ACCT352 Final: Final Exam

• School: University of Delaware
• Department: Accounting
• Course: ACCT352
• Professor: Alexander Virgil

Document Summary

Agency (the principal-agent relationship): fiduciary relationship which results when one person (principal) and another person (agent) mutually agree the agent will act on principal"s behalf with third parties and will be subject to principal"s control. Agent transacts business with third parties as if she were the principal. Fiduciary: strictest duty of care recognized by the us legal system which imposes upon the person in this role a legal duty to act solely in another party"s (principal"s) interests. Principals cannot do it all, principals lack the expertise of agents. It can be created for any legal purpose. It is usually formed by contract but not always. Any person who has capacity to contract can appoint agent to act on behalf for legal purpose. Employer-employee relationships: agency relationships are common between employers and employees but not all employees are agents. Only employees authorized to deal with third parties are deemed to be agents.