BUSFIN 3500 Study Guide - Midterm Guide: Gross National Income, Limited Liability, De Facto
12 Dec 2015
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The three most common forms are sole proprietorship, partnership, and corporation. Sole proprietorship: involves one person who owns and operates a business. Principle: the party for whom an agent acts. Many agency agreements are created orally, and they are just as effective as written agency agreements. One of the more common agencies created orally is the employer-employee relationship. The employee acts as an agent of the employer. Ex: agent is hire to manage a pool/ the expressed authorization gives rise to implied authority to allow agent to do reasonable things in order to manage the pool properly: buying cleaning tools, repair filtration systems. Apparent authority: principle is prevented from denying giving the agent permission to act. Hiring a repair man (that drives a company vehicle, arrives dressed in company uniform, long history with repair company) to buy new air conditioner. Repair man sells for lower than company price.
