The law of the agency is contained in commercial law. It deals with Quasi- contractual, non contractual, as well as, contractual relationships involving a person known as the agent and the principal. A principal authorizes the agent to act on his behalf in creating a legally binding relationship with the third party. In other words, it can be defined as a relationship between an agent and the principal in which case, the principal, impliedly or expressly practices authority over the agent to work on his behalf or under his control (Solomon, 2010). More often than not, the agent on behalf of the principal is expected to negotiate with the third party to bring the party into contractual relationships. This is in line with the common law principle represented in Latin statement ‘Quasi facilt per alium facit per se’ which means that a person acting through another person does so, on her own interest (Horwitz, 2007). This paper explores the applicability of the law of agency in a contract between the agents acting on behalf of the third party and the principal. This paper shall respond to issues presented in the Nature of Agency, in a substantive way.
The key elements that the paper addresses are the legal issues in The Nature of Agency video and the legal principles that apply to each issue identified. The questions to be responded to are as follows: was contract formation achieved in the video? Explain why or why not. How does your interpretation of whether or not Janet is considered an acting agent of the company influence your decision? How should the contract in the simulation have been administered? Identify specific small business procedures and process, which if in place, might mitigate risks that are associated with ambiguities that associate with the express, implied, or apparent authorities of an agent, besides the arbitration offer presented to Nonlinear Pro, what other legal remedies do the small business featured in the video, Quick Takes, have to choose from as means of achieving contract dispute resolutions?
It is certainly true that the contract was finally made between Quick Takes Video and Non-Linear Pro Company. This is because Janet though acting unknowingly, and thinking that it was a delivery slip, signed for a new video editing system for a three month lease on behalf of the company. Additionally, it is confirmed from the conversation between Non-Linear Pro and his layer where Non-Linear Pro seeks to know if his company can be liable for the contract between Janet and Quick Takes Video Company. The layer reaffirms that Janet was acting on behalf of the owner and that Janet is considered the owner’s agent, and what she does binds the company. The layer further legally advices the owner to consider another defense option rather than using the claim the he was not directly involved.
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Janet is considered as an acting agent of the owner’s company. This is because she has the powers to bind legally her principal. This is confirmed by the principal when he says that Janet is fully responsible for ordering tape stock and stuff like that. This in essence confirms that Janet is bestowed with the responsibility of placing orders for the tapes on behalf of the owner. This implies that the principal has to be particularly careful in terms of what kinds of authority the principal actually gives to the agent.
The contract in the simulation should have been administered to involve the owner of the business. The owner should have made it clear to the third party the extent of authority of the agent in the company. For small businesses, ambiguity arises in cases where there is a lot more implied authority that is vested in the workers and thus making the employees to end up doing more than what is expected of them. Additionally, in the small businesses, the third parties are not informed of the exact limits of authority of the agents and this creates confusion. Another situation that creates ambiguity in small businesses arises where the principal by behavior, creates an impression that agents have more powers than what the agent actually has.
Besides the arbitration offer presented to Nonlinear Pro, there are other legal remedies the small business featured in the video, Quick Takes, chooses from as a means to achieve contract dispute resolution. First, whenever they send out contracts, if they have an employee who they just want to negotiate contracts, but who does not have final contracting authority, when they send out bids, for example, it should be clearly stated on that offer that a contract is not formed until it has gotten the approval from the president or the treasurer or whoever has contracting authority (Sealy & Hooley, 2009). Secondly, the principal should be exceedingly careful in terms of what kinds of authority he extents to the agent and make sure they make it clear for the situation that demand that he makes a decision instead of appearing to delegate the decision to the agents. This will help to avoid ambiguity that arises due to the implied authority by the agent.