Essay on Agents Rights and Liabilities

An agency refers to the establishment of a contract between an agent and a principal by mutual consent. The law of agency is concerned with the responsibilities and rights established when individual acts for another person. The term agency denotes to the legal relationship that binds the agent and principal, whereby the principal grants the agent the right to act on his or her behalf. In the establishment, the principal gives authority to the agent to take actions on its behalf and under the command of the principal. While the actions of the agent bind the principal, the relationship between the agent and the principal is fiduciary. Agency law thus governs and binds the lawful affiliation whereby the agent contracts with third persons and parties on behalf of the principal. The agent will owe all duties to the principal and at the same time, the principal owes some responsibility to the agent. However, the extent of the agents responsibility towards the principal is established by:

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Terms and conditions of the agreement

Scope of the authority in addition to the obligations of fidelity to the interests of the principal

On the other hand, the primary duties of the agent include:

Taking action on behalf and taking instruction from the principal

Take action to the extent and directions as entrusted by the principal

Act and carry out duties with care and thoroughness

Other maiden duties may include:

Not to take advantage of the transactions and acquire benefits in the process of carrying out the duties as per the instructions of the principal

To act only within the extent of the stated authority

Refrain and act in a manner that will not damage the enterprise or investments of the principal

While an agent is liable to the principal person, it is done only so with apparent authority. It thus means the agent is legally responsible for covering the principal for any damage that may result from any action taken. At the same time, the principal owes some contractual responsibilities of fair dealing and good faith. Although this may be relieved, off in case, the agent breaches the contract. According to Cohen (2017), the principal has the moral duty to take action by the terms implied between the agent and the principal. In case the agent acts within the extent of the actual authority, the principal is legally responsible for covering the agent for compensation in the course of the relationship, not considering whether the expenses was authorized or just as a way of promoting the principal's interests.

Agency Contract

An agency contract is a mutually binding relationship between the principal and an agent In binding the principal, the agent has authority in the contract created by implied authority. For example, if an individual gives out a credit card to a close relative, the credit card holder may be required to make payments made by the other party with the card (Cohen 2017). Under the regulations of an agency, an agreement is binding whereby the parties mutually agree to a subject matter. In such a case, a formal contract is signed to establish the rules and regulations governing the relationship between the parties in terms of a time limit, payment to be received, terms, and conditions in addition to their scope of involvement and participation in the contract. Agents and the principals are often protected by legislations outlined to govern and streamline operations and relationship of the parties (Richard 2013).

Creation of Agency Relationship

The association of agency can be created by; ratification, the operation of law, agreement, and by implied authority (Cohen 2017). It is important to note that an agency can be made to exist even if the parties involved do not want or wish for its existence or even in a situation that the parties declare that an agency does not exist. It, therefore, means that the parties can establish with or without consent an agency relationship.

By Express Agreement

Under this method, the agency may come into existence through a power of attorney.

By operation of Law

In some cases, agencies come into existence by a decree. For instance, in a partnership form of business, every partner is an agent of the firm. In the same way, promoters also become agents by the company acts (Richard 2013).

By Ratification

The term ratification entails the adoption of a given task. After accomplishment of the task, agent relations start to operate with the individual has done the task becoming the agent while the other individual becomes the principal. Implied ratification denotes to a situation where there is no expression (Cohen 2017).

By Implied Authority

Implied authority comes into existence due to the relationship between the individuals or by the behavior of the individuals. For example, Green and Porter are cousins. Green moves to a different country. Porter leases out Green's agricultural land at a fee. Porter collects the money paid out and sent to Green. Automatically, Green assumes the principal status while Porter, the agent. Implied authorities are divided into three.

Agency by Necessity: For example, company A hires out transport services to transport timber to a given destination. Along the way, the transit vehicle is stopped and takes over three days. It thus means the vehicle cannot reach its destination to deliver the timber. The transportation company decides to sell the wood. In this case, it is an agency by necessity due to the certain arising situation faced by the transit company (Richard 2013).

By Estoppel: While the three are together, John says to Clare, that he is an agent representing John. In this case, an agency is established called Agency by Estoppel.

By holding Out: By example, John is Clare's servant. Clare has made John accustomed to taking goods on credit from Vicky. At one time Clare gave John money to bring goods from Vicky. John misappropriated the cash and received the goods on credit. In this case, an agency by holding out is established with Clare becoming liable to Vicky.

Termination of Agency

An agency may be ended by the decision of the members or by law. By agency, it ends if the expiry date that it was established reaches. Alternatively, it may be terminated when after fulfillment of the object. Other ways in which it may be terminated include insolvency or the principal, liquidation of the business, damage of the subject issue, and death of one of the party members. Other ways may involve breaking out of war, and the principal becomes an alien, and extinction of the sub-agency (Cohen 2017).

In the situation of termination by the act of parties, the principal may give a notice to the agent in which the agent will not get any compensation. In case an agent terminates the agency by an opinion to the principal, the agent will make all necessary payment to the principal. Additionally, both parties may agree mutually to end the agency.

Principals Right to Indemnification

Indemnity refers to the obligation to another person to provide for compensation in case of loss suffered. The legal relationship between the principal and agent is covered and regulated by law (Richard 2013). While the agent owes the principal contractual responsibility, the head on the other hand has the right to indemnification in case the agent goes against the contractual agreement or acts in violation of the instructions provided. It is a mutual consideration in which the agent is expected to act within the scope of agreement assuring the principal of mandate to the responsibilities bestowed upon the agent. According to Cohen (2017), it is a measure to mitigate the principal against loss of any kind in case of the agent's contravention of the agreement or failure to act by the agreement. While the principal has the right to indemnification, the responsibility to act within the law and within the contractual arrangement is vital for the safety and mitigation of any loss by the principal. It is thus important to understand all the duties and responsibilities of the principal as regards the relationship of the two in a way that the principal will not incur any loss during the duration of the contractual agreement (Cohen 2017). The right to indemnity is vital as it helps protect the business interest of the principal from any misappropriation, misjudgment, and or the agent going against the agreement.

The principals duty to the agent includes:

Duty to Cooperate

Duty to Compensate

Duty of care

Dealing fairly and in good trust

Contractual Rights

Right of Principal

An agent owes the principal the obligation to carry out tasks by the principal's instructions. The agent may be subject to tort accountability if a task is improperly performed. The agent has the duty to be loyal and confidential to the principal and at the same time avoid any form of conflict or contradiction of interest (Cohen 2017). The principal may seek for damages or compensation to compensate for the agents ill-gotten material benefits and at the same time, hold the agent's compensation.

Duties of Principal

The principal must contract with the agent in real terms, trust, and fairly. It shall be based on the conditions of the contract signed by the two parties (Richard 2013). Additionally, the principal must give back all resources and money used by the agent during the transaction and deal. While carrying out duties, the principal has the responsibility to cooperate and be involved in the deals to improve the performance of the agent. In case the principal breaches any of the mentioned duties, the agent has the right to seek for indemnification or obtain the breach of contract relief. On the other hand, the agent may not get specific performance (Cohen 2017.

Principals Remedies

According to Cohen (2017), given that, the agent-principal relationship is administered by a contract, majority of the remedies at the disposal of the principal meaning that the principal can take legal action against an agent. The principal has the following in case the agent goes against the fiduciary duties:

Constructive Trust: As long as the agent is still bound by the contract, anything obtained is the principal's meaning that the principal may take legal action to recover any form of benefit gotten by the agent. Although the principal divide and give a portion to the agent.

Avoidance: If the agent goes against the contract, the principal is allowed by law, the principal may choose to shun the contract and the agent altogether.

Indemnification: As discussed above.

Agents Duties to the Principal

According to the law, the agent has the duty to perform, refrain from any act that may be harmful to the principal. This follows the responsibility to act within the scope of available authority of the principal's official instructions (Richard 2013). This may come up despite the fact that an agent may feel that a different course of action may be appropriate. The duty of care arises from the responsibility to be competent, diligent, and caring while carrying out the outlined tasks and responsibilities. Failure to perform and follow the contract may subject the agent to tort liability and loss of compensation (Cohen 2017). The agent further owes the principal the obligation of faithful performance, which may be the same as a trustee subject to a trust. Other duties include the duty to notify, the duty of loyalty. Additionally, the agent is not expected in any way to compete with the principal unless there is an authority to do so agree upon by the parties. So long as the action is not unlawful or wrong, it is allowed, and the agent has the mandate to go ahead and carry out the duties. However, the duty of loyalty and trust does not oblige an agent to protect a dishonest principal. On the same note, fiduciary duty does not allow the agent to take a position without t...