Unit 8 Business Law

Agency: A relationship that exists when one party (the agent) represents another party (the principal) in the formation of legal relations.

Agent: A person who is authorized to act on behalf of another.

Principal: A person who has permitted another to act on her or his behalf.

Law of Agency: The law governing the relationship where one party, the agent, acts on behalf of another, the principal. Derived largely from tort and contract law.

Creation of Agency Relationship: Arises by contract or conduct, may be express, implied, oral, written, or under seal.

Actual Authority: Power from express or implied agreement.

Express Authority: Authority granted explicitly in writing or orally.

Implied Authority: Authority inferred from conduct or circumstances.

Apparent Authority: Power an agent appears to have due to principal’s conduct.

Agency by Estoppel: When a principal's conduct leads third parties to reasonably believe an agency relationship exists.

Agency by Ratification: Created when a principal adopts a contract made without authority.

Fiduciary Duty: Agent must act in good faith, not profit personally, and avoid conflicts of interest.

Termination of Agency Agreement: Ends by law (death, insanity, bankruptcy), mutual agreement, or notice.

Employment Relationship: A contract where an employer provides pay in exchange for services.

Independent Contractor: A person working independently, not an employee.

Dependent Contractor: Independent but economically dependent on one employer.

Implications of Employment: Employees receive statutory rights and can sue for wrongful dismissal.