Management and Organizational Studies 2275A/B Chapter Notes - Chapter 13: Secret Profit, Estoppel, Fiduciary
Agency = a relationship that exists when one party represents another party in the formation of legal relations. Agent = person who is authorized to act on behalf of another. Principal = person who has permitted another to act on her behalf. Legal relationships are as binding on principal as if that person had directly entered them themselves. Agency is about one person representing another in a way to affect the latter"s relationships with the outside world. Sports agent negotiating deal for a hockey player. Insurance agent selling insurance on behalf of insurance companies. Agent acts for someone else - doing business on their behalf. Relationship is essential to success of principal (may not have expertise to handle the situation) Almost every business transaction , at least one party is acting as an agent. Corporation enters into contract through agency of one of its directors/employees. Partnership is bound to a contract through agency of one of its partners/firm employee.