Tutorial 9 Flashcards
appointment of agents?
one of the most common commercial arrangements in business
agents can be used in domestic and international trade
an agent = ?
a person who has legal authority to conduct business on behalf of another person, known as a principal
an agent doesn’t contract on his/her own behalf
an agent contracts on behalf of his/her principal
how is the arrangement between a principal and agent arranged?
normally, the principal pays the agent a salary, fees or commission or a share of the profits
what happens to agents who break the terms of their agency contracts or act negligently?
they’ll become liable to their principals and have to pay compensation (damages)
is a director an agent of a company?
yes
is a partner an agent of a partnership?
yes
what are the duties of an agent?
- obedience (obey lawful instructions)
- skill (use care & skill when performing duties)
- performance (perform duties)
- fiduciary duties (relationship between principal and agent is a fiduciary relationship)
fiduciary relationship?
relationship where one of the parties can be expected to trust the other implicitly
what fiduciary duties does an agent have?
an agent must
- avoid any conflict of interest
- not make a secret profit
- not take a bribe
- keep records of dealings on behalf of the principal
- keep confidentiality
what are the rights of an agent?
- to be indemnified against losses & liabilities
- to be repaid expenses and any agreed remuneration
- to exercise a lien over property owned by the principal which has lawfully come into his possession
indemnify = ?
compensate for harm or loss
lien = ?
a right to keep possession of property belonging to another person until a debt owed by that person is settled
what are the ways an agent can contract with third parties on behalf of the principal?
- agency by consent
- agency by estoppel
- agency of necessity
- ratification
agency by consent?
consent given impliedly, in writing or orally
agency by estoppel?
“holding out”
where the words or conduct of the principal leads a third party to presume that a person has the authority of an agent and the third party acts upon this (the agent has apparent or ostensible authority)
ostensible authority = ?
the power of an agent to act on behalf of a principal
agency of necessity = ?
where there’s an existing contractual relationship but there’s an emergency, it’s impossible to communicate with the principal, the property or interests of another are in imminent jeopardy, they act in good faith and the action was reasonable and prudent
ratification = ?
if an agent makes a contract on behalf of the principal, but doesn’t have authority, the principal can later ratify the contract and so may validate past acts
ratify = ?
sign or give formal consent to, officially making it valid
what are the different types of authority of an agent?
actual express authority
implied actual authority
ostensible or apparent authority
actual express authority
authority given either orally or in writing
implied actual authority
authority implied from the nature of the agent’s activities or what is usual in the circumstances
unless the third party knows otherwise, they are entitled to assume that an agent has implied actual authority
ostensible or apparent authority
authority in which lord denning said is “the authority of an agent as it appears to others”
arises where the principal represents to a third party that the agent has authority
sole trader?
one human individual who is in business on his own
can, however, employ staff
don’t have to register as their business is private
must register for VAT like companies & partnerships
unlimited liability
partnership?
partners are agents of eachother
when two or more people go into business together and build a joint business
what are the 3 types of partnerships?
ordinary partnership
limited partnership
limited liability partnerships
ordinary partnership?
under the 1890 partnership act
may engage in any type of business
all partners can manage and are agents of eachother
limited partnership?
under the limited partnerships act 1907
rare types of partnerships; shouldn’t be confused with an LLP
limited liability
partnership must have one general partner who runs the business and has unlimited liability
must register with the registrar of companies
limited liability partnerships?
under the limited liability partnerships act 2000
this was passed as prior to this, partners were jointly and heavily liable for the unlawful acts of another partner
under an LLP, members have limited liability
must register with the registrar of companies
companies?
artificial legal persons with separate legal identity from the persons who own the shares and control the company
limited liability
Salomon v Salomon (1897)?
landmark judgement and held that companies are a separate legal entity from persons who own and control them
known as the ‘veil of incorporation’
what is company law based on?
companies act 2006
what are the 2 types of companies?
- public (PLC)
- private (LTD)
private companies?
limited by shares mostly, minority limited by guarantee
typically small/medium sized
must have at least 1 director
no limit on amount of share capital
public companies?
registered as a public company
limited by shares and must have a minimum of £50,000 share capital allotted to the shareholders
minimum of 2 directors
may or may not be quoted on a recognised stock exchange
debenture = ?
a contract between a creditor and the company for a loan to be repaid with fixed interest
must be paid before shareholders are paid
‘piercing the corporate veil’?
corporate veil can be pierced in certain circumstances to prevent the abuse of a company’s legal personality
only applies when the person deliberately evades an existing legal obligation, liability or restriction
key benefit of a company being a separate legal person?
limited liability for shareholders
