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Understanding Agency Law and Responsibilities

May 7, 2025

Agency Law Lecture Notes

Introduction to Agency Law

  • Definition: Agency law governs the relationship between agents and principals and the authority of agents to act on behalf of principals.

Key Concepts in Agency Law

Principal-Agent Relationship

  • Principal: The party who authorizes another to act on their behalf.
  • Agent: The party who is authorized to act on behalf of the principal.
  • Fiduciary Relationship: Agents have a duty to act in the best interest of the principal.

Types of Authority

  • Actual Authority: Authority expressly given by the principal to the agent.
  • Apparent Authority: Authority that a third party reasonably believes the agent has, based on the principal’s actions.

Duties of Agents

  • Duty of Loyalty: Agents must prioritize the principal’s interests.
  • Duty of Care: Agents must act with competence and diligence.
  • Duty to Inform: Agents must keep the principal informed of relevant information.

Duties of Principals

  • Duty to Compensate: Principals must pay the agent for services rendered.
  • Duty to Reimburse: Principals must reimburse agents for expenses incurred on behalf of the principal.

Termination of Agency

  • By Agreement: Termination can occur by mutual consent between the principal and agent.
  • By Operation of Law: Death or incapacity of the agent or principal automatically terminates the agency.
  • By Revocation/Renunciation: Principal may revoke authority; agent may renounce authority.

Liability in Agency

  • Contractual Liability: Principals are bound by contracts entered into by agents with authority.
  • Tort Liability: Principals may be liable for torts committed by agents acting within the scope of their authority.

Conclusion

  • Understanding agency law is critical in ensuring proper legal and financial accountability in business and personal dealings.