12-10-2012, 01:40 PM
TERMINATION OF AGENCY
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INTRODUCTION
Agency=Principal and Agent.
Agency is the most common and most important legal relationship.
Understanding agency is crucial to understand the legal environment of business.
Principals use agents to be able to conduct multiple business operations simultaneously in various locations.
The principal has the right to control the agent in matters entrusted to the agent.
THE NATURE OF AGENCY
Where one person is authorized by another to bind the latter to a contract
Agent acts to bring principal and third party into contract
Two contracts (1) principal and agent; and (2) principal and 3rd party
Dependent agent acts for single principal
Independent agents carry on an independent business and act for a number of principals
AGENT
Section 182 defines agent as a ” Person employed to do any act for any other or to represent any other in dealing with third person”
Example of agent can be A asks B to sell his fiat car on his behalf .In this case A is the principal and B is his agent . This relationship between A and B is called Agency.
DUTY OF PERFORMANCE
An agent’s duty to a principal that includes:
Performing the lawful duties expressed in the contract, and
Meeting the standards of reasonable care, skill, and diligence implicit in all contracts.
An agent who does not perform his or her express duties or fails to use the standard degree of care, skill, or diligence is liable to the principal for breach of contract.
An agent who has negligently (or intentionally) failed to perform properly is also liable in tort.
DUTY OF NOTIFICATION
An agent’s duty to notify the principal of information he or she learns from a third party or other source that is important to the principal.
The agent is liable to the principal for any injuries resulting from a breach of this duty.
DUTY OF LOYALTY
The agency relationship is based on trust and confidence.
An agent owes a fiduciary duty not to act adversely to the interests of the principal.
If this duty is breached, the agent is liable to the principal.
DUTY OF ACCOUNTABILITY
A duty that an agent owes to maintain an accurate accounting of all transactions undertaken on the principal’s behalf.
This duty also requires the agent to:
Maintain a separate account for the principal, and
Use the principal’s property in an authorized manner.
PRINCIPAL AGENT RELATIONSHIP
The arrangement that exists when one person or entity (called the agent) acts on behalf of another (called the principal).
For example, shareholders of a company (principals) elect management (agents) to act on their behalf, and investors (principals) choose fund managers (agents) to manage their assets.
DUTY OF COMPENSATION
A duty that a principal owes to pay an agreed-upon amount to the agent either upon completion of the agency or at some other mutually agreeable time.
If there is no agreement as to the amount of compensation, the law implies a promise that the principal will pay the agent the customary fee paid in the industry.
RIGHTS OF PRINCIPAL
1. Right to recover damages
Ensure and get compensation
Agent carelessness
Get proper account
Dealing on his own account
2. Right to recover secret profits made by agent
TERMINATION OF AGENCY
An agency is terminated by the principal revoking his authority or by the agent renouncing the business of the agency being completed or , by either the principal or agent dying or becoming of unsound mind , or by the principal being adjudicated an insolvent under the provisions of any act for the time enforced for the relief of insolvent debtors”