Understanding Agency Law

Understanding Agency Law

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Understanding Agency Law
Agency law is an area of business law, more specifically that of commercial, where the existence and relationship of a principal and agent is at the forefront. A "principal," the individual who is the main participant in any given situation, will have given over authority or power to an "agent," who then will be left with the legal rights to act on their behalf. Examples of such relationships include that of guardians/wards as well as real estate agents/sellers. The actual agreement between these individuals represents the "agency." In general a principal may give unto an agent any task he or she may be otherwise able to do on their own.
 
 
In cases of agency law, an agent may institute an additional relationship between their principal and another party. Throughout these proceedings, however, the agent will not incur any liability since they will not be included as a party in the contracts. The principal, alone, will acquire such a responsibility as set forth by the agent. Under contract, agency law specifies that the principal attain the services of the agent, in terms of their representation, in exchange for monetary compensation. 
 
 
What presents a slight difference in how employers oversee their employees is the fact that the principal informs the agent of their desires, and afterward, leaves the course of action to their discretion. An employer actually spells out exactly how they wish work to be done. Agents are also compensated on a basis of commission as opposed to a predetermined salary or hourly rate. In such a way, they may only expect payment based on their achievement of whatever the principal had required. In reference to real estate agents, they act on behalf of sellers as determined by a contract, and will receive a specified percentage of the sale they had garnered.
 
 
As set forth by agency law, agents' authority in terms of prescribed actions may fall into specified categories. These include: "express authority," "implied authority," "authority by ratification," "usual authority," and "apparent authority." Express authority is that which is included as part of the aforementioned contract. Authority is spelled out in specifics in writing for the agent to follow. Implied authority, however, deduces implications not actually stated in express authority. Such authority may be employed when the agent feels necessary as well as when actions will lead to the achievement of the Principal's original desired goals. An example would be the agent deciding to show a residence to a prospective buyer despite their principal being absent. 
 
 
Though not specified as an action to be done in the contract, such an act may be necessary as a sale may be garnered, which would be what the principal will have desired. Authority by ratification makes use of the past as an agent may go forward with actions with past authority in mind. This will be applicable under agency law as long as the principal provides their consent subsequently in connection to being "bound by the unauthorized acts of his agent." 
 
 
Usual authority concerns "customs of the trade," where consent is assumed by the principal in relation to the agent's actions as long as they reside within the field of legality. Apparent authority, as the last of these venues of power, entails that an agent be permitted to negotiate on behalf of a principal with another party despite prior consent. This is due to circumstances such as if the "third party" is led by the principal to assume that the agent had such authority to begin with. In a case such as this, such a belief has led to their knowledge of the agent's apparent authority.

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