CHAPTER 24: BASIC PRINCIPLES OF AGENCY

Learning Objectives:• General Agency Principles• Duties of the Agent• Duties of the Principal• Termination:

By Operation of Law By Parties’ Agreement

Chapter 24 2

CHAPTER 24: BASIC PRINCIPLES OF AGENCY

1. Importance of Law of Agency to Business

2. Agent: Acts for another

3. Principal: Person for whom another acts

Chapter 24 3

INTRODUCTION TO THE LAW OF AGENCY

1. Three Parties: Agent, Principal, Third Party

2. Types of Principals:a. Disclosed

b. Undisclosed

c. Partially disclosed

Chapter 24 4

GENERAL AGENCY PRINCIPLES

3. Types of Agentsa. Brokers and Factors

b. General and Special

c. Independent Contractors

4. Capacity of the Parties

5. Formal Requirements

Chapter 24 5

GENERAL AGENCY PRINCIPLES

1. Nature of Agency Relationship: Fiduciary

2. Duty of Loyalty3. Duty to Protect Confidential Information4. Duty to Obey Instructions5. Duty to Inform6. Duty Not to be Negligent (Duty to Act

Reasonably)7. Duty to Account

Chapter 24 6

DUTIES OF AGENT

1. Duty to Compensatea. General Duty

b. Special Case: Sales Representatives

2. Duty to Reimburse

3. Duty to Indemnify

Chapter 24 7

DUTIES OF PRINCIPAL

1. Death

2. Insanity

3. Bankruptcy

4. Destruction or Illegality of Subject Matter

Chapter 24 8

TERMINATION BY OPERATION OF LAW

1. Mutual Agreement

2. Unilateral Action

Chapter 24 9

TERMINATION BY PARTIES’ ACTIONS

CHAPTER 24: BASIC PRINCIPLES OF AGENCY