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Copyright © 2004 by Prentice-Hall. All rights reserved.
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BUSINESS LAWBUSINESS LAW
E-Commerce and Digital LawE-Commerce and Digital Law
International Law and EthicsInternational Law and Ethics
55thth
EditionEdition
by Henry R. Cheesemanby Henry R. Cheeseman
Slides developed by
Les Wiletzky
Wiletzky and Associates, Puyallup, WA
Chapter 29
Agency Formation and
Termination
Copyright © 2004 by Prentice-Hall. All 29 - 2
The Nature of AgencyThe Nature of Agency
 Agency relationships are formed by theAgency relationships are formed by the
mutual consent of amutual consent of a principalprincipal and anand an agentagent..
 AgencyAgency is theis the fiduciary relationshipfiduciary relationship “which“which
results from the manifestation of consent byresults from the manifestation of consent by
one person to another that the other shall actone person to another that the other shall act
in his behalf and subject to his control, andin his behalf and subject to his control, and
consent by the other so to act.”consent by the other so to act.”
Copyright © 2004 by Prentice-Hall. All 29 - 3
The Nature of AgencyThe Nature of Agency (continued)(continued)
 Agency Law –Agency Law – The large body of commonThe large body of common
law that governs agency.law that governs agency.
 A mixture of contract law and tort law.A mixture of contract law and tort law.
 Principal –Principal – The party who employs anotherThe party who employs another
person to act on his or her behalf.person to act on his or her behalf.
 Agent –Agent – The party who agrees to act onThe party who agrees to act on
behalf of another.behalf of another.
Copyright © 2004 by Prentice-Hall. All 29 - 4
The Principal-Agent RelationshipThe Principal-Agent Relationship
PrincipalPrincipal
AgentAgent Third PartyThird Party
AgencyAgency
ContractContract
Contract with thirdContract with third
party on behalf ofparty on behalf of
principalprincipal
Principal’sPrincipal’s
obligation toobligation to
perform theperform the
contractcontract
Copyright © 2004 by Prentice-Hall. All 29 - 5
Persons Who Can Initiate an AgencyPersons Who Can Initiate an Agency
RelationshipRelationship
 Any person who has the capacity to contractAny person who has the capacity to contract
can appoint an agent to act on his or hercan appoint an agent to act on his or her
behalf.behalf.
 Persons who lackPersons who lack contractual capacitycontractual capacity
cannot appoint an agent.cannot appoint an agent.
 e.g., insane persons and minorse.g., insane persons and minors
Copyright © 2004 by Prentice-Hall. All 29 - 6
Persons Who Can Initiate an AgencyPersons Who Can Initiate an Agency
RelationshipRelationship (continued)(continued)
 An agency can be created only toAn agency can be created only to
accomplish a lawful purpose.accomplish a lawful purpose.
 Agency contracts that are created for illegalAgency contracts that are created for illegal
purposes or are against public policy arepurposes or are against public policy are
void and unenforceable.void and unenforceable.
Copyright © 2004 by Prentice-Hall. All 29 - 7
Kinds of Employment RelationshipsKinds of Employment Relationships
Employer-EmployeeEmployer-Employee
RelationshipRelationship
Principal-AgentPrincipal-Agent
RelationshipRelationship
Principal-IndependentPrincipal-Independent
Contractor RelationshipContractor Relationship
Copyright © 2004 by Prentice-Hall. All 29 - 8
Employer-Employee RelationshipEmployer-Employee Relationship
 A relationship that results when an employerA relationship that results when an employer
hires an employee to perform some form ofhires an employee to perform some form of
physical service.physical service.
 An employee is not an agent unless he orAn employee is not an agent unless he or
she is specifically empowered to enter intoshe is specifically empowered to enter into
contracts on the principal employer’s behalf.contracts on the principal employer’s behalf.
Copyright © 2004 by Prentice-Hall. All 29 - 9
Principal-Agent RelationshipPrincipal-Agent Relationship
 An employer hires an employee and givesAn employer hires an employee and gives
that employee authority to act and enter intothat employee authority to act and enter into
contracts on his or her behalf.contracts on his or her behalf.
 The extent of this authority is governed byThe extent of this authority is governed by
any express agreement between the partiesany express agreement between the parties
and implied from the circumstances of theand implied from the circumstances of the
agency.agency.
Copyright © 2004 by Prentice-Hall. All 29 - 10
Principal-Independent ContractorPrincipal-Independent Contractor
RelationshipRelationship
 Principals employ persons or businessesPrincipals employ persons or businesses
who are not employees to perform certainwho are not employees to perform certain
tasks on their behalf.tasks on their behalf.
 These persons and businesses are calledThese persons and businesses are called
independent contractorsindependent contractors..
 A principal can authorize an independentA principal can authorize an independent
contractor to enter into contracts.contractor to enter into contracts.
 Principals are bound by the authorizedPrincipals are bound by the authorized
contracts of their independent contractors.contracts of their independent contractors.
Copyright © 2004 by Prentice-Hall. All 29 - 11
Principal-Independent ContractorPrincipal-Independent Contractor
RelationshipRelationship (continued)(continued)
 The crucial factor in determining whether aThe crucial factor in determining whether a
person is an employee or an independentperson is an employee or an independent
contractor is thecontractor is the degree of controldegree of control that thethat the
principal has over that person.principal has over that person.
Copyright © 2004 by Prentice-Hall. All 29 - 12
Employment at WillEmployment at Will
 At-Will Employees –At-Will Employees – Employees who do notEmployees who do not
have an employment contract.have an employment contract.
 Under common law, an at-will employeeUnder common law, an at-will employee
could be discharged by an employer at anycould be discharged by an employer at any
time for any reason.time for any reason.
 Exceptions to the at-will doctrine:Exceptions to the at-will doctrine:
 Statutory ExceptionStatutory Exception
 Contract ExceptionContract Exception
 Public Policy ExceptionPublic Policy Exception
Copyright © 2004 by Prentice-Hall. All 29 - 13
Summary: Kinds of Employment RelationshipsSummary: Kinds of Employment Relationships
Type of RelationshipType of Relationship DescriptionDescription
Employer-EmployeeEmployer-Employee The employer has the right to control the physical conduct ofThe employer has the right to control the physical conduct of
the employee.the employee.
Principal-AgentPrincipal-Agent The agent has the authority to act on behalf of the principalThe agent has the authority to act on behalf of the principal
as authorized by the principal and implied from the agency.as authorized by the principal and implied from the agency.
An employee is often the agent of his employer.An employee is often the agent of his employer.
Principal-IndependentPrincipal-Independent
ContractorContractor
The principal has no control over the details of theThe principal has no control over the details of the
independent contractor’s conduct.independent contractor’s conduct.
An independent contractor is usually not an agent of theAn independent contractor is usually not an agent of the
principal.principal.
Copyright © 2004 by Prentice-Hall. All 29 - 14
Formation of the Agency RelationshipFormation of the Agency Relationship
ExpressExpress
AgencyAgency
ImpliedImplied
AgencyAgency
ApparentApparent
AgencyAgency
Agency byAgency by
RatificationRatification
Copyright © 2004 by Prentice-Hall. All 29 - 15
Express AgencyExpress Agency
 An agency that occurs when a principal andAn agency that occurs when a principal and
an agent expressly agree to enter into anan agent expressly agree to enter into an
agency agreement with each other.agency agreement with each other.
 Exclusive agency contractExclusive agency contract
 Power of attorneyPower of attorney
 Express agency contracts can be either oralExpress agency contracts can be either oral
or written unless the Statute of Fraudsor written unless the Statute of Frauds
stipulates that they must be written.stipulates that they must be written.
Copyright © 2004 by Prentice-Hall. All 29 - 16
Implied AgencyImplied Agency
 An agency that occurs when a principal andAn agency that occurs when a principal and
an agent do not expressly create an agency.an agent do not expressly create an agency.
 The agency is implied from the conduct ofThe agency is implied from the conduct of
the parties.the parties.
 The extent of the agent’s authority isThe extent of the agent’s authority is
determined from the particular facts anddetermined from the particular facts and
circumstances of the particular situation.circumstances of the particular situation.
 Incidental authorityIncidental authority
Copyright © 2004 by Prentice-Hall. All 29 - 17
Apparent AgencyApparent Agency
 Agency that arises when a principal createsAgency that arises when a principal creates
the appearance of an agency that in actualitythe appearance of an agency that in actuality
does not exist.does not exist.
 When an apparent agency is established, theWhen an apparent agency is established, the
principal isprincipal is estoppedestopped from denying thefrom denying the
agency relationship.agency relationship.
 It is the principal’s actions that create anIt is the principal’s actions that create an
apparent agency.apparent agency.
Copyright © 2004 by Prentice-Hall. All 29 - 18
Agency by RatificationAgency by Ratification
An agency that occurs when:An agency that occurs when:
1.1. A person misrepresents himself or herselfA person misrepresents himself or herself
as another’s agent when in fact he or she isas another’s agent when in fact he or she is
not, andnot, and
2.2. The purported principal ratifies (accepts)The purported principal ratifies (accepts)
the unauthorized act.the unauthorized act.
Copyright © 2004 by Prentice-Hall. All 29 - 19
Summary: Formation of Agency RelationshipsSummary: Formation of Agency Relationships
(1 of 2)(1 of 2)
Type of AgencyType of Agency DefinitionDefinition Enforcement of the ContractEnforcement of the Contract
ExpressExpress Authority is expressly given toAuthority is expressly given to
the agent by the principal.the agent by the principal.
Principal and third party arePrincipal and third party are
bound to the contract.bound to the contract.
ImpliedImplied Authority is implied from theAuthority is implied from the
conduct of the parties,conduct of the parties,
custom and usage of trade,custom and usage of trade,
or act incidental to carryingor act incidental to carrying
out the agent’s duties.out the agent’s duties.
Principal and third party acts arePrincipal and third party acts are
bound to the contract.bound to the contract.
Copyright © 2004 by Prentice-Hall. All 29 - 20
Summary: Formation of Agency RelationshipsSummary: Formation of Agency Relationships
(2 of 2)(2 of 2)
Type of AgencyType of Agency DefinitionDefinition Enforcement of the ContractEnforcement of the Contract
ApparentApparent Authority created when theAuthority created when the
principal leads a third partyprincipal leads a third party
into believing that the agentinto believing that the agent
has authority.has authority.
Principal and third party arePrincipal and third party are
bound to the contract.bound to the contract.
By RatificationBy Ratification Acts of the agent committedActs of the agent committed
outside the scope of hisoutside the scope of his
authority.authority.
Principal and third party are notPrincipal and third party are not
bound to the contract unless thebound to the contract unless the
principal ratifies the contract.principal ratifies the contract.
Copyright © 2004 by Prentice-Hall. All 29 - 21
Termination of an Agency and EmploymentTermination of an Agency and Employment
ContractContract
 An agency contract is similar to otherAn agency contract is similar to other
contracts in that it can be terminated by:contracts in that it can be terminated by:
 Acts of the partiesActs of the parties, or, or
 Operation of lawOperation of law
 Once an agency relationship is terminated,Once an agency relationship is terminated,
the agent can no longer represent thethe agent can no longer represent the
principal or bind the principal to contracts.principal or bind the principal to contracts.
Copyright © 2004 by Prentice-Hall. All 29 - 22
Termination by Acts of the PartiesTermination by Acts of the Parties
An agency may be terminated by theAn agency may be terminated by the
following acts of the parties:following acts of the parties:
1.1. Mutual agreementMutual agreement
2.2. Lapse of timeLapse of time
3.3. Purpose achievedPurpose achieved
4.4. Occurrence of a specified eventOccurrence of a specified event
Copyright © 2004 by Prentice-Hall. All 29 - 23
Termination by Operation of LawTermination by Operation of Law
An agency is terminated by operation ofAn agency is terminated by operation of
law, including:law, including:
1.1. Death of the principal or agentDeath of the principal or agent
2.2. Insanity of the principal or agentInsanity of the principal or agent
3.3. Bankruptcy of the principalBankruptcy of the principal
4.4. Impossibility of performanceImpossibility of performance
5.5. Changed circumstancesChanged circumstances
6.6. War between the principal’s and agent’sWar between the principal’s and agent’s
countriescountries
Copyright © 2004 by Prentice-Hall. All 29 - 24
Irrevocable AgencyIrrevocable Agency
 An agency coupled with an interest:An agency coupled with an interest:
 Special type of agency relationshipSpecial type of agency relationship
 This type of agency is irrevocable by theThis type of agency is irrevocable by the
principalprincipal
 Not terminated by the death or incapacity ofNot terminated by the death or incapacity of
either the principal or the agenteither the principal or the agent
 Terminates only when the agent’s obligationsTerminates only when the agent’s obligations
are performedare performed
Copyright © 2004 by Prentice-Hall. All 29 - 25
Wrongful Termination of an Agency orWrongful Termination of an Agency or
Employment ContractEmployment Contract
 The termination of an agency contract inThe termination of an agency contract in
violation of the terms of the agency contract.violation of the terms of the agency contract.
 The nonbreaching party may recoverThe nonbreaching party may recover
damages from the breaching party.damages from the breaching party.
 The distinction between theThe distinction between the powerpower and theand the
rightright to terminate an agency is critical.to terminate an agency is critical.

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Agencynotes 121005160223-phpapp01

  • 1. Copyright © 2004 by Prentice-Hall. All rights reserved. PowerPoint Slides to AccompanyPowerPoint Slides to Accompany BUSINESS LAWBUSINESS LAW E-Commerce and Digital LawE-Commerce and Digital Law International Law and EthicsInternational Law and Ethics 55thth EditionEdition by Henry R. Cheesemanby Henry R. Cheeseman Slides developed by Les Wiletzky Wiletzky and Associates, Puyallup, WA Chapter 29 Agency Formation and Termination
  • 2. Copyright © 2004 by Prentice-Hall. All 29 - 2 The Nature of AgencyThe Nature of Agency  Agency relationships are formed by theAgency relationships are formed by the mutual consent of amutual consent of a principalprincipal and anand an agentagent..  AgencyAgency is theis the fiduciary relationshipfiduciary relationship “which“which results from the manifestation of consent byresults from the manifestation of consent by one person to another that the other shall actone person to another that the other shall act in his behalf and subject to his control, andin his behalf and subject to his control, and consent by the other so to act.”consent by the other so to act.”
  • 3. Copyright © 2004 by Prentice-Hall. All 29 - 3 The Nature of AgencyThe Nature of Agency (continued)(continued)  Agency Law –Agency Law – The large body of commonThe large body of common law that governs agency.law that governs agency.  A mixture of contract law and tort law.A mixture of contract law and tort law.  Principal –Principal – The party who employs anotherThe party who employs another person to act on his or her behalf.person to act on his or her behalf.  Agent –Agent – The party who agrees to act onThe party who agrees to act on behalf of another.behalf of another.
  • 4. Copyright © 2004 by Prentice-Hall. All 29 - 4 The Principal-Agent RelationshipThe Principal-Agent Relationship PrincipalPrincipal AgentAgent Third PartyThird Party AgencyAgency ContractContract Contract with thirdContract with third party on behalf ofparty on behalf of principalprincipal Principal’sPrincipal’s obligation toobligation to perform theperform the contractcontract
  • 5. Copyright © 2004 by Prentice-Hall. All 29 - 5 Persons Who Can Initiate an AgencyPersons Who Can Initiate an Agency RelationshipRelationship  Any person who has the capacity to contractAny person who has the capacity to contract can appoint an agent to act on his or hercan appoint an agent to act on his or her behalf.behalf.  Persons who lackPersons who lack contractual capacitycontractual capacity cannot appoint an agent.cannot appoint an agent.  e.g., insane persons and minorse.g., insane persons and minors
  • 6. Copyright © 2004 by Prentice-Hall. All 29 - 6 Persons Who Can Initiate an AgencyPersons Who Can Initiate an Agency RelationshipRelationship (continued)(continued)  An agency can be created only toAn agency can be created only to accomplish a lawful purpose.accomplish a lawful purpose.  Agency contracts that are created for illegalAgency contracts that are created for illegal purposes or are against public policy arepurposes or are against public policy are void and unenforceable.void and unenforceable.
  • 7. Copyright © 2004 by Prentice-Hall. All 29 - 7 Kinds of Employment RelationshipsKinds of Employment Relationships Employer-EmployeeEmployer-Employee RelationshipRelationship Principal-AgentPrincipal-Agent RelationshipRelationship Principal-IndependentPrincipal-Independent Contractor RelationshipContractor Relationship
  • 8. Copyright © 2004 by Prentice-Hall. All 29 - 8 Employer-Employee RelationshipEmployer-Employee Relationship  A relationship that results when an employerA relationship that results when an employer hires an employee to perform some form ofhires an employee to perform some form of physical service.physical service.  An employee is not an agent unless he orAn employee is not an agent unless he or she is specifically empowered to enter intoshe is specifically empowered to enter into contracts on the principal employer’s behalf.contracts on the principal employer’s behalf.
  • 9. Copyright © 2004 by Prentice-Hall. All 29 - 9 Principal-Agent RelationshipPrincipal-Agent Relationship  An employer hires an employee and givesAn employer hires an employee and gives that employee authority to act and enter intothat employee authority to act and enter into contracts on his or her behalf.contracts on his or her behalf.  The extent of this authority is governed byThe extent of this authority is governed by any express agreement between the partiesany express agreement between the parties and implied from the circumstances of theand implied from the circumstances of the agency.agency.
  • 10. Copyright © 2004 by Prentice-Hall. All 29 - 10 Principal-Independent ContractorPrincipal-Independent Contractor RelationshipRelationship  Principals employ persons or businessesPrincipals employ persons or businesses who are not employees to perform certainwho are not employees to perform certain tasks on their behalf.tasks on their behalf.  These persons and businesses are calledThese persons and businesses are called independent contractorsindependent contractors..  A principal can authorize an independentA principal can authorize an independent contractor to enter into contracts.contractor to enter into contracts.  Principals are bound by the authorizedPrincipals are bound by the authorized contracts of their independent contractors.contracts of their independent contractors.
  • 11. Copyright © 2004 by Prentice-Hall. All 29 - 11 Principal-Independent ContractorPrincipal-Independent Contractor RelationshipRelationship (continued)(continued)  The crucial factor in determining whether aThe crucial factor in determining whether a person is an employee or an independentperson is an employee or an independent contractor is thecontractor is the degree of controldegree of control that thethat the principal has over that person.principal has over that person.
  • 12. Copyright © 2004 by Prentice-Hall. All 29 - 12 Employment at WillEmployment at Will  At-Will Employees –At-Will Employees – Employees who do notEmployees who do not have an employment contract.have an employment contract.  Under common law, an at-will employeeUnder common law, an at-will employee could be discharged by an employer at anycould be discharged by an employer at any time for any reason.time for any reason.  Exceptions to the at-will doctrine:Exceptions to the at-will doctrine:  Statutory ExceptionStatutory Exception  Contract ExceptionContract Exception  Public Policy ExceptionPublic Policy Exception
  • 13. Copyright © 2004 by Prentice-Hall. All 29 - 13 Summary: Kinds of Employment RelationshipsSummary: Kinds of Employment Relationships Type of RelationshipType of Relationship DescriptionDescription Employer-EmployeeEmployer-Employee The employer has the right to control the physical conduct ofThe employer has the right to control the physical conduct of the employee.the employee. Principal-AgentPrincipal-Agent The agent has the authority to act on behalf of the principalThe agent has the authority to act on behalf of the principal as authorized by the principal and implied from the agency.as authorized by the principal and implied from the agency. An employee is often the agent of his employer.An employee is often the agent of his employer. Principal-IndependentPrincipal-Independent ContractorContractor The principal has no control over the details of theThe principal has no control over the details of the independent contractor’s conduct.independent contractor’s conduct. An independent contractor is usually not an agent of theAn independent contractor is usually not an agent of the principal.principal.
  • 14. Copyright © 2004 by Prentice-Hall. All 29 - 14 Formation of the Agency RelationshipFormation of the Agency Relationship ExpressExpress AgencyAgency ImpliedImplied AgencyAgency ApparentApparent AgencyAgency Agency byAgency by RatificationRatification
  • 15. Copyright © 2004 by Prentice-Hall. All 29 - 15 Express AgencyExpress Agency  An agency that occurs when a principal andAn agency that occurs when a principal and an agent expressly agree to enter into anan agent expressly agree to enter into an agency agreement with each other.agency agreement with each other.  Exclusive agency contractExclusive agency contract  Power of attorneyPower of attorney  Express agency contracts can be either oralExpress agency contracts can be either oral or written unless the Statute of Fraudsor written unless the Statute of Frauds stipulates that they must be written.stipulates that they must be written.
  • 16. Copyright © 2004 by Prentice-Hall. All 29 - 16 Implied AgencyImplied Agency  An agency that occurs when a principal andAn agency that occurs when a principal and an agent do not expressly create an agency.an agent do not expressly create an agency.  The agency is implied from the conduct ofThe agency is implied from the conduct of the parties.the parties.  The extent of the agent’s authority isThe extent of the agent’s authority is determined from the particular facts anddetermined from the particular facts and circumstances of the particular situation.circumstances of the particular situation.  Incidental authorityIncidental authority
  • 17. Copyright © 2004 by Prentice-Hall. All 29 - 17 Apparent AgencyApparent Agency  Agency that arises when a principal createsAgency that arises when a principal creates the appearance of an agency that in actualitythe appearance of an agency that in actuality does not exist.does not exist.  When an apparent agency is established, theWhen an apparent agency is established, the principal isprincipal is estoppedestopped from denying thefrom denying the agency relationship.agency relationship.  It is the principal’s actions that create anIt is the principal’s actions that create an apparent agency.apparent agency.
  • 18. Copyright © 2004 by Prentice-Hall. All 29 - 18 Agency by RatificationAgency by Ratification An agency that occurs when:An agency that occurs when: 1.1. A person misrepresents himself or herselfA person misrepresents himself or herself as another’s agent when in fact he or she isas another’s agent when in fact he or she is not, andnot, and 2.2. The purported principal ratifies (accepts)The purported principal ratifies (accepts) the unauthorized act.the unauthorized act.
  • 19. Copyright © 2004 by Prentice-Hall. All 29 - 19 Summary: Formation of Agency RelationshipsSummary: Formation of Agency Relationships (1 of 2)(1 of 2) Type of AgencyType of Agency DefinitionDefinition Enforcement of the ContractEnforcement of the Contract ExpressExpress Authority is expressly given toAuthority is expressly given to the agent by the principal.the agent by the principal. Principal and third party arePrincipal and third party are bound to the contract.bound to the contract. ImpliedImplied Authority is implied from theAuthority is implied from the conduct of the parties,conduct of the parties, custom and usage of trade,custom and usage of trade, or act incidental to carryingor act incidental to carrying out the agent’s duties.out the agent’s duties. Principal and third party acts arePrincipal and third party acts are bound to the contract.bound to the contract.
  • 20. Copyright © 2004 by Prentice-Hall. All 29 - 20 Summary: Formation of Agency RelationshipsSummary: Formation of Agency Relationships (2 of 2)(2 of 2) Type of AgencyType of Agency DefinitionDefinition Enforcement of the ContractEnforcement of the Contract ApparentApparent Authority created when theAuthority created when the principal leads a third partyprincipal leads a third party into believing that the agentinto believing that the agent has authority.has authority. Principal and third party arePrincipal and third party are bound to the contract.bound to the contract. By RatificationBy Ratification Acts of the agent committedActs of the agent committed outside the scope of hisoutside the scope of his authority.authority. Principal and third party are notPrincipal and third party are not bound to the contract unless thebound to the contract unless the principal ratifies the contract.principal ratifies the contract.
  • 21. Copyright © 2004 by Prentice-Hall. All 29 - 21 Termination of an Agency and EmploymentTermination of an Agency and Employment ContractContract  An agency contract is similar to otherAn agency contract is similar to other contracts in that it can be terminated by:contracts in that it can be terminated by:  Acts of the partiesActs of the parties, or, or  Operation of lawOperation of law  Once an agency relationship is terminated,Once an agency relationship is terminated, the agent can no longer represent thethe agent can no longer represent the principal or bind the principal to contracts.principal or bind the principal to contracts.
  • 22. Copyright © 2004 by Prentice-Hall. All 29 - 22 Termination by Acts of the PartiesTermination by Acts of the Parties An agency may be terminated by theAn agency may be terminated by the following acts of the parties:following acts of the parties: 1.1. Mutual agreementMutual agreement 2.2. Lapse of timeLapse of time 3.3. Purpose achievedPurpose achieved 4.4. Occurrence of a specified eventOccurrence of a specified event
  • 23. Copyright © 2004 by Prentice-Hall. All 29 - 23 Termination by Operation of LawTermination by Operation of Law An agency is terminated by operation ofAn agency is terminated by operation of law, including:law, including: 1.1. Death of the principal or agentDeath of the principal or agent 2.2. Insanity of the principal or agentInsanity of the principal or agent 3.3. Bankruptcy of the principalBankruptcy of the principal 4.4. Impossibility of performanceImpossibility of performance 5.5. Changed circumstancesChanged circumstances 6.6. War between the principal’s and agent’sWar between the principal’s and agent’s countriescountries
  • 24. Copyright © 2004 by Prentice-Hall. All 29 - 24 Irrevocable AgencyIrrevocable Agency  An agency coupled with an interest:An agency coupled with an interest:  Special type of agency relationshipSpecial type of agency relationship  This type of agency is irrevocable by theThis type of agency is irrevocable by the principalprincipal  Not terminated by the death or incapacity ofNot terminated by the death or incapacity of either the principal or the agenteither the principal or the agent  Terminates only when the agent’s obligationsTerminates only when the agent’s obligations are performedare performed
  • 25. Copyright © 2004 by Prentice-Hall. All 29 - 25 Wrongful Termination of an Agency orWrongful Termination of an Agency or Employment ContractEmployment Contract  The termination of an agency contract inThe termination of an agency contract in violation of the terms of the agency contract.violation of the terms of the agency contract.  The nonbreaching party may recoverThe nonbreaching party may recover damages from the breaching party.damages from the breaching party.  The distinction between theThe distinction between the powerpower and theand the rightright to terminate an agency is critical.to terminate an agency is critical.