The law of agency is an area of commercial law dealing with a set of contractual, quasi-contractual and non-contractual fiduciary relationships that involve a person, called the agent, that is authorized to act on behalf of another (called the principal) to create legal relations with a third party.
What are the principal and agent’s duties to the third party?
If an agent acts within the scope of his/her authority, a principal is bound by the act of his/her agent [i]. Moreover, a party is responsible for any action or inaction by the party or the party’s agent[ii].
What is the relationship between agent and principal?
The principal-agent relationship is an arrangement in which one entity legally appoints another to act on its behalf . In a principal-agent relationship, the agent acts on behalf of the principal and should not have a conflict of interest in carrying out the act.
Who is a third party in agency relationship?
Generally, where an agent enters into a contract with a third party within the remit of its authority and the existence or identity of the principal is disclosed to the third party at the time of the contract, then such contract can be enforced by and against the principal.
What is the difference between an agent and a principal?
A principal, according to ASU 2016-08, is the company that is providing the good or service to the customer, and an agent is the company arranging for the good or service to be provided to the customer . An agent acts on behalf of the principal and normally will receive a commission for its services.
What are the 4 types of agents?
- Artists’ agents. An artist’s agent handles the business side of an artist’s life. ...
- Sales agents. ...
- Distributors. ...
- Licensing agents.
Can an agent sue on behalf of the principal?
The agent cannot be sued by the principal while acting within their authority . While a tort is committed while an agent is acting outside their authority the principal will likely escape liability.
Can a third party sue the principal?
It is an exception to the principle of privity of contract and thus enables a third party to sue either the undisclosed principal or the agent on the contract . ... An undisclosed principal may sue or be sued on a contract to which the undisclosed principal is not a party.
What are the three duties owed to the third party?
Determine whether the information is fact or fiction. Check state law . Determine materiality. Discuss disclosure with the sellers.
Is a principal a third party?
A disclosed or partially disclosed principal is liable to a third party for a contract made by an agent who is acting within the scope of his or her authority.
What are the 5 types of agents?
The five types of agents include: general agent, special agent, subagent, agency coupled with an interest, and servant (or employee) .
Who is not eligible for contract?
Minor is not eligible to enter into a contract. Minors are individuals who are under the age of 18. Minors are not considered to have legal capacity, meaning they do not have the ability to make contracts with other people. If a minor signs a contract, they have the ability to void the deal with certain exceptions.
Does a principal have to be disclosed?
The DCA representative confirmed that California law did not require a licensee to disclose their license status when acting solely as a principal . ... Such unwritten encouragement places the disclosing licensee at unnecessary risk and liability when acting solely as a principal in a transaction.
Can an agent work for more than one principal?
It means that even if an agent is minor or otherwise incompetent to contract, he is capable of creating a valid contract between his principal and the third person. In this context, the agent is only a connecting link between the principal and the third party.
Who does the agent bring to the principal in a transaction?
– Customer = 3rd party which agent brings to principal i.e. if the agent is selling a home on behalf of the principal, the customer is the potential buyer. If the agent is looking to lease a space for his client, or principal, the customer is the potential landlord.
What is an example of a principal agent problem?
Principal Agent Problem Examples
A widespread real-life example of the principal agent problem is the way companies are owned and operated . The owners (principal) of a firm will elect a board of directors. The board of directors monitor and guide the management team like C-Level executives (the agents).
