Agency and the Employment Relationship. Chapter 14 Meiners, Ringleb & Edwards The Legal Environment of Business, 12 th Edition. Agency Relationships. Agency is created when a person or company ( agent ) agrees to act for or in place of another person or company ( principal )
Meiners, Ringleb & Edwards
The Legal Environment of Business, 12th Edition
1. Theprincipalcreates authority in an agent
2. Theagentreceives authority & carries out the principal’s instructions
3. Third parties make a contractor are involved in a tortwith the agent
1.Disclosed principal:Identity of principal is known by the third party at time of making of contract with agent.
2. Principal is liable to a third party for the contract of the agent if the agent has actual authority.
3. If there is apparent authority, the principal is contractually liable to a third party.
4. Undisclosed principal: Identity of principal is unknown to third party.
5. An agent is liable to a third party if there is an undisclosed principal.