THE LEGAL CONCEPT OF AGENCY
AYN456 BUSINESS AND CORPORATIONS LAW ASSIGNMENT 1
THE LEGAL CONCEPT OF AGENCY
Part A
INTRODUCTION
The legal concept of agency plays an essential role under commercial transactions. This essay will first explain the definition of agency and methods of creating agency relationship, then the benefits and drawbacks of agency will be illustrated. Finally, there are two examples presenting formal and informal agency relationship.
THE LEGAL CONCEPT OF AGENCY
An agency refers to a legal relationship between agent and principal. A broad concept of agency is a person who is able, by virtue of the authority conferred upon him/her to create legal rights and duties as between another person, who is called his principal, and third parties.1
HOW DOES AGENCY ARISE
An agency relationship is simple to build, as the principal clearly manifest the intension for the agent to act on their behalf, and then reach an agreement by both. Generally, there are four ways to create agency, which are by express or implied appointment, ratification, operation of law, or by estoppel.
Agency created by appointment always involves in a form of consent from both the agent and the principal. This agreement can be generated through oral or written method. Normally it is feasible to establish an agency relationship by oral form, whereas a written contract is more reliable and safe.2 The contract may include the scope of authority that given to the agent and the contract can bind the agent and the principal together to allow the agent act on behalf of the principal.3
Agency created by ratification arise where the transaction need to be made by agent and is beneficial to the principal and then the principal may ratify the unauthorized act subsequently,4 also it should occur under an existing agency relationship.
There are another two agency relationships created by operation of law, which are by necessity, or by cohabitation relationship. The necessity is emerged for a person to act
THE LEGAL CONCEPT OF AGENCY
Part A
INTRODUCTION
The legal concept of agency plays an essential role under commercial transactions. This essay will first explain the definition of agency and methods of creating agency relationship, then the benefits and drawbacks of agency will be illustrated. Finally, there are two examples presenting formal and informal agency relationship.
THE LEGAL CONCEPT OF AGENCY
An agency refers to a legal relationship between agent and principal. A broad concept of agency is a person who is able, by virtue of the authority conferred upon him/her to create legal rights and duties as between another person, who is called his principal, and third parties.1
HOW DOES AGENCY ARISE
An agency relationship is simple to build, as the principal clearly manifest the intension for the agent to act on their behalf, and then reach an agreement by both. Generally, there are four ways to create agency, which are by express or implied appointment, ratification, operation of law, or by estoppel.
Agency created by appointment always involves in a form of consent from both the agent and the principal. This agreement can be generated through oral or written method. Normally it is feasible to establish an agency relationship by oral form, whereas a written contract is more reliable and safe.2 The contract may include the scope of authority that given to the agent and the contract can bind the agent and the principal together to allow the agent act on behalf of the principal.3
Agency created by ratification arise where the transaction need to be made by agent and is beneficial to the principal and then the principal may ratify the unauthorized act subsequently,4 also it should occur under an existing agency relationship.
There are another two agency relationships created by operation of law, which are by necessity, or by cohabitation relationship. The necessity is emerged for a person to act