1. AUTHORITY OF ACTORS

2. Owner’s responsibility for the company’s liabilities
Business form
PRIVATE
ENTERPRENEUR
Yksityisyritys
Tnmi
GENERAL PARTNERSHIP
Avoin yhtiö
LIMITED
PARTNERSHIP
Kommandiitti-
yhtiö Ky
LIMITED LIABILITY
COMPANY
Osakeyhtiö
Oy, Oyj
Owner
Number of
Owners
Founding
documents
Owner’s responsibility for the company’s liabilities
Acting on behalf of the company
(Within the line of business)
Profit sharing
Entrepreneur
Partner
Personally liable and silent partner
Shareholder 1
2 or more
1 + 1 or more
1 or more -
Founding contract
Founding contract
Contract,
Articles of Assoc.
Owner liable with his entire personal property
The partners are personally, jointly and separately responsible for the company’s liabilities
Personally liable partner: as in partnership,
silent partner: liability limited to his contribution
Shareholders’ liability limited to their contribution
Entrepreneur
Each partner independently
Personally liable partner: as in partnership
Board of Directors
All the proceeds of the enterprise belong to the entrepreneur
1) According to the contract
2) Interest to the partners’ contributions
First silent partner’s share of profit, liable partner’s as in partnership
Non-restricted equity capital can be distributed as dividends among the shareholders

3. 1. PRIVATE ENTERPRENEUR Not a juristic person Owner
the entrepreneur and his firm are not separate
Owner
One natural person
Must have his habitual residence in the European Economic Area, unless exempted by the National Board of Patents and Registration of Finland (NBPR)
Acts on behalf of the firm
Is responsible for commitments made on behalf of his firm
Liable with his entire personal property
Bookkeeping is required
No auditing required

4. 2. GENERAL PARTNERSHIP Partners’ authority
Each partner may represent the company within the company’s line of business
Deviations:
Partners’ agreement => effective if the third party knew => best to register
Each partner has a veto right => effective toward a third party only if he knows about the veto

5. 3. LIMITED LIABILITY COMPANY
Board of Directors
1-5 members
At least one of the members must have his habitual residence in the EEA
Responsible for administration and organisation of company operations
Represents the company
The right to sign on behalf of the company can be extended by the Articles of Association
Duly convened when 50% of members present

6. 2. LIMITED LIABILITY COMPANY (cont.)
Managing Director
By virtue of the Articles of Association
Responsible for day-to-day operations and administration
Responsible for financial administration and accounting
Represents the company in matters within his authority
Appointed by Board of Directors
Accountable to the Board of Directors

7. REPRESENTATION (1)
A person appears on behalf of another person (juristic or natural)
Representative
Agent
Merchandise
THIRD PARTY
PRINCIPAL
Money

8. REPRESENTATION (2) Based on: Forms: Prescription of law Commission
Direct representation
Contract will be in the name of the principal
Indirect representation
Contract will be in the name of the representative

9. REPRESENTATION BASED ON COMMISSION
Power of attorney/letter of authorization
Notice to a third party
Appointment of a procurator
Authorisation on basis of one’s position
Oral authorisation
Power of attorney

12. REPRESENTATIVE (AGENT)
1. DIRECT REPRESENTATION
In the name and on behalf of the principal
Contracting parties are the principal and the third party
> Contract is binding to the principal, not to the representative
Goods
Contract
P.Principal T.Third
REPRESENTATIVE (AGENT)
PRINCIPAL
THIRD PARTY
Money

13. REPRESENTATIVE (AGENT)
2. INDIRECT REPRESENTATION
In the name of the representative, on behalf of the principal
Contracting parties are the representative and the third party
Goods
Contract
A.Agent T.Third
REPRESENTATIVE (AGENT)
THIRD
PARTY
PRINCIPAL
Money

14. I authorise Pekka Pykälän (160666-666Z) to sell
CASE 1
Jussi lived abroad and wished to sell his piano which was in his Helsinki apartment. He authorised Pekka by the following letter of attorney:
I authorise Pekka Pykälän ( Z) to sell
my white Hellas piano on behalf of me.
Sydney,
Jussi Jussila
Pekka sold at a good price the piano and also the music books Jussi had left sitting on the piano. He sent the money to Jussi.
How do you comment the case?

15. Agent’s competence:
Always shows outwards => if exceeded, the principal will not be bound
PRINCIPAL
Agency agreement
AGENT
Contract
P.Principal T.Third
Letter of Attorney
”Piano”
=> COMPETENCE
Goods
THIRD
PARTY ?

16. CASE 2
Jussi lived abroad and wished to sell his piano which was in his Helsinki apartment. He authorised Pekka by the following letter of attorney:
I authorise Pekka Pykälän ( Z) to sell
my white Hellas piano on behalf of me.
Sydney,
Jussi Jussila
Jussi told Pekka to try first to sell the piano at €1.000, and not to sell it under € 800.
Since there were very few potential buyers, Pekka finally sold the piano at € 740 eurolla and sent the money to Jussi.
Give your comments?

17. Letter or attorney: ”Piano”
Agent’s authority:
Based on the Agency agreement
=> Even if exceeded, the principal will be bound if the third party was in good faith
PRINCIPAL
Agency agreement
” € 800”
=> AUTHORITY
AGENT
€ 60
Contract
€ 740
P.Principal T.Third
Letter or attorney: ”Piano”
Goods
=> COMPETENCE ?
740
THIRD
PARTY

18. COMPETENCE
AUTHORITY
INSTRUCTIONS AUTHORISATION

19. 4. ASSIGNMENT
Consider the negotiating roles of the actors of your company focusing on
their rights to represent the company and
their potential need of authority
Draw up a Power of Attorney for one of the actors for some legal act he or she will have to make during the contract process. This legal act can also be the signing of the final contract.