Analyze and discuss the difference between express, implied, and apparent agency relationships, law assignment help

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Write an analysis in a minimum of 1,050 words in which you include the following:

  • Analyze and discuss the difference between express, implied, and apparent agency relationships.
  • Describe when an agent may be liable for tort when acting on behalf of a principal.
  • Describe when a principal may be liable for tort when an agent is acting on behalf of a principal. 
  • Identify and describe how an agency relationship is terminated. 

Cite a minimum of 3 scholarly references.

Format your paper consistent with APA guidelines.

Click the Assignment Files tab to submit your assignment as a Microsoft® Word document.

This is the book that we are using and must be used as one of the references:

Legal Environment of Business

Online Commerce, Business Ethics, and Global Issues

EIGHTH EDITION

Henry R. Cheeseman

Professor Emeritus

Marshall School of Business

University of Southern California

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Formation of an Agency An agency and the resulting authority of an agent can arise in any of the following four ways: express agency, implied agency, apparent agency, and agency by ratification. These types of agencies are discussed in the paragraphs that follow. Express Agency Express agency is the most common form of agency. In an express agency, the agent has the authority to contract or otherwise act on the principal’s behalf, as expressly stated in the agency agreement. Express agency occurs when a principal and an agent expressly agree to enter into an agency agreement with each other. Express agency contracts can be either oral or written unless the Statute of Frauds stipulates that they must be written. express agency An agency that occurs when a principal and an agent expressly agree to enter into an agency agreement with each other. Example In most states, a real estate broker’s contract to sell real estate must be in writing. If a principal and an agent enter into an exclusive agency contract, the principal cannot employ any agent other than the exclusive agent. If the principal does so, the exclusive agent can recover damages from the principal. If an agency is not an exclusive agency, the principal can employ more than one agent to try to accomplish a stated purpose. The following feature describes the creation of a special form of express agency. Contemporary Environment Power of Attorney A power of attorney is one of the most formal types of express agency agreements. It is often used by a principal to give an agent the power to sign legal documents on behalf of the principal. The agent is called an attorney-in-fact even though he or she does not have to be a lawyer. Powers of attorney must be written. Usually, they must also be notarized. There are two kinds of powers of attorney: power of attorney An express agency agreement that is often used to give an agent the power to sign legal documents on behalf of the principal. general power of attorney A power of attorney where a principal confers broad powers on the agent to act in any matters on the principal’s behalf. special power of attorney A power of attorney where a principal confers powers on an agent to act in specified matters on the principal’s behalf. 1. General power of attorney. A general power of attorney confers broad powers on the agent to act in any matters on the principal’s behalf. Example A person who is going on a long trip gives a general power of attorney to his brother to make all decisions on his behalf while he is gone. This general power of attorney includes the power to purchase or sell stocks or real estate, pursue or defend lawsuits, and to make all other relevant decisions. 2. Special power of attorney. A special power of attorney confers limited powers on an agent to act on behalf of a principal. The agent is restricted to perform those powers enumerated by the agreement. Example A person who has her house listed for sale but who is going on a trip gives her sister a special power of attorney to make decisions regarding the selling of her house while she is gone, including accepting offers to sell the house and signing documents and deeds necessary to sell the house. A principal can make a power of attorney a durable power of attorney, which remains effective even though the principal is incapacitated. Implied Agency In many situations, a principal and an agent do not expressly create an agency. Instead, the agency is implied from the conduct of the parties. This type of agency is referred to as an implied agency . The extent of the agent’s authority is determined from the facts and circumstances of the particular situation. Example A homeowner employs a real estate broker to sell his house. A water pipe breaks and begins to leak water into the house. If the homeowner cannot be contacted, the real estate broker has implied authority to hire a plumber to repair the pipe to stop the water leak. The homeowner is responsible for paying for the repairs. Agency by Ratification Agency by ratification occurs when (1) a person misrepresents him- or herself as another’s agent when in fact he or she is not and (2) the purported principal ratifies (accepts) the unauthorized act. In such cases, the principal is bound to perform, and the agent is relieved of any liability for misrepresentation. implied agency An agency that occurs when a principal and an agent do not expressly create an agency, but it is inferred from the conduct of the parties. agency by ratification An agency that occurs when (1) a person misrepresents him- or herself as another’s agent when in fact he or she is not and (2) the purported principal ratifies the unauthorized act. Example Bill Levine sees a house for sale and thinks his friend Sherry Maxwell would want to buy it. Bill enters into a contract to purchase the house from the seller and signs the contract “Bill Levine, agent for Sherry Maxwell.” Because Bill is not Sherry Maxwell’s agent, she is not bound to the contract. If Sherry agrees to purchase the house, however, there is an agency by ratification. On ratification of the contract, Sherry Maxwell is obligated to purchase the house. In the following case, the court had to decide if an agency had been created. CASE 18.1 STATE COURT CASE Agency Eco-Clean, Inc. v. Brown 749 S.E.2d 4, 2013 Ga. App. Lexis 913 (2013) Court of Appeals of Georgia “The board of regents argues that it should not be held responsible for ‘bad decisions made by its students.’ ” —Barnes, Presiding Judge Facts Nicholas Brown was a student at Georgia Tech University and a member of the Ramblin’ Reck spirit club. The board of regents of the University System of Georgia (University) owns a Model A automobile called the Ramblin’ Reck which is the mascot of Georgia Tech University. Members of the club are responsible for driving the car at athletic games, parades and campussponsored events and throughout campus to raise school spirit. During its use, several club members drive and sit in the car, while two other members stand on the running boards of the vehicle. When the vehicle needed some repairs, Eco-Clean, Inc. installed new handles on the vehicle’s doors using wood screws one-half to three-quarters of an inch long. One day when the club members drove the Model T from a fraternity house, Brown stood on the passenger side running board, grasping an interior handle with one hand and the exterior handle with the other. After the car had gone one block, the driver turned left onto Ferst Avenue. When the driver took the turn, the handle Brown was holding onto snapped off, and he fell from the running board. Brown struck his head on the road and blacked out. Eyewitnesses testified that the car accelerated through a red light and that the car was turning at an unusually high rate of speed at the time of the accident. Brown fractured his right temporal bone and was hospitalized for four days. Brown permanently lost his sense of taste and smell, as well as his hearing in one ear. Brown sued the university and Eco-Clean to recover damages for negligence. Brown asserted that the university negligently promoted the unsafe use of the car by students on public roads and that the university is vicariously liable for the negligence of its agents, including the driver who was driving the Ramblin’ Reck on the university’s behalf at the time of the accident. The jury found that Eco-Clean was negligent for installing the door handles with short wood screws rather than stronger bolts. The jury also found that the student driver was an agent of the university and that the university was vicariously liable for the driver’s negligence. The jury awarded Brown $680,000 against each defendant. The university appealed the decision, alleging that the driver of the Model T was not its agent. Issue Was the driver of the car an agent of Georgia Tech University? Language of the Court The board of regents argues that it should not be held responsible for “bad decisions made by its students.” The parties deposed an eyewitness to the incident who testified that the driver of the Georgia Tech car sped up and ran a red light before making the turn where Brown fell off. Because some evidence introduced at trial authorized the jury to determine that the board of regents was liable under an agency theory for the negligence of the driver, the trial court did not err in denying the board of regents’ motion for a directed verdict of liability. Decision The court of appeals held that the student driver was an agent of Georgia Tech University and upheld the trial court’s award of damages to Brown. Ethics Questions 1. Did Georgia Tech University act ethically in denying liability? To view the Ramblin’ Reck vehicle, go to www.reckclub.org. Apparent Agency Apparent agency (or agency by estoppel) arises when a principal creates the appearance of an agency that in actuality does not exist. Where an apparent agency is established, the principal is estopped (stopped) from denying the agency relationship and is bound to contracts entered into by the apparent agent while acting within the scope of the apparent agency. Note that the principal’s actions—not the agent’s—create an apparent agency. apparent agency (agency by estoppel) Agency that arises when a principal creates the appearance of an agency that in actuality does not exist. Example Georgia Pacific, Inc., interviews Albert Iorio for a sales representative position. Iorio, accompanied by Jane Franklin, the national sales manager, visits retail stores located in the open sales territory. While visiting one store, Franklin tells the store manager, “I wish I had more sales reps like Albert.” Nevertheless, Iorio is not hired. If Iorio later enters into contracts with the store on behalf of Georgia Pacific and Franklin has not controverted the impression of Iorio that she left with the store manager, the company will be bound to the contract. CONCEPT SUMMARY Formation of Agency Relationships Type of Agency Express Formation Authority is expressly given to the agent by the principal. Implied Authority is implied from the conduct of the parties, custom and usage of trade, or act incidental to carrying out the agent’s duties. By Acts of the agent are committed outside the ratification scope of his or her authority. Apparent Authority is created when the principal leads a third party to believe that the agent has Enforcement of the Contract Principal and third party are bound to the contract. Principal and third party are bound to the contract. Principal and third party are not bound to the contract unless the principal ratifies the contract.
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RUNNING HEAD: AGENCY RELATIONSHIPS

Agency Relationships

RUNNING HEAD: AGENCY RELATIONSHIPS
Differences between Agency Relationships
An Agency can be described as a legal entity in which an agent has the power to act on
the behalf of a principal. When an agent-agency relationship is established, there remains no
conflict of interests between the agent and the agency in carrying out the assigned tasks or acts.
There are four different kinds of an agency relationship; Express Agency, Implied Agency,
Agency by Ratification, and Apparent Agency (Cheeseman, R. H. (n,d.)).
An Express agency relationship is an actual existing agency in which the principal
anoints or extends its general and specific powers to an agent, providing the authority to act, and
the conditions to use this authority and the extent to which the agent can use those powers is
stated in either written form or it is orally described (Cheeseman, R. H. (n,d.)). It is the
considered the most formal form of an agency relationship because both the principal and the
agent mutually and formally agree to the terms of the contract signed between the parties. There
are some special conditions under which it is obligatory to establish express agency relationship
in the written form.
Implied Agency relationship is a relatively less formal type of contract or agreement
between the agent and the principal authority in which the nature of relationship is analyzed,
applied, and interpreted by the act...


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