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Module 8
Business Organizations and Sales
| Term | Definition |
|---|---|
| Agent | One who acts on behalf of another |
| General Agent | The general agent possesses the authority to carry out a broad range of transactions in the name and on behalf of the principal. One who is designated a general agent has the authority to act in any way required by the principal's business |
| Power of Attorney | a delegation of authority to another to act in his stead |
| Special Agent | one who has authority to act only in a specifically designated instance or in a specifically designated set of transactions |
| Agency Coupled with an Interest | An agent whose reimbursement depends on his continuing to have the authority to act as an agent is said to have an agency coupled with an interest if he has a property interest in the business |
| Subagent | An agent authorized to act for the agent. For legal purposes, they are agents of both the principal and the principal's general agent, and both are liable for the subagent's conduct although normally the general agent agrees to be primarily liable |
| Servant | an agent employed by a master [employer] to perform service in his affairs whose physical conduct in the performance of the service is controlled or is subject to the right to control by the master |
| Independent Contractor | a person who contracts with another to do something for him but who is not controlled by the other nor subject to the other's right to control with respect to his physical conduct in the performance of the undertaking |
| Capacity | Legal ability to enter into a contract |
| Implied Agency | Courts can declare an agency exists even without an agreement, often in areas of social need. An implied agency arises when a person acts like an agent and the principal, knowing this, acquiesces, allowing that person to hold himself out as the agent. |
| Apparent Agency | An instance where the law may find agency, where a principal hires an agent and then neglects to inform those with whom he did business that the agent is no longer authorized |
| Fiduciary Duty | The agent's responsibility is to subordinate his self-interest to that of his principal |
| Duty to avoid self dealing | A fiduciary may not lawfully profit from a conflict between his personal interest in a transaction and his principal's interest in that same transaction. |
| Duty to preserve confidential information | The law therefore prohibits an agent from using for his own purposes or in ways that would injure the interests of the principal, information confidentially given or acquired |
| Duty of Skill and Care | An agent must perform work with the care and skill standard in the locality for that job. If the agent possesses special skills greater than others in the community, they must exercise those higher skills. |
| Duty of good conduct | The agent is not at liberty to act with impropriety or notoriety, so as to bring disrepute on the business in which the principal is engaged |
| Duty to Keep and Render Accounts | The agent must keep accurate financial records, take receipts, and otherwise act in conformity to standard business practices |
| Duty to Act Only as Authorized | Only conduct which is contrary to the principal's manifestations to him, interpreted in light of what he has reason to know at the time when he acts,...subjects the agent to liability to the principal. |
| Employment at Will | Under the traditional "employment-at-will" doctrine, an employee who is not hired for a specific period can be fired at any time, for any reason. |
| Duty to Indemnify | Unless the agreement explicitly provides otherwise, the principal has a duty to indemnify or reimburse the agent |
| Partnership | A partnership (or general partnership) is a business owned jointly by two or more people. |
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