Overview & Agency Flashcards
Co-ownership:
Aligns interest of the two parties( advantage over K). Downside- share profits.
Transaction cost theory
- People begin to organize their production in firms when the transaction cost of coordinating production through the market exchange is greater with the firm.
What is agency
Agency is the fiduciary relation which results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other to act.
Elements of agency
- Acting on behalf- ability to affect their legal relationship
- Subject to control
- Consensual
Remedy for breach of fiduciary duty (horses)
All the profits
What is fiduciary duty
put others interest before you own
Types of agency authority
- Actual
- Apparent
- Inherent
- Estoppel
- Ratificaiton
What is actual authority: Express & Implied
- Does AGENT reasonably believe P intends authority?
i. Authority is the power of the agency to affect the legal relations of the principal by acts done in accordance with the principal’s manifestation of consent to him.
apparent authority
Does it appear to THIRD PARTY that P has given A authority to act as his agent?
- A can’t create agency on his own, has to be agent first.
i. Apparent Authority is the power to affect the legal relations of another person by transactions with third persons, professedly as agent for the other, arising from and in accordance with the others manifestations to such third persons.
Inherent authority
- Does nature of the position ordinarily include authority-even if this particular agent didnt have it. (Must have agency before this comes into play)
i. Inherent agency power is a term used in the restatement of this subject to indicate the power of an agent which is derived not from authority, apparent authority or estoppel, but solely from the agency relationship and exists for the protection of persons harmed by or dealing with a servant or other agent.
Undisclosed principal for business:
business is subject to liability to third persons with whom the agent enters in transactions usual in such businesses and on the principal’s account, although contrary to the direction of the principal.
Undisclosed principal reducing authority
principal can’t rely on instructions given an agent that qualify or reduce the agents authority to less than the authority a third party would reasonably believe the agent to have under the same circumstances if the principal had been disclosed
Agency by estoppel
-Did P’s bad conduct cause Third parties loss?
Last route
“Shut up” - Who ever was in position to prevent the harm will be liable. (Hotel scenario check in)
Ratification
- Did P accept deal made on his behalf by A
i. Ratification is the affirmance by a person of a prior act which did not bind him but which was done or professedly done on his account, whereby the act, as to some or all persons, is given effect as if originally authorized by him.
Methods of ratification 4
- Express affirmance by the principal
- Implied affirmance by accepting benefits at time when it’s possible to decline them.
- Implied affirmance through silence or inaction- we don’t give the principal an option.
- Implied affirmance through bringing a lawsuit to enforce the contract.
