Agency and Employment Law Chap 21 – Agency Law Chap 22 – Employment Law Chap 23 – Unions & the Employment Relationship Chap 24 – Discrimination in Employment Chap 25 – Employment-Related Injuries

Agency Law Chapter 21

Agency Relationship An AGENCY is a relationship between two parties that allows one of the parties to act so as to legally bind the other Principal: The person who authorizes another to enter into legal relationships on his or her behalf Agent: The party that was authorized

Agency Relationship The agent is like a middle man. You want to buy something at the store. You don’t have to go to the store owner, but may go to a salesman who is an agent for the owner. Whenever one person represents another Either party may terminate the agency relationship at any time (there may be liability for breach of contract – but the agency can end)

The Agent The agent must act within the granted Scope of Authority: that which they have been authorized to do by the principal When the agent works for free (no consideration) and there is no contract; the agency is called a gratuitous agency.

Granting Authority Express Authority: specific authority that is communicated directly by the principal to the agent - may be oral or written Implied Authority: power to do anything that is reasonably necessary or customary to carry out the duties that were expressly authorized

Examples “What’s Your Verdict?” on page 388 “In This Case” on page 389

Express Authority Power of Attorney: Any writing that appoints someone as an agent General vs Specific P of A

Agent Authority What if the agent acts outside the scope of his or her authority? Is the principal bound? ▫NO! Unless… you Ratify.

For Ratification to be Valid 1.The third person must have believed that by dealing with the principal’s agent, he or she was making a contract with the principal. 2.Before ratifying the principal must have full knowledge of all material facts. 3.Principal must show intent to ratify. 4.Principal must ratify the entire act, not just part. 5.The principal must ratify before the third person withdraws from unratified transaction.

Examples “Think Critically About Evidence” on page 391 # 7 and #8

Agent’s Duties to the Principal Fiduciary: put the interests of the principal ahead of your own Loyalty: the agent may not secretly benefit from the transaction Obedience: you must follow principal’s instructions Reasonable Care and Skill: you must act with the care and skill of a reasonably prudent person

Agent’s Duties to the Principal Confidentiality: You must keep information private and deal with caution. Accounting: You must account for all principal’s money and property that comes into your possession. No Commingling! (Mixing their funds with your funds) You must keep their money in a Trust Account.

Agent’s Duties to 3 rd Party 1.Do not act outside the scope of authority given you by the principal. 2.You must ensure that the principal has contractual capacity. Sometimes the principal wants to remain undisclosed- not have their identity known. In such cases the agent is liable on the contract.

Principal’s Duty to the Agent Pay what you promised for the agency’s services. Reimburse the agent for any expenses incurred. Cooperate with the agent after assigning him/her a task.

Principal’s Duties to 3 rd Party To follow through on Agent’s agreement. Not authorize or permit any improper acts. (Selling alcohol to a minor)

How is an Agency Terminated The principal may revoke the agent’s authority at any time. Agent can quit at any time. (If under contract for a set amount of time and the agent quits, the principal may seek damages) By Agreement: at the end of completion of a certain task, or after a certain length of time By Operation of Law: upon death, insanity, bankruptcy, or change in law

When an Agency has been Terminated The principal must notify 3 rd parties ▫If the principal does not give individualized notice, may be liable for agreements ▫Notice can be given by publishing in newspaper

Examples “What’s Your Verdict” on page 394 “What’s Your Verdict” on page 395 “Think Critically About Evidence” on page 397 # 6-9

The End! In groups of three, do the “Think Critically About Evidence” problems on page 399. Type up your answers. Be prepared to discuss with class. Individually, do the vocabulary worksheet