Authority

Legal decision-making is primarily the responsibility of the individual, not their attorney.
- Power of Attorney: Must be explicitly granted to allow someone to make legal decisions on one's behalf.
- An attorney serves as a guide and advisor, but they cannot make decisions without explicit authority from their client.

Attorneys in a business context cannot serve dual roles that conflict:
- An individual cannot be both an attorney and a decision-maker (e.g., board member, managing partner) at the same time due to potential conflicts of interest.
- This ensures the attorney represents their client’s interests without being personally invested in the decisions.

Agency: Exists because one person cannot manage all decisions or activities alone. This divides responsibilities between the principal and their agents.
- Employee's Role: An employee does not have the authority to make decisions for their employer.
- Agent's Loyalty: Depends on the context—whether representing the buyer or seller in a transaction (e.g., real estate).
- An agent's goal is to maximize the principal's desired outcomes, often tied to commissions.

The agent must clarify their role to both parties involved in the transaction, ensuring transparency and trust.
- Example: A real estate agent represents the seller, aiming to sell the property for the highest price while keeping the buyer informed about the situation.
- If a sale goes beyond express authority (e.g., selling for more than agreed), the principal needs to be informed to avoid disputes.

In business transactions, understanding the scope of authority is vital:
- The principal may approve or deny decisions made by the agent.
- Promissory Estoppel: Enforced if a third party relies on an agent's apparent authority, creating potential risks for the principal.

Torts: Related to negligent acts committed in the course of employment (e.g., employee spilling hot soup). Responsibility can extend to employers under the doctrine of Respondent Superior, where employers can be held liable for employee actions if within the scope of employment.
Indemnification: The right of an entity to seek compensation from others responsible for the damages. Essential in tort cases where both employee and employer might be liable.

If an agent acts beyond their authority, the principal may ratify the contract if they accept it (understanding all terms) or deny it, potentially leading to agency by estoppel claims.
It is crucial for principals to be aware of their agents’ actions to mitigate risk.

Upon termination, agents must communicate effectively with third parties regarding their role to avoid confusion regarding authority.
- Actual Notice: The individual must inform third parties when agency has ended.
- Constructive Notice: Legal notification that may be deemed reasonable through published announcements, though this is less relevant today as traditional media is less utilized.

Not all agents are employees, and not all employees are agents. Understanding the distinctions is important in managing responsibilities and liabilities.
Employees can be agents, but agents may not have the same employer-employee relationship.

Ethical considerations surround agency relationships, focusing on how agents must act in the best interests of their principals.
- The necessity of transparency regarding authority and the limits of an agent's capabilities is crucial for maintaining trust.

In business, structures like sole proprietorships, partnerships, and LLCs have varying degrees of risk and liability:
Sole Proprietorship:
- Created simply by operating a business.
- Disappears when the owner dies or decides to stop the business.
- The owner holds all liability for debts.
Partnership:
- Voluntary agreements between two or more individuals for profit.
- Must include management agreements for clarity on responsibilities.
- Partnership liability is shared among partners.
LLC (Limited Liability Company):
- Offers limited personal liability to owners, protecting personal assets.
- Easier to manage than partnerships as the structure is defined from the start, reducing disputes.

Importance of clear communication and established agreements in business practices can prevent disputes.
- Legal guidance during entity creation is advisable for occupation stability and to navigate the complexities of partnerships.
- Attending supplemental classes or workshops enhances understanding of business law principles.

Focus on LLCs in the next class. Confirm project details and prepare for upcoming quizzes addressing discussed topics.
Ensure participation by engaging with peers on account of real-world applications of law in business settings.