Business Law
Executive Summary
Various issues in the common law arise when agents make contracts on behalf of principals. Should a principal be bound when his agent makes a contract on his behalf that he would immediately wish to disavow? The tradeoffs resemble those in tort, so the least-cost avoider principle is useful for deciding which agreements are binding and can unify a number of different doctrines in agency law. In particular, an efficiency explanation can be found for the undisclosed-principal rule, under which the agent's agreement binds the principal even when the third party with whom the contract is made is unaware that the agent is acting as an agent. Agency deals with situations in which one person -- the principal-- uses another person -- the agent-- to act on his behalf. Sometimes the acts of the agent are attributed legally to the principal, sometimes not. Clearly, agency is central to business dealings.
No owner of a business can do everything himself; he must delegate some things to agents, and this is true not only of large corporations but of sole proprietorships that have employees who work for the owner. In partnerships, the partners act as each other’s agents. And in corporations, the shareholders are completely unable to act on their own behalf; they delegate authority to a board of directors, who in turn delegate authority to the officers of the corporation. In this report we will discuss the formation and types of agencies with a detail analysis of the evident problems between principal-agent relationships. Moreover, a comparative study between Virginia and Pakistan has been done as to what similarities of duties of an agency are pertaining. Lastly, we will propose some recommendations or procedure that can help the agencies work diligently and purposely.
Table of Contents
Executive Summary 1 Introduction 3 Formation of Agency 3 Types of Authority 4 Types of Agents 6 Duties of an Agent: 9 Rights of an Agent: 10 Agency
Various issues in the common law arise when agents make contracts on behalf of principals. Should a principal be bound when his agent makes a contract on his behalf that he would immediately wish to disavow? The tradeoffs resemble those in tort, so the least-cost avoider principle is useful for deciding which agreements are binding and can unify a number of different doctrines in agency law. In particular, an efficiency explanation can be found for the undisclosed-principal rule, under which the agent's agreement binds the principal even when the third party with whom the contract is made is unaware that the agent is acting as an agent. Agency deals with situations in which one person -- the principal-- uses another person -- the agent-- to act on his behalf. Sometimes the acts of the agent are attributed legally to the principal, sometimes not. Clearly, agency is central to business dealings.
No owner of a business can do everything himself; he must delegate some things to agents, and this is true not only of large corporations but of sole proprietorships that have employees who work for the owner. In partnerships, the partners act as each other’s agents. And in corporations, the shareholders are completely unable to act on their own behalf; they delegate authority to a board of directors, who in turn delegate authority to the officers of the corporation. In this report we will discuss the formation and types of agencies with a detail analysis of the evident problems between principal-agent relationships. Moreover, a comparative study between Virginia and Pakistan has been done as to what similarities of duties of an agency are pertaining. Lastly, we will propose some recommendations or procedure that can help the agencies work diligently and purposely.
Table of Contents
Executive Summary 1 Introduction 3 Formation of Agency 3 Types of Authority 4 Types of Agents 6 Duties of an Agent: 9 Rights of an Agent: 10 Agency