Explain the concept of agency law and relationship

What is AGENCY? definition of AGENCY (Black's Law Dictionary)

explain the concept of agency law and relationship

This lesson explains agency Tort Liability in Agency Relationships: Definition & Law Apparent Authority: Definition, Cases & Example. AGENCY RELATIONSHIPS: AN OVERVIEW. Why do we care about agency relationships? Because it is the fundamental concept on which other business or . This section deals with agency law and the agent - partner relations. What is Agency Law? Agency law refers to the relationship between An intricate element of the principal-agent relationship is the concept of control. The agent agrees to.

In such a situation it was impossible to confer right or duties on a third party. Because of the wide prevalence of slavery, there was no great need for a true agency relationship.

Agency Relationship: Definition, Principles & Problems

As Roman law later developed, the formalities connected with creating legal relationships became less important, and the need for personal representation in commerce increased.

In the meantime, however, legal theory and practice had developed so many ways to evade the problem that there was no longer an urgent need for Roman law to overcome its stark conservatism and to develop a legal institution that it had earlier opposed. Medieval influence of canon law and Germanic law Labouring under the influence of Roman law, legal development in the Middle Ages strove to overcome disadvantages in daily commercial life caused by the Roman rejection of the principle of agency.

Through the efforts of legal scholars glossators and commentatorsRoman law was further developed by means of extensions, emphases, and exceptions—a process already sanctioned by the Romans themselves. Additional impetus for change came from Roman Catholic Church canon law. Although manifestly structured after Roman civil lawcanon law had its own special development, influenced by Hebraic theological concepts.

Certain writers succeeded as early as in constructing a type of agency relationship based on the position of procuratora relationship intended to solve the representation problem in all except legal matters.

The issue nevertheless remained in dispute. About this time, the doctrine of principal and agent developed in England as an outgrowth or expansion of the doctrine of master and servant.

explain the concept of agency law and relationship

Anglo-Norman law created the figures of ballivus and attornatus. His position in the household of his master empowered the ballivus to transact commercial business for his master, reminiscent of the power of the slave to bind his master under Roman law.

explain the concept of agency law and relationship

Later the ballivus was given more authority, especially in his frequent role as land administrator, gradually becoming competent to act independently for his master. On the other hand, the attornatus, originally just a representative of one of the parties in litigation, soon assumed a position of broader importance.

Certain contracts were effective only when made in a judicially prescribed manner.

explain the concept of agency law and relationship

For this reason, the formation of this type of contract always had to be concluded in a court proceeding in which an attornatus represented each party. This was the beginning of the role of the attornatus as a general agent. Modern developments Recognition of the principle of agency in the field of civil law was finally achieved in continental Europe during the ascendancy of natural law in the 17th century. By this time, however, new objections grounded in state law, feudal law, and the question of the general reasonableness of agency had to be overcome.

Hugo Grotius in his best-known work, De Jure Belli ac Pacis ; On the Law of War and Peaceexplained that on the basis of his mandate a procurator could acquire rights directly for his principal.

He thereby overcame the Roman rule that allowed slaves and dependent sons, but not free persons, with two exceptions, to act directly for the head of the household. Grotius simply maintained that this rule did not contradict natural law. In another work, Defensio Fidei Catholicae, Grotius added, in a theological contextthat the principle of agency is based not on essential natural law but on nonessential natural law; that is, agency is not demanded by the nature of things but must only correspond to and be adapted to the nature of things.

The codifications of the subsequent age of rationalism recognized the principle of representation. The Prussian Civil Codethe French Napoleonic, or Civil, Codeand the Austrian General Civil Code nevertheless regarded agency as an aspect of mandate and the power to act as an agent to be derived solely from that concept. In contrast, 18th-century commercial lawwhich at the end of the Anglo-Saxon period had split off from the main body of common law and had been allowed to develop under less-stringent controls, modified numerous feudal common-law concepts.

In particular, it brought a legal flexibility allowing the law of agency, which had grown from three independent common-law roots—one relating to actions of debt and assumpsit informal contractanother connected with the action of account, and the third deriving from deeds—to adapt itself to the peculiar problems and requirements of an individual case.

Through this commercial influence, the concept of undisclosed agency, an especially important mode of representation in commercial transactions in which the agent appears to be the principal, developed alongside open agency representation in English law.

Agency Relationship: Definition, Principles & Problems - Video & Lesson Transcript | socialgamenews.info

Thus, even when a principal with the real economic interest in the transaction remained concealed, claims for and against him began to be recognized, whereas in continental law the necessity for the agent to act openly in the name of the principal retained a more fundamental importance in the general doctrine of contracts.

English law attempted to relate agency rules more closely to the everyday needs of the principal—agent relationship, in contrast to the conceptually systematic and more narrowly confining treatment of agency in continental European law. A particularly important distinction in the European law of agency was made in the second half of the 19th century by the legal scholars Rudolf von Jhering and Paul Laband.

Before them, agency was viewed solely in terms of the relationship binding the principal, the person being represented, and the agent, the person representing; that is, agency was equated with the relationship created by the mandate given to the agent.

Business Law: The Principal-Agent Relationship

This distinction was largely adopted by the continental European legal systems and was codified in several countries. Nineteenth-century legal theory also strengthened the so-called disclosure principle Offenheitsprinzipaccording to which the acts of an agent have direct legal implications for the principal only when the agent makes it known to the third party by acting in the name of his principal that he acts for him and not for himself.

Only in such a case can there be direct representation—where the principal alone is the party to the contract—in contrast to indirect representation. Thus, this distinction became, to varying degrees, a common element in the individual civil-law systems. Anglo-American law, more realistic in this area and standing on different dogmatic grounds, was not influenced to the same degree by such principles, although it was also long plagued by refined doctrinal distinctions, such as the contrast between general agents, with whom an outsider could deal with moderate safety, and special agents, whose powers the courts viewed very narrowly.

At this stage of development the remaining feudal elements in the English law of agency, whose prototypes had remained the servant and the steward of a lord, were largely eliminated.

Because of the increasing complexity of most modern commercial transactions, the significance of the various types of representatives grew to the point where agency had become one of the most important of modern legal relationships. The agent had come to be seen as an instrument of the principal without personal responsibility, a view which developed still further the responsibility of the principal for the misconduct of his agent.

Reflecting the generally more realistic attitude of contemporary private law, the modern treatment of agency has retreated from the somewhat artificial conceptualism of the 19th century and has emphasized the actual commercial and social context.

Tendencies both to apply general solutions to broad types of cases and to provide specific solutions in the more unique individual cases have produced further refinements in the law of agency. The continuing shift to more complex business units, accompanied by developments in marketing practices, has required solutions more appropriate to modern business necessities.

In addition to a reassessment of the relationship between mandate and authority to act for the principal, new questions are being asked concerning the proper role of this kind of authority in relation to the legal and social functions of representation that it serves. In this view the authorization by the principal and the act of the agent are not two independently complete legal transactions carried out in isolation from each other.

Rather, they are two parts of an extended legal event, which would consist of a single act if no agency were involved. Thus, when the principal uses the help of an agent, the offer, which is usually made by a single act, becomes divisible into two parts the authorization and the action of the agent.


The rules of different systems In order to compare agency in continental and Anglo-American law, the principal types of agency that have developed in practice should be noted.

An agent owes the principal a number of duties. An agent can represent the interests of more than one principal, conflicting or potentially conflicting, only after full disclosure and consent of the principal. An agent must not usurp an opportunity from the principal by taking it for himself or passing it on to a third party.

In return, the principal must make a full disclosure of all information relevant to the transactions that the agent is authorized to negotiate. Termination[ edit ] Mutual agreement also through the principal responding his authority. Through renouncing when agent hm self stop being an agent. The internal agency relationship may be dissolved by agreement.

Under sections to of the Indian Contract Actan agency may come to an end in a variety of ways: Withdrawal by the agent — however, the principal cannot revoke an agency coupled with interest to the prejudice of such interest. An agency is coupled with interest when the agent himself has an interest in the subject-matter of the agency, e.

Alternatively, agency may be terminated by operation of law: If he does, he is liable to compensate the agent for the loss caused to him thereby. The same rules apply where the agent, renounces an agency for a fixed period. Notice in this connection that want of skill, continuous disobedience of lawful orders, and rude or insulting behavior has been held to be sufficient cause for dismissal of an agent.

Further, reasonable notice has to be given by one party to the other; otherwise, damage resulting from want of such notice, will have to be paid s. The termination does not take effect as regards the agent, till it becomes known to him and as regards third party, till the termination is known to them s.

Business Law: The Principal-Agent Relationship - LawShelf Educational Media

Some states opt for the partnership as no more than an aggregate of the natural persons who have joined the firm. Others treat the partnership as a business entity and, like a corporationvest the partnership with a separate legal personality.

Hence, for example, in English lawa partner is the agent of the other partners whereas, in Scots law where there is a separate personality, a partner is the agent of the partnership.

This form of agency is inherent in the status of a partner and does not arise out of a contract of agency with a principal. The English Partnership Act provides that a partner who acts within the scope of his actual authority express or implied will bind the partnership when he does anything in the ordinary course of carrying on partnership business.

Even if that implied authority has been revoked or limited, the partner will have apparent authority unless the third party knows that the authority has been compromised. Hence, if the partnership wishes to limit any partner's authority, it must give express notice of the limitation to the world. Agency law provides the set of rules governing the way in which this relationship operates. This manifestation can be oral or in writing.

Examples of written agency agreements include attorney retainer agreements. Agency relationships can also arise from circumstances even without explicit agreement. Whether an implied agency arose is a question of fact for a jury or judge to determine if the issue comes up a trial.

Types of Authority An agent can act with two types of authority, actual and apparent. Actual authority exists when the agent takes an action on behalf of the principal and he reasonably believes that the principal wants this action taken. Apparent authority exists when the agent takes actions for the principal with a third party that the third party reasonably believes the agent has the authority to take. Principal tells or implies to a vendor, however, that Agent has unlimited authority to buy from him.

Duties of Principals and Agents Agents are required to act up to the following duties and standards: An agent owes his principal a general duty of loyalty. This means that the agent must subordinate his interests to those of the principal if they fall within the agency relationship.