27.1 b a c k n e x t h o m e Chapter 27 Objectives  Specify the duties an agent owes the principal and the principal owes the agent.  Describe the agent’s and principal’s liabilities to third parties.  State how an agency may be terminated, either by the parties or by operation of the law. © © 2002 West Educational PublishingTo accompany Law for Business, 14e, by Ashcroft and Ashcroft

27.2 b a c k n e x t h o m e Agent’s Duties to Principal  Loyalty and good faith  Obedience  Routine obedience  Discretionary obedience  Reasonable skill and diligence  Accounting  Information

27.3 b a c k n e x t h o m e Principal’s Duties to Agent Compensation  Contract determines compensation.  If contract is silent, agent may obtain reasonable or customary compensation. Reimbursement  Agent gets reimbursed for expenses or for disbursements paid from agent’s personal funds.  Expenses because of an agent’s illegal act must be paid by the agent.

27.4 b a c k n e x t h o m e Principal’s Duties to Agent Indemnification  Contractual payment made by agent for principal is an expense of principal. Sticking to the terms of the contract  Everyone must abide by terms of the contract, or a breach will result.

27.5 b a c k n e x t h o m e Third Parties  Explain four ways in which agents are liable to third parties.  What duties and liabilities does a principal have to third parties?  What is the test of an agent’s apparent authority? Quick Quiz Quick Quiz Quick Quiz Quick Quiz Quick Quiz Quick Quiz Quick Quiz Quick Quiz

27.6 b a c k n e x t h o m e Termination of Agency by Acts of the Parties Original agreement Original agreement Revocation Renunciation by the agent Renunciation by the agent Subsequent agreement Subsequent agreement

27.7 b a c k n e x t h o m e Termination by Operation of the Law Subsequent illegality Subsequent illegality Destruction Dissolution War Bankruptcy Death or incapacity Death or incapacity