different duties of an agent for which a principal bounds him under a contract,
which can be illustrated as follows:
 Agent is accredited by its principal to under take different acts on the place of its
principal.
 Agent has a duty to enter into various contracts as and when its principal ask him to do
so.
 Also, an agent has the duty to perform all the acts according to effective due diligence
and care.
 According to the case law: Castillo v. Case Farms of Ohio, 96 F Supp. 2d 578 it has been
held that principal is liable for the acts of his agent. In this case it was held that principal
that is Case farms is liable for the acts done on the behalf of him. It illustrates that
principal is responsible for the acts done on the behalf of agent, as there is a fiduciary
relationship between them (Burgunder, 2010). It should also be noted that a principal
may be held liable for the acts of his agent based on the actual agency relationship
created by delegation of authority expressly or delegated by principal. So, it also conveys
that there are many duties which are assigned by the principal to his agent.
 In accordance with an another case law of : Liley v.Doubleday, it was been held that an
agent is liable to follow all the instructions as given by its principal and also to keep the

himself within the line of authority. It conveys that when an agent is appointed or entered
ion the contractual relationship with its parties then in that case , agent owes a duty of
obligation to perform in the best interest of principal within its authority. Also, an agent
is required to execute all his acts according to ethics and due diligence. Also, if an agent
do any act other wise and any loss occurs, the agent is responsible to render it to his
principal in good manner. On the other hand, according to the case law of: Sheills v
Blackburn (1789) 1 HBI 158, the agent was a gratuitous agent so, principal was not liable
there are some exceptions to this rule. It means that a Gratuitous agent is not required to
obey order of his principal to continue to be his agent. It has bee clarified that there are
some exceptions in which the principal is not liable for the acts of his agent.
 Another duty is related to maintain the standard of care and skill while performing the
acts of his agent (Gladding, 2012). It demonstrates that an agent is required to execute all
its functions according to proper skills and standard of care while performing their tasks.
If in case they are failed to meet the standards as decided then the agent will be
considered as the prima facie negligent. In other words it can be understood in a way that
an agent is required to act with sensible diligence by using such skills which he possess.
Also, in this case. If principal suffers any loss that owes to duty of agent , then agent will
be held accountable for that said loss. It has been defined under a decided case law:
Keppel v.Wheeler. Also, agent is answerable for the acts and actions done by him in
respect of direct consequences.
 In addition to this an agent is under an obligation to perform all the duties laid down by
its principle with proper communication. It means that an agent should communicate all
the consequences and important matter to his agent so as to avoid any ambiguity.
 Moreover, it has been evaluated that an agent should make sure that there are no topic of
conflicts and issues between them (Hertrampf and Piedad-Pascual, 2012). It means that n
agent should remain pure an should not enter into any personal contract with third party
which can arise any conflict of interest. It has been defined under case law of Wallace v
Tellfair, that an agent is not supposed to perform any task which arises any issues of
conflicts for its Principal.
 An agent is purported not to make any secret profits which can hinder the performance in
the course of agency. According to the law of agency, the agent is not required to make

or adopt any secret or hidden profits in the course of contract by adoption of unfair means
and ways, without the knowledge and permission of his principal. The agent doping so is
responsible for creating secret profits are liable to compensations and damage caused to
his principal. An agent can not use of property, position , information or knowledge for
his personal gain. It will be considered as the breach of contract. As facts laid down in the
respective case of : Wilson v Hurstanger, it has been held that there are the lender of
money was held responsible for the concealment of amount of commission. It should not
be practised as it is prohibited according to the law of agency (Hull and et. al., 2010).
 Another duty of an agent can be recognised in the terms of remitting the sums repayable
to his principal received by him. However, he is liable to deduct his agency charges in
respect of lawful charges limited to his right. Even , in the case of void or illegal
transactions, an agent is needed to perform this duty by remitting and informing him
about the money received on the account of the said transaction.
 Also, an agent is require to obey the duty of obedience with its principal. It means that in
accordance with law, agents are required to obey the legal and lawful instructions of
principal(Kapka-Skrzypczak and et. al., 2011). On the other hand, if principal is engaged
in the illegal transactions or tasks, the agent is then also be liable to follow all the acts as
principal asks him to do so.
There are some exceptions in which agent can delegate its authority to some one else:
◦ Nature of work.
◦ Trade custom.
◦ Principal consent.
◦ Ministerial consent.
There are varied types of agents authority:
 Apparent authority: In this authority, one person has given authority to another person in
a certain manner to bind the other person (Kidholm and et. al., 2012). It is given
expressly and in implied manner. According to the case law of : Free man and Locker v
Buckhurst Park Properties (Mangal) Ltd. [1964] 2 QB 480, it was been held that actions
of directors are never be in actual authority.

 Usual authority: in this type of authority which an agent generally has. It has been
explained by the case law of : Watteau v Fenwick, it was been held that agent was
bound to perform the duty of contract.
 Authority by ratification: It is an another type of authority in which agent firstly did not
have any authority to act on the behalf of its principal. But later the principal ratifies and
accepts the contract or actions that has been performed by his agent . Also, principal get
bound by the work done. It can be illustrated from the given case law of Keighley,
Maxstead &co v Durant [1902] AS.C.240.
If there is no authority for an agent or there is an absence of an authority then it will be
considered as the breach of warranty on the part of agent.
TASK 2
2.2 Discuss the rules relating to the duration of an offer under English contract law.
In according to the different terms related to law, there are different terms and concepts
related to contract and its related aspects (Laskowski and Szymczyk, 2010). Contract is a legal
agreement which is consist of all the essential requirements and elements which gives it a legal
and binding effect. It must be noted that there are 2 types of contract which are considered the
most. They can be categorised under Bilateral contracts and unilateral contracts. The contracts in
which both the parties t the contract are under an obligation, then it will be termed as bilateral
contract. On the contrary, if in the contract, one party assumes its obligation that can be held as
unilateral contract. There are mainly 4 elements of a valid contract:
 Offer.
 Acceptance.
 Consideration.
 Intention to create legal relationships.
An offer is a legal term in which there is an expression of temperament to enter into
contract on some terms and conditions which are made with an intent to make it as binding as
soon as being accepted by other party to whom offer has been made (Padhi, 2012). An offer can
be expressed or implied. According to the decided case law of: Smith v Hughes (1871), offer has
been given by the party to another party to make it a legal relationship. On the other hand, in the
case law of : Harvey v Facey [1893] AC 552 Privy Council, it has been held that there was no

contract established between the said parties as Facey did not directly answered the question of
Harvey.
There is an another term in law, which is invitation to treat. It is distinguishable with an
offer. An invitation to treat can not be accepted and it is merely an invitation to other for offers.
An offer should by an acceptance which is must. Acceptance signifies that the other party has
agreed about ll the terms and conditions regarding offer. A valid consideration is one which has
been communicated to offeree. Also, the terms related to the acceptance are same as terms and
conditions of offer. It can be illustrated through a case law of : Entorres v Miles Far East [1955]
2 QB 327 Court of Appeal, it has been held that an acceptance will be treated as valid, if it is
communicated to offerer.
An offer is considered to be the most important factor through which a basis of contract
can be formed. It means that it is just a beginning of any contract. Offer can not be considered to
be the valid until and unless it has been accepted by the other party to the contract (Pearson and
Benameur, 2010). While framing a contract all the terms and conditions regarding offer and
acceptance should be mentioned in the contract.
There are certain Rules and regulations as specified in law, relating to the duration of an
offer. These can be summarised as follows:
 Counter offer is the offer in which both the parties to the contract make an offering of
their willingness to enter into contractual relationship. It means that offer has been made
by both the parties to each other. According to the decided case law of: Hyde v Wrench
(1840) 49ER132 chancery Division (Decided by Langldale MR), it has been held that
there was no contract between the parties. As and when counter offer is made , it finishes
off the original offer and it is no longer open to the offeree to accept. In this counter offer,
there is no duration of offer as the offer has been destroyed as it is a counter offer.
 In the case of specific offer, is demonstrates that it is made to the specific offer or a group
of persons. In this case offer is valid up to, it has been accepted by the all of the persons
in a particular group. It can be concluded by a relevant case law Spencer v. Harding Law
Rep. 5 C. P. 561, it has been held that the offer is valid to the time in which the other
party accepts the offer.

 An offer will be valid up to during a limited period of time. It must be understood in the
following way that if the offeree responds at the time and has an intention to create a
legal intention than in that case offer can be valid.
 Cross offer: it is an another type of offer in which both the parties make the offer to each
other with out any information of the offer made by other person. It is called as cross
offer (Pozgar, 2011). It is not treated a contract as offer has been made by both the
parties. It is quite similar with counter offer. In this type of contract, the offer will not be
continued as it offer created by one can not be accepted by the other party. In accordance
with the case law of Tin v Hoffman & Co [1873], it has been held that the offer has
terminated . It can not remain open as two offers can not make a valid contract.
 In case of standing offer, it is a contract in which an offer is made for a particular period
of time and it is liable to be accepted at any time in that period. In this case the duration
of an offer till the time as specified by offerer.
 An offer can be remained open till the time period according to the specifications of the
time period specified and it ends after the period of a reasonable time period (Sweet and
Schneier, 2012).
 Although an offer can be revoked before the agreed time expires. it means that an offer
can be diminished if either of the party revokes in between the time period expires.
However, there are some exceptions to this case. It includes option contract, unilateral
contract and firm offer. In the above mentioned cases, the offer can be revoked even if
the time period has not been expired.
 In case of implied offer, it has been said it is the offer in which it is understandable by the
act of the parties or situations (Uprety and Salman, 2011). In this aspect it has been said
that offer will be terminated by the accomplishment of the basis or a reason for which the
contract has been formed.
CONCLUSION
From the above report it has been concluded that there are varied types of laws which can
be bifurcated in contract laws, business laws etc. In this present report it has been mentioned that
there is a fiduciary relationship between an agent and its principal. It has been defined that there
are certain liabilities and duties of agent and principal which they need to abide. Also, the
concept of contract and its essential elements has been discussed. It can also be noted that the

duration of an offer depends upon the types of offer. There are different types of offers which
can include counter offer, cross offer and implied offer.

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