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Agent
A person who has legal authority to conduct business on behalf of another person, known as a principal.
If they act negligent or break terms of the contract, the principle can sue for damages
Principal
The person on whose behalf an agent acts, and who is legally bound by the agent's contracts.
Duties of an agent
Obedience - obey lawful instructions
Skill. -use care and skill expected of a person in their profession when performing his duties
Performance - perform duties personally
Fiduciary duties - the relationship between an agent and principal is a fiduciary relationship. One party trust the other implicitly.
Rights of an agent
The right of an agent to be compensated for losses and liabilities incurred while acting within the scope of their authority.
Ostensible Authority
Authority that appears to others to be granted to an agent by a principal, even if not expressly given.
Sole Trader
A business owned and operated by one individual, who retains all profits and is personally liable for all losses.
Must register as self employed to HMRC, and pay vat if they earn over a certain amount
Partnership
A business relationship between two or more people who manage and operate a business together with the aim of profit.
each partner pays their tax individually
The partnership act regulates how the partnership is run, the split of profit, dissolving a partnership and this should be in writing before a partnership is formed.
Limited Liability Partnership (LLP)
Created because before this act was created all partners of the firm were liable for the acts of one partner.
all members have limited liability
Firm has its own legal presence
It must register with the register of companies
Members pay their tax individually
Members are partners not shareholders and manage separates parts of the company
Separate Legal Entity
A legal concept which asserts that a company exists independently from its shareholders and owners.
Piercing the Corporate Veil
A legal decision to treat a corporation and its shareholders as one entity to prevent fraud or injustice.
Franchise
A legal agreement where a franchisor allows a franchisee to market and sell its products or services in a specified area.
In return the franchisee pay fees, commission or single price.
Franchisor might offer start up advice, marketing materials.
Actual Express Authority
Authority that is explicitly granted to an agent, either orally or in writing.
Liability of Partnerships
The legal responsibility of partners for debts and obligations incurred by the partnership.
Limited Partnership
A partnership with at least one general partner who has unlimited liability and one or more limited partners who have limited liability.
general partner controls the day to day operations
Its rare because it has proved easier to benefit as a private limited company
Business Ventures
Forms of business organization such as sole traders, partnerships, and corporations.
Salomon v Salomon & Co Ltd
A landmark case that established the principle of separate legal personality for companies.
Aaron Salomon had a successful business making and selling shoes
He soled his business to a company and loaned 10,000. The company was dissolved. The liquidator refused to pay him the money as he failed to see the business and Salomon as different people.
Agency by Necessity
A situation where an agent takes action on behalf of a principal in an emergency where it is impossible to communicate with the principal.
Conflict of Interest
A situation where an agent's personal interests could potentially interfere with their duty to the principal.
Implied actual authority
is the authority that an agent has to act on behalf of a principal, which is not explicitly stated but is inferred from the principal's conduct or the circumstances.
Private companies
Limited by shares.
Typically small or medium sized
One director
No limit on the amount of share company
Must have file audited accounts within 9 months of their financial year end
Public company
limited by shares and must have 50000 share capital allotted to share holders
Minimum of 2 directors, company secretary, hold annual general meeting
File accounts within 6 months of the financial year
Separate legal entity
